The value of real-time information and how this can influence better, data driven decisions cannot be overstated. This has become part of our everyday vocabulary, a need which doesn't just apply to clinical data, but also operational decisions and business processes that run our life science businesses.
Reforecasting clinical trials based on the latest data and information can improve operations and overall trial performance. Reforecasting is a critical component of keeping your company's plans in line with its financial position and on track to meet its goals.
As most of us know, using a data driven approach to update your clinical forecast based on actual progress is essential. However, that this is easier said than done. Especially when there may be a myriad of changes that have occurred since the last time the forecast was updated.
Starting with a detailed baseline budget is essential in the reforecasting process, even if that baseline budget was "out of date" as soon as it was approved. This baseline budget will be the control in understanding the financial picture of a clinical trial — similar to how placebo treatment arms are the control in analyzing the clinical data results.
Just like any side to side comparison, the ability to compare current forecast to prior forecast is essential. If the baseline budget and forecasts do not include the necessary detailed assumptions, timeline and costs, then it will be very difficult to analyze and understand any variance between them.
If your reforecasting process is not standardized and automated, you risk trading the value of it for the manual hours necessary to reforecast. According to research, "There is wide recognition of the operational issues involved in more frequent reforecasts, particularly: The time it takes finance to manage a round of reforecasting (13.6 working days)".
There needs to be a more efficient method to reforecast your trials without taking on the operational cost to complete this financial reporting update.
This efficiency can be realized if your organization can implement a process to aggregate the "actual" trial data and metrics in an automated way, as well as automate the recalculation to understand how you are doing compared to your baseline and compared to your last reforecast.
When you take a standardized and automated approach to reforecasting, you are able to quickly gather and analyze projected trial expenses based on actual knowledge using predictive models to understand the potential impact on your costs and timeline. Perhaps your actuals are running over budget every month. If you reforecast for the remaining months in the fiscal year or in the clinical trial, and you incorporate this real-world knowledge into your reforecast, you have a better, more strategic view of the state of your clinical development business.
Equally as important is ensuring the business processes that support reforecasting activities are efficient, as this impacts how accurate you will be in reconciling the study payments, contracts, and forecasted values.
Any improvements to the reforecasting business processes should focus on which elements of the data and the process will provide:
Part of improving your reforecasting accuracy and your process is ensuring your reforecast for the key cost drivers is based on the latest data. Do you know which assumptions are key cost drivers or key timeline drivers?
Does your reforecasting tool identify or automate the updates to these areas? As these assumptions change, it is important to ensure all of the downstream study activities and timelines are updated based on these changes. Having a reforecasting solution that dynamically updates downstream activities on assumption changes and timeline shift is critical. Using predictive planning models will enable this in your reforecasting process.
Simply reviewing your numbers based on change isn't enough. Reforecasting your budget frequently calls for action.
You may discover that your approved budget needs revisions and reforecasting gives you the ability to address potentially high-profile topics such as:
Having this data for decision-making is important whether the news is good or bad.
For instance, if you find your study enrollment delays will result in underspend in this calendar year that you hadn't anticipated, a reforecasted budget can help your finance and executive team decide the best ways to leverage those available funds.
It starts at the top with the executive team creating a transparent environment where information sharing is rewarded and not treated with punitive actions. Establishing a transparent organization will enable a transparent process and will be critical to the accuracy and outcome of the forecasting cycles. The value of transparency in forecasting provides the following critical benefits:
Expecting your initial clinical development assumptions to last through an entire year or an entire trial is at best naïve and at worst detrimental to your business. Planning ahead, paying attention to detail, and harmonizing processes and systems empower trial managers to budget and forecast trial requirements accurately. Incorporating reforecasting into your regular financial reporting process, as needed, will keep you on track and help you roll with the punches.
See my next blog on "Creating a Predictive Modeling Process in your Clinical Forecast".
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