Team Disha

Guesstimate Handbook

2023-24
Foreword
This issue of the Guesstimate Handbook is to provide a ready reference of hand-picked
guesstimate problems based on previous interview experiences of students across consulting
firms to assist in their preparation. The aim of sharing these sample questions is to inform
students about the experiences of past batches and to help them prepare for their placements
accordingly.

The sample solutions provided aim to enable the reader in learning about various approaches to
solving guesstimates. Every individual could have his/her unique way of tackling guesstimates,
each of which could be correct.

This document has contributions from students who appeared for campus interviews conducted
by consulting firms during the placement process over the past years.

Guesstimate Handbook
2023-24

Team Disha, IIM Lucknow

Issue: 22 December 2023

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Acknowledgements
Team Disha is grateful to all the people who have helped us by sharing their guesstimate cases
and interview experiences, which has enabled us to put together a comprehensive preparation
resource for the future batches.

We would also like to acknowledge the efforts of our entire batch as well, and thank the senior
batches for their help in putting together this case book. They have ensured breadth and depth
in the sample guesstimates to give the reader a comprehensive view of the kind of problems
that may be administered.

We are also grateful to the alumni of the Team Disha, IIM Lucknow for their valuable feedback
on the guesstimates which has helped us further enhance the overall quality of the book.

Team Disha,
IIM Lucknow

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Contents

Foreword...................................................................................................................................... 1
Acknowledgements..................................................................................................................... 2
Contents....................................................................................................................................... 3
How to use this guide?............................................................................................................... 4
Getting started with Guesstimates............................................................................................ 5
Evaluation components........................................................................................................... 5
Skills needed........................................................................................................................... 5
Frameworks..................................................................................................................................7
Top-down approach................................................................................................................. 7
Bottom-up approach................................................................................................................ 8
Guesstimate Do’s and Don’ts..................................................................................................... 8
Sample Guesstimates................................................................................................................. 9
Petrol pumps in Delhi.........................................................................................................9
Electricity consumption in India........................................................................................10
Cost of painting a room.................................................................................................... 11
Revenue for Times of India.............................................................................................. 12
Talent pool for Generative AI in India...............................................................................14
Industrial consumption of water....................................................................................... 16

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How to use this guide?
While reading this Guesstimate handbook, we suggest the reader should use the sample
problems to set up a session between 2 people (or groups), and after solving it, the solution
process sheet should be looked into to gain a broader understanding of the approach and areas
of improvement.

The frameworks are there to give a direction initially and should not be treated as a fixed
boundary but could be utilized by the reader to cover any other guesstimate which comes up
their way according to their own logical structure. Also, the reader should leverage the
recommendations, tips, and suggestions to apply learnings from one sample question to
another.

Remember, the journey is as important as the destination. Preparation is a group exercise with
individual self-preparation as well.

We wish you the best of luck in your preparation journey!

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Getting started with Guesstimates
Guesstimates are short, number-intensive estimation cases. It forms the first step in learning to
scope and structure cases. Ideal Time Limit: 15-20 minutes.

Evaluation components Skills needed

● Ability to think on your feet ● Logical thinking
● Approach & structure ● Communication
● Quantitative skills ● Presentation

Sample Flow

STEP 1: REITERATING THE PROBLEM STATEMENT - Confirm Objective of the problem

STEP 2: SCOPING OF THE PROBLEM - Ask relevant questions to clarify and reduce the
problem till the assumptions are either made clear or removed

STEP 3: CHOOSING AN APPROACH - Think logically and come up with a possible set of
approaches. Explain the best approach & confirm if you should go ahead with it.

STEP 4: DRAWING A DECISION TREE - State your assumptions first hand, lay down the
structure neatly on paper and solve it step by step. Keep communicating & asking the
interviewer for buy-ins

STEP 5: CALCULATIONS - Calculate your answer. Be ready for a conversation around error
estimates, other approaches, etc.

STEP 6: SANITY CHECKS - If possible, reconfirm & triangulate your answer with a ballpark
estimate from another approach

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Additional Pointers

Reducing factors

● Includes opt-in percentages that help in reducing the TAM to the SAM
● Should have a justification based on known data points
● May use personal experience or anecdotal evidence to justify. Eg: number of people who
need a knee replacement surgery in India (have a knee issue > will opt for a surgery)

Replacement factors

● Applicable to products which have a useful life

● Divide the total quantity by the useful life to obtain the yearly demand for a product
● Eg: demand for ACs in India (assume life of an AC to be 7 years, divide final demand by
7 to obtain this year’s demand)

Best practice: Before starting to actually solve the guesstimate, walk the interviewer through
your approach to get a buy-in, and then begin solving. This reflects structured thinking and
strong communication skills during the case.

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Frameworks

Top-down approach
Start with an entire population (in other words, the top level) and then break it down until you
arrive at an answer.

Guesstimate solution = A1 + A2 + B1+ B2 + B3 + C

Segments
● Demographics (age, sex, income)
● Psychographics(attitudes, behaviors, values etc.)
● Geography (city/country, urban vs. rural etc.)
● Literacy, Digital familiarity

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Bottom-up approach
Start from the bottom—some low-level statistic, such as Revenue per store, which does not
change across your universe and build your way up to the answer.

● Bottom up approach is much more subjective than the top down approach.
● Especially replicable blocks depending on the case in hand, it can be one single store,
one family to a single person. Be careful while picking your block and while scaling up.
● Bottom up approach though gives accurate results provided you scale up properly.

Guesstimate Do’s and Don’ts

Do’s Don’ts
● Take about a minute to gather your ● Ask too many clarifying questions
thoughts and decide approach ● Questions about approach
● Use tree diagrams, normal diagrams, ● Start solving without discussing the
approach
anything that explains your thoughts
● Start with a population set every time
clearly in a visual way ● Be text heavy on your sheet
● Relate your assumptions to facts, ● Unreadable writing
experiences and sellable logic ● Guessing the numbers
● Keep talking as you write, engage the ● Solving without explaining what you
interviewer are doing

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Sample Guesstimates
Petrol pumps in Delhi
● Scoping/Assumptions
○ Delhi city or greater Delhi
○ Operational and non-operational pumps

● Methodology
○ Area of Delhi:
Assume the farthest distance across the city is 50km apart. The area of a
rhombus with diagonals of length 50km:
Area = 0.5 x 50 x 50 = 1250 ~ 1200 sq km
○ Assume Residential = 35%, Commercial = 35%, Forest cover = 10%, Roads =
20%
○ Assume Main roads = 50% (= 150 sq km), Highways = 15% (= 45 sq km)
○ Assume width of Main road = 25m, Highway = 35m
○ Determine length of roads
○ Assume Petrol pump density at Main roads = 1/5km
○ Assume Petrol pump density at Highway = 1/10km
● Similar cases
○ Number of toll plazas in a state
○ Total hospitals in a city

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Electricity consumption in India
● Scoping/Assumptions
○ Residential and/or Commercial and/or Industrial
○ Month of the year
○ Which part of the country

● Methodology
○ Determine units consumed for middle income and then multiply suitable factor to
estimate for other income groups.
○ Units consumed by Urban-Middle income = 150-200
○ Units consumed by High income = 400; Units consumed by Low income = 100
○ Units consumed by Rural-High income = (70%) x (Urban-middle class
consumption)
● Similar cases
○ Number of ACs in offices
○ Water consumption in all households
○ Market size of Fridge in India

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Cost of painting a room
● Scoping/Assumptions
○ The shape of the room, number of windows, doors etc
○ Slant of roof if any
○ If there are pillars or other structures that need to be painted
○ Being painted for first time or repainted (number of coats of paint)

● Methodology
○ Height of walls = 4m, length of wall = 6m
○ Find area of roof and 4 walls
○ Determine area of pillars (cylindrical pillars of radius = 30cm)
■ Area = 2 x (3.14) x radius x height
○ Calculate volume of paint needed
■ Paint volume = Num of coats x Surface Area x Paint/Area
○ Find paint/area as follows:
■ Width of brush = w, Length of brush stroke = l, Depth of coat = d
■ Volume of paint for needed for covering area of (w)x(l) is (number of
coats)x(w)x(l)
○ Find total paint needed in cubic cm and convert to liters using suitable factor
○ Assume cost of 1 bucket of paint and it’s volume and use it to arrive at final
answer
● Similar cases
○ Paint all pillars in a metro station
○ Cost of painting all cars sold in a year
○ Water needed to submerge IIM Lucknow campus

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Revenue for Times of India
● Scoping/Assumptions
○ Only Time of India or Times group; Print and/or digital.
○ Cost per unit (as cost varies depending upon day of week) for print.
○ Click Through Rate (CTR) as proxy for digital Advertising revenue.
■ Alternatives - Impressions, conversion rate

● Methodology
○ Subscription
■ Rural revenue would be only from the High income segment.
■ Number of households = Population/Family size
■ Urban-Newspaper penetration = High income + Middle income
■ English newspaper penetration = 10%

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 ■ ToI market share = 30%
○ Advertisements
■ Total Ad area = (Number of pages) x (Total page area) x (Ad area/page)
= 20 x (60 x 40) x 25%
■ Price/area = 5000
■ Digital users = (High + Middle income Urban population) x (news readers)
■ CTR = 0.5%
■ Cost/Click = 10
● Similar cases
○ Number of Spotify subscribers
○ Revenue of India Today magazine

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Talent pool for Generative AI in India

● Scoping/Assumptions
○ Any specific level of employees or seniority
○ Workforce using Gen AI or contributing to its development

● Methodology
○ Hiring of fresh graduates or people working in similar roles
○ Hiring of fresh graduates
■ Estimate the number of colleges which have courses in Computer
Science and Engineering
■ Number of colleges/ universities based on number of states, colleges/
universities per state
■ Assume % of students in such courses
■ Assume % of students going in for niche job roles in Gen AI
○ People working in similar roles
■ SDE
■ ML engineers
■ Data Scientists
■ Academic researchers
○ Identify top companies in these roles

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● Similar cases
○ Number of Drone engineers in Asia
○ Number of total Aerospace engineers in next 5 years

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Industrial consumption of water
● Scoping/Assumptions
○ Geography to consider
○ Time period to cover
○ Specific industry to consider/ignore

● Methodology
○ Indian GDP - $4 tn
■ Agricultural - 20%
■ Industrial - 30% (= $1.2 trillion)
■ Services - 50%
○ Use COGS in the Income Statement as a proxy for water consumption
○ Assume that 2% of the revenue is the cost related to water consumption (= $24
billion)
○ Assume cost of water

● Similar cases
○ Industrial electricity consumption
○ Demand for fighter aircrafts

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Number of people crossing delhi airport in a day
● Scoping/Assumptions
○ What constitutes people - airport staff, people coming to drop/pick others
○ Cargo flights not to be considered
○ Time of the year and which airport
○ Domestic and/or international passengers
○ Special travel restrictions (eg: pandemics)

● Methodology
○ Passengers = (Total runways) x (Num of flights) x (Occupancy rate)
○ Estimate for domestic and use it as proxy for international
○ Use number of runways as the proxy factor (Domestic:Int’l = 60:40)
○ Divide the 24hrs into peak and non-peak hours.
■ Peak = 3am-8am & 4pm-9pm
■ Peak demand
● Domentic: 1take-off/ 2 min, Int’l: 1take-off/ 10 min
■ Non peak demand
● Domentic: 1take-off/ 5 min, Int’l: 1take-off/ 15 min
○ Flight capacity
■ Domestic: 150
■ Int’l: 250-300
● Similar cases
○ Passengers crossing a metro/train station
○ Footfall in a multiplex

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