Tool Name: Scenario Analysis

What is it?

Scenario analysis is a participatory exercise based on a facilitated process of brainstorming, rigorous data gathering to explore the issues raised in brainstorming and the creation of three to four plausible future situations (scenarios) in which a reform will play out.  These scenarios are differentiated by plausible discontinuities (such as a change in government, a currency devaluation or a major shift in commodity or input prices), but take into account significant predictable factors (such as demographic trends).

What can it be used for?

Scenario analysis is forward-looking and is generally used to analyze "lumpy" investments or major changes in strategic direction.  The process is particularly adapted to bringing the perspectives of different stakeholders together around contentious decisions.  "Civic scenarios" have been used to bring leaders from different political groups together to lie out alternative paths during government transition in South Africa and the transition away from violence in Colombia and Guatemala. Scenarios have also been used to bring community leaders, environmentalists, politicians and transport specialists together to make long-term strategic plans for state-level transport investment in the United States.

What does it tell you?

Scenario analysis lets policy-makers: (i) "pre-test" the performance of a policy reform in different plausible situations, allowing for the creation of alternate plans; (ii) assess the level of ownership for a reform agenda among key stakeholders; (iii) get support for a reform agenda by including relevant stakeholders in discussions around scenarios to build a shared understanding of key issues in a reform.

Complementary tools

Normally used in conjunction with economic models and social analysis, which can serve as analytical inputs to the scenario-building process, and stakeholder analysis, which helps determine key groups to consider in different scenarios. Can be used in conjunction with Think Tools software.

Key elements

The elements of a complete scenario analysis are: (i) preliminary scenario workshop which brings together relevant stakeholders to brainstorm the key issues around a reform agenda; (ii) data collection wherein a researcher assembles relevant information around the issues identified in a workshop; (iii) scenario-building workshop where relevant stakeholders build alternate scenarios; (iv) dissemination process where scenarios are shortened to one-page briefing notes and shared with the public via newspapers, television and radio

Requirements

Data

Scenario analysis requires: (i) economic information, including standard economic projections; (ii) demographic information; (iii) sector-specific information relevant to the issues at hand; (iv) a basic profile of a country's political economy and of ethnic, linguistic and religious divisions within a country.

Time

Workshops of up to three days, spread over periods of up to several months depending on the timing of information inputs generated by economic and TIPS analysis in PSIA, along with other policy analysis documents.

Skills

An individual with strong facilitation skills and specific experience running scenario exercises. Ability to understand and absorb PSIA analysis from different disciplines and to feed this analysis into scenario building.

Supporting software

N/A

 

 

Financial cost

A small exercise intended to ensure that the assumptions of policymakers are challenged would cost approximately US$10,000.  A full exercise with participatory workshops designed to build support among stakeholders could cost as much as US$30,000.

Limitations

Successful scenario analysis is based on the skill of facilitators and the choice of participants.  Because the process is participatory and based on subjective understanding, it is best for strategic rather than tactical questions.

References and applications

Maack J (2001). Scenario Analysis: A Tool for Task Managers.  Social Development Paper Number 36. Washington DC

Pruitt B (2000). UNDP Civic Scenario/Civic Dialogue Workshop. Antigua, Guatemala, Nov 8-10,

Planning scenarios: Envision Utah (1997-2000): http://governor.utah.gov/dea/qget/Archives/Scenario_Analysis/scenario_analysis.htm)

Civic scenarios: South Africa, Mont Fleur Scenarios (1992 - ) http://www.gbn.org/public/gbnstory/articles/ex_mont_fleur.htm)

Colombia, Destino Colombia (1998 - http://www.gbn.org/public/gbnstory/articles/ex_destino.htm)