In which two stages should sensitivity analysis be conducted?

Sensitivity analysis is a technique used to assess how the different values of an independent variable impact a particular dependent variable under a given set of assumptions. In the context of project evaluation and business cases, it is essential for understanding the robustness of forecasts and identifying which variables have the most significant effect on project outcomes.

Conducting sensitivity analysis during the stages of switching values and scenario analysis is particularly important. In the switching values stage, analysts look at the thresholds at which a project switches from being viable to not viable or vice versa. This helps in determining the risk associated with uncertain inputs. On the other hand, scenario analysis involves assessing how various projected scenarios would play out under different assumptions, thereby giving a more comprehensive understanding of potential outcomes. This dual focus allows for capturing a wide range of possible future conditions, which is crucial for making informed decisions.

The other options do not encompass the pivotal aspects associated with conducting sensitivity analysis. Initial forecasting and retrospective analysis focus primarily on prediction accuracy and past performance evaluation, respectively, but may not provide the in-depth variability insights that switching values and scenario analysis do. Preliminary assessments and final evaluations are too broad and don't specifically mention the detailed exploration of variable impacts needed for effective sensitivity analysis. Market research and project implementation are critical to understanding market dynamics