Forecasting of cost indices in the Greek construction industry: A joint methodology approach

Forecasting is the process of estimating or predicting the future. The principle aim is to provide reliable estimates of future business that will assist management in making accurate decisions and sound plan for the future. Essentially, there are two main approaches to forecasting - subjective and objective approach. The subjective approach incorporates the judgement of 'experts' (persons who work closely with the industry or product they are set to forecast). The objective approach applies a scientific process to the analysis of previous data using a statistical approach to create 'a fit' to the historic data then applying the 'model' to predict future occurrences. There have been several attempts to see whether analytical mapping can indeed outperform the judgement of experts and vice versa. However, studies have shown that combination methods, which combine subjective and objective approaches, are more comprehensible. The objective of this paper is to forecast cost indices in the Greek construction industry using a forecasting methodology, which has been developed during the course of this research. The methodology combines analytical process of forecasting with judgmental input to tune and adjust forecasting figures. It is concluded that such a methodology can improve forecasts and provide managers with a vital tool to analyse historical data. The methodology is encapsulated in a form of a computer program.