Account for market uncertainty in new program launches

Despite rigorous market demand evaluation, some program launches will not work out as planned. Two factors make hitting enrollment targets particularly difficult:

1. Market demand is inherently uncertain. Even with sophisticated data analyses, it is impossible to precisely anticipate student or competitor behavior. The best enrollment projections are still estimates, and estimates are prone to error.

2. Markets change. Market-driven programs are subject to macro-industry forces, like new technologies, legislation, demographic shifts, and economic trends. Programs in market-driven disciplines have experienced booming demand followed by sharp, unexpected drops, as the petroleum engineering example below illustrates.

Labor Trends

Since program launches rarely generate the exact financial results that leaders anticipate, institutions that base program approval decisions on rigid projections risk denying promising proposals with tolerable risk potential. Basing approval decisions on inflexible, fixed performance expectations also delays time-to-market, as faculty spend extensive time revising program plans until proposals project desired financial results.

Project a range of acceptable outcomes in new program evaluations

Instead, finance and academic leaders should consider a range of potential performance outcomes when evaluating new program projections. The University of Maryland, Baltimore County accounts for inherent uncertainty in new program launches through its financial sensitivity analysis template. The Excel-based template automatically calculates a range of possible financial scenarios for leaders to evaluate. Specifically, it calculates the impact of overestimating and underestimating enrollments and costs by 25%. Leaders can use this data to make program launch decisions based on a range of scenarios, rather than a fixed number that the program is unlikely to hit.

UMBC

Using differentiated enrollment targets in program planning

Pepperdine University similarly builds flexibility into its program planning process by setting differentiated enrollment targets across functions. Finance builds conservative enrollment targets into budget projections to guard against financial shortfalls from slow or adverse market responses. Meanwhile, academic leaders consider a more optimistic target to plan for instructional capacity and other academic resources, and enrollment managers set aggressive targets for recruiters to promote best-case enrollments. This “hope for the best, plan for the worst” approach positions programs for success while guarding against unforeseen losses from market underperformance.

Pepperdine

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