In any organization the size of the U.S. Postal Service, financial forecasting plays an important role. Accurate forecasting of revenue, volume, and expenses is essential to planning budgets, understanding future cashflows, identifying risk areas, and deciding where to invest capital.

Unfortunately, significant unexpected events can invalidate even the best forecasts. The quick and unforeseen rise of the global pandemic last spring impacted businesses of every size. While the Postal Service experienced yet another dramatic loss in letter and flat volume and revenue, it also it experienced a huge increase in packages. These changes made its previous forecasts unusable. In response to a congressional request, the Postal Service created a new series of revenue and volume forecasts.

In our newly released report, Pandemic Volume and Revenue Projected Scenarios, OIG auditors evaluated the reasonableness of the Postal Service’s projected financial scenarios as a result of the impact of the pandemic.

We found that, in its efforts to produce forecasts quickly, USPS management didn’t always document processes or save supporting materials used for assumptions, inputs, and calculations. For example, management was unable to provide a documented methodology for how it determined post-pandemic volume projections. Further, management relied on professional judgment to develop these projections due to a lack of historical data to reflect the impact of such a pandemic.

While we agreed using professional judgment was reasonable, we were unable to assess the objectivity of projected scenarios because USPS couldn’t provide documentation or a thorough explanation for key components of the methodology.

Do you believe that forecasting in this pandemic economy goes beyond normal scenario planning? Tell us below!

Comments (7)

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  • anon

    Can I open a post office box free of charge still due to the issues from the pandemic?

    Feb 26, 2021
  • anon

    nicee

    Feb 26, 2021
  • anon

    Yes but the post office has always been re-active not pro- active. We usually are way behind all the other delivery agencies. I’m a rural carrier in a small rural town. I see UPS and Fed-Ex with many helpers in their personal vehicles helping with the avalanche of parcels. The post office needs package runners helping with the packages. The post office gets taken advantage of by Amazon, UPS, Fed-Ex, Walmart by dropping off all the over sized, long driveways, dogs etc. packages for us to deliver. When did we become a small freight company? It seems as though the post office wants me to kill myself trying to deliver double the packages making multiple trips in my personal vehicle all the while we have 2 managers blatantly playing on their phones all day asking me what time I’m going to be finished!! If the other delivery companies figured out that their employees needed help delivering the packages why hasn’t the post office figured it out?

    Feb 24, 2021
  • anon

    I think it would be more than that to claim to be a joint venture

    Feb 24, 2021
  • anon

    No private entity has a plan for pandemic, disaster, or war. Yes, USPS forecasting in this pandemic economy goes beyond normal scenario planning. Nevertheless, the USPS appears to be behind the curve regarding damage control and recovery. Others like FedEx, UPS, Amazon, and Walmart appear to have adapted to circumstances and public demand and each remain profitable. Therefore, the problem at the USPS must be inflexible logistics and management personnel who have their hands tied behind their backs while gagged. My Postmaster told me he was a pawn in a top-down system and had no way to escalate his customers' suggestions for improvement.

    Feb 24, 2021
  • anon

    Thank you for your service, sir, et al.

    Feb 23, 2021
  • anon

    With a year of pandemic under our belts there should be plenty of data to at the very least get a baseline. It may be that management responsible for predictions were not given the right tools or access to do anything other than use judgement. There may need to be a shifting of resources from redundant management positions to qualified data analysts.

    Feb 23, 2021

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