I have a business in which I contract with my clients to perform work for them for an indefinite amount of time. To forecast my profitability, I need to forecast when my existing contracts will end. I have historical data from which I made a simple function to estimate the likelihood that a contract ends as a function of the age of the contract (how many weeks the contract has been active). This runoff function is a simple table
|Age in weeks||% of remaining contracts that end (Runoff %)|
I then take each contract and look up its expected Runoff % for the next week and sum those %'s to get the total number of contracts expected to end. I continue this process for each week in the forecast (increasing each contracts age by 1 as the weeks move forward).
To test whether this is a good estimator, I have looked at forecasting just 1 week into the future. Thus I estimate next week's number of contracts that will end and compare that to the actual number of contracts that ended.
What statistical test should I run to determine whether the estimator is a good one and at what confidence level?
I looked at chi-square tests, but they look to apply to categorical data and so does not appear to apply here.