A System for Forecasting and Monitoring Cash Flow: Forecasting federal and state revenues, maintenance contracts, other expenditures, and cash balances. Phase II
The research on which this report is based was performed as part of a study to develop an improved system for generating a two-year forecast of monthly cash flows for the Virginia Department of Highways and Transportation. It revealed that current techniques used by the Department to forecast right-of-way payments, salaries and wages, and allocations to cities, counties, other state agencies, and transit properties require no change. On the other hand, it showed that forecasts of expenditures on materials, supplies and equipment, and maintenance contracts have overestimated actual cash outlays by significant margins. In addition, this research revealed that success in forecasting federal revenue reimbursements is, at best, likely to be spotty and that forecasts typically will be overly optimistic. For state revenues, official forecast approved by the Office of the Secretary of Transportation necessarily serve as the basis of the official cash forecast; nevertheless a technique is proposed for early identification of significant changes in state revenue collections. The use of techniques derived from this research in a December 1983 forecast of cash flows for January Through July 1984 showed that the estimated cash balance for the end of the period was within $4.0 million of the actual balance. Among the major recommendations are that it may be reasonable to establish cash balances at contingency levels consistent with the expected excess of expenditures over revenues for the months of July through October.
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FORECASTING CONTRACT CONSTRUCTION
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actual collections Ap May Jun apportionment average cash balances cash flow forecast cash forecast construction and maintenance construction payout forecast construction program contract construction payout cumulative error Curve Monthly Factors Department of Highways Department's expenditures on materials expenditures on salaries Feb Mor Ap federal aid forecast federal aid reimbursements Federal Highway Administration FORECAST JANUARY 1984 forecast period FORECASTING AND MONITORING Forecasting Federal Highways and Transportation JL S N Jon Feb Mor June 30 line items maintenance contracts materials and supplies million per month MINUS ACT miscellaneous contracts monthly distribution factors Monthly Factors Actual Monthly Factors EUMULATIVE monthly factors model monthly factors technique official forecast overestimated actual Payout Curve Monthly Phase Proposed Improvements proposed techniques regression analysis revenue collections right-of-way seasonal adjustment September 1984 standard error SYSTEM FOR FORECASTING techniques formerly techniques proposed total payout total revenue transit properties underestimate Virginia Department WDH&T ZZ 23 MNTH