Estimations

Question 1

Why is estimations an important part of the consulting job?

Answer 1

E.g. test a financial model, or get a first understanding of a specific market or industry

Question 2

Estimations: the 5-step approach

Answer 2

1. Clarify scope
2. Structure problem
3. Choose assumptions
4. Calculate
5. Check answer

Question 3

Clarify scope

Answer 3

• Ask any scope related questions you may have
  
  • E.g. $ per year or customers per year
• Beware of grey areas in the scope
  
  • E.g. what’s included in the market or not (for example B2B vs B2C or what products are included in the scope)

Question 4

Structure problem

Answer 4

• Show your plan to get to your answer
• Have your interviewer understand the full logic of what you are going to do before start estimating
• Use top-down structure to make sure that you’re not leaving anything out and that the interviewer understands your ideas easily
• Explicitly state the algebra in your structure

Question 5

Choose assumptions

Answer 5

• Use data and logic to back up your assumptions
• Focus on what matters
• Get creative
• It’s OK to ask

Question 6

Calculate

Answer 6

• Calculations must be precise and efficient
• Always reality check before you start calculating

Question 7

Check answer

Answer 7

• Compare your value to something to get an idea of wether it makes sense or not
• You can get creative with your number
• If you can’t find a way, say what you would like to do
• If you have to adjust your value, go for variables that can change more
• Don’t just check your math