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Delphi Method

A qualitative method of forecasting where experts answer several rounds of questionnaires

What is the Delphi Method?

The Delphi method, also known as the estimate-talk-estimate technique (ETE), is a systematic and qualitative method of forecasting by collecting opinions from a group of experts through several rounds of questions. The Delphi method relies on experts who are knowledgeable about a certain topic so they can forecast the outcome of future scenarios, predict the likelihood of an event, or reach consensus about a particular topic.

 

Delphi Method

 

Understanding the Delphi Method

The Delphi method consists of several rounds of written questionnaires that allow experts to give their opinions. After the experts answer each round of questionnaires, the facilitator collects all the answers and hands out a summary report of the answers to each expert. Then, the experts review the summary report and either agree or disagree with the other experts’ answers.

The experts then fill out another questionnaire that gives them the opportunity to provide updated opinions based on what they understand from the summary report. The Delphi method becomes complete when a consensus of forecasts is achieved.

 

Delphi Method Process

 

1. Identify the issue and objective

It is important to define the issue you are trying to solve and what you want to achieve by using the Delphi method. Make sure that you know what you are trying to forecast.

 

2. Choose a group of experts and a facilitator

The experts can be individuals who are internal or external to the organization. The facilitator should take a neutral position and be someone with experience with research and data collection.

 

3. Round one questionnaire

The facilitator provides the first questionnaire for the experts. The type of questions in round one are usually open-ended, as it allows experts to brainstorm their ideas. The facilitator collects all the answers from the questionnaire and hands out a summary report of answers to the experts. In the summary report, the experts’ identities remain anonymous to encourage them to state their opinions freely.

 

4. Round two questionnaire

The second questionnaire should be created by analyzing the answers that you observe from the first round. Identify any similarities between answers and eliminate irrelevant content, so the second questionnaire can go in the direction where there is consensus within the experts.

When the experts answer the second questionnaire, their opinions may remain the same, or they may change their opinions after reading the summary report from the first round and understanding the other experts’ opinions. After the completion of the second questionnaire, the facilitator hands out a second summary report of answers to the experts.

 

5. Round three questionnaire

Proceed to the third round with the same idea as the second round. The third questionnaire should be created by analyzing answers from the second questionnaire. The experts will answer the third questionnaire based on their opinions from the summary report of answers in the second round.

You may continue to go through additional rounds of questionnaires or choose to stop here if you feel like you’ve reached enough consensus between the experts, and all their forecasts agree with each other.

 

Practical Applications

The Delphi method was initially used to forecast trends and outcomes in the fields of science and technology. For example, it’s been used to predict trends in aerospace, automation, broadband connections, and the use of technology in schools.

Additionally, it’s been used to forecast outcomes related to the economy, education, healthcare, and public policy. It is also useful in business situations, helping forecast sales with 96%-97% accuracy compared to actual sales numbers. As a result, the Delphi method can be used as a technique to predict the success of business events.

 

Additional Sources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

  • Cluster Sampling
  • Ensemble Methods
  • Sample Selection Bias
  • Hypothesis Testing

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!