July 22, 2022
General
Masooma Memon

8 Steps to Better Project Forecasting (Despite Change)

Without project forecasting, it can be very difficult to stay on track with your projects. Learn how to improve it and make sure you're not spending too much time on something that isn't going to produce results.

When it comes to planning projects, there are a lot of things you have to think about before you can get started. How much time will it take? What will the total cost be? Will your team have to work overtime? These are all important questions that need to be answered before you can start working on your project.

And while you might be able to answer some of these questions by looking at past projects or similar ones in the industry, there's no guarantee that they'll apply here. That's where project forecasting comes into play: It sheds light on how much time, money, and resources their projects will consume.

What is project forecasting?

Project forecasting is a process that helps you predict the future of your projects. It involves analyzing historical data and resources available to make assumptions about project success. 

In other words, project forecasting answers the question what it takes to deliver a successful project and how to reduce risk.

Even though most project forecasts are off beam, they could still be valuable. Here's an example. 

Project forecasting example

Say a client comes in with a request for creating and executing their social media marketing.

Based on the work our example social media marketing agency has done in the past, the project team will be having an idea of the work that’ll go into the project. However, roughly estimating the time frame without first checking in on resource availability won’t help.

What’s needed then is an effective project forecast. It’ll help understand:

  • The work that’ll go into the entire project (from strategizing to scheduling social posts on the client’s social profiles)
  • The time each phase of this project will take and whether the team has the bandwidth to dedicate the time the project needs.
  • The employees that’ll be responsible for taking this project from start to finish. Also important here is checking whether the project team needed is available (has the capacity to take on the work including what you’d do in case someone needs an emergency off).

If this project comes from an old or retainer client and they request specific team members to work on the project tasks, you’ll need to check in their availability too.

Your project forecast will also change if the client requests urgent delivery. In that case, you’ll not only need to keep tabs on resource availability but also consider any schedule clashes for other projects in the pipeline.

Why is project forecasting important?

Project management as a whole is all about making smart decisions, so it should come as no surprise that project forecasting is essential for making good decisions about your projects. If you want to be able to react quickly and effectively when changes occur, then having strong forecasting capabilities will be crucial.

Project forecasting helps you to plan for any changes that could affect your project's schedule or budget. It also helps you determine how much time and money will be necessary in order to complete each phase of the project, which makes it easier for everyone involved in the project—from managers down through individual contributors—to know exactly what they need from each other at any given point along the way.

When should you start project forecasting?

The best time to start project forecasting is before you begin your project. Your team should get together and discuss what they think the ideal outcome of the project will be, then create a list of goals based on those expectations. As you progress through each phase of your project, revisit this list and adjust it accordingly. This allows you to keep track of how well your team is performing compared with its goals.

When should you forecast at the beginning? Forecasting at the beginning gives everyone an idea about where they need to focus their efforts. If there are any major obstacles or difficult tasks ahead, then this helps everyone prepare for them beforehand so that they can deal with them when they come up later in development stages. It also gives people ideas about what kind of skills might be needed for certain jobs as well as how much time each job will take as part of overall development work flow schedule

Who should be involved in project forecasting?

Project forecasting is a collaborative process. Therefore, it's important to get everyone involved. From the project manager down to stakeholders and team members, everyone has a stake in the outcome of your forecasts.

Key elements to focus on in a project forecast

Before we dive into how you can create a project forecast, let’s walk you through three key elements to focus on when forecasting: 

  • Duration

This is the time that goes into the entire project. To make sure you’re making an accurate forecast, break down the project into phases and/or tasks. Then note how much time each phase will take. 

If you’ve been using a project management software that helps you track the time that goes into projects, you’ll know what duration similar tasks have taken. This, in turn, will assist in allotting time to each project task/phase.

If you’re new to project management and forecasting though, collaborate with team members — asking them how long it’ll take to complete a specific task. 

  • Cost

Again, start with breaking down the project into individual tasks. 

Analyze how much each task would cost based on the charges of the people responsible for completing those tasks. Estimate the cost of the tools and the taxes involved as well. You’ll also want to factor in your project margin at this point.

If it’s an urgent project, make sure you pencil in urgent costs. For example, the cost for moving your defined project schedule around or for bringing on board a subcontractor.

If you already have a full grip on your resource management, it should be fairly simple to estimate resource costs and, by extension, the overall estimated cost of the project.

  • Quality

Finally, the quality of the work deliverables is also important because the more your focus is on quality, the more time the project will take. What’s more, the expertise of the people who’ll work on the project will also be different, changing up its cost and duration estimates.

Essentially, quality isn’t something to compromise with. Even so, quality markers vary from project to project.

For instance, you might be working on prototypes or completing template-based tasks for a project. So make sure you also estimate the quality of the work involved as part of your forecasting process. 

How do you create a project forecast?

Creating a project forecast using a forecasting tool like Runn is easy. On the dashboard, it gives you:

  • Resources availability
  • Project financials including budget and pricing model
  • Project reports updated in real-time

On the left-hand side of the Project Planner, you can view all your projects. By hovering over the project icon there, you can see the project budget — access it anytime for a quick overview of the budget. 

On the right side, you’ll see a Gantt chart showing how much time each assignment under different project phases is consuming and how it’s adding to the overall project costs.

As you change the time estimates of these tasks, the overall project budget will update in real-time — helping you get an estimate of how increasing time on the various project aspects will impact the overall budget.

You can also see the total hours that you dedicate to the project (on the main menu on the left-hand side) change. This way, you can see how over budget and over time you can go when the time dedicated to the project tasks changes.

For a full overview of the project financial information, check our reports. Runn will do all the math for you, so you'll see:

  • Project Budget
  • Project Revenue
  • Overbudget
  • Project People Costs
  • Project Gross Profits
  • Margin

8 steps to improved project forecasting

1. Get organized

When you're managing projects, your first step is to get organized. You can't forecast what you don't know about, and for that reason it's important to keep track of everything that goes into a project. Some people use spreadsheets to organize their information, but if you're looking for a more streamlined experience consider using a project management software like Runn.

2. Use a combination of historical data and a forecasting tool

You probably already have a pretty good idea of what your revenue and expenses look like over the course of a year. It's easy enough to get a sense of how much money you're bringing in, and how much money you're spending on supplies or employees or rent or whatever else.

 But if you want to predict how much money you'll make or spend in the future—and how long that might take—you need historical information and a way to populate it on a new timeline..

For example, let's say that you had a really busy month last month, with tons of new clients coming in and lots of projects getting done. That means that your revenue was high and your expenses were low. Now let's say that this month has been less busy: fewer clients and fewer projects have come through the door than usual. That means lower revenue and higher expenses than usual for this month so far!

If all you had was today's data—without knowing anything about last month—you wouldn't be able to figure out whether things are going better or worse than usual overall for this period of time because there are fluctuations every day depending on what happens.

3. Create many forecasts, not one

It's best to create various forecasts than aim for perfect a single one, HBR reports. The idea that an expert's individual judgement is often no better than a random guess is pretty well established in the scientific community. But it's also true that combining multiple, independent judgments can be more likely to yield an accurate answer.

So what happens when you combine multiple, independent judgments? When a group of people make predictions about something - whether it's how much rain will fall in California this year or how many people will attend a football game - looking at forecasts in aggregate can reveal what the group knows collectively about a topic. 

After all, two heads are better than one!

4. Get to know your resources better

The better you know the people working with you, the better you can forecast projects. Keep a record of both your staff’s charges and skills.

To add, record what new skills employees have learned and what projects they’ve shown interest in taking on (this is essential for human resource planning too).

Lastly, keep tabs on the work on each employee’s plate. Have they been overloaded with work lately? Is their vacation time due soon?

Review all of these factors when creating your project forecasts. For example, knowing an employee is due to take their paternity leave helps you plan the new project with another available employee on board.

Similarly, you can plan to assign project tasks to members who’ve shared an interest in the project type or those who have been seeing a lot of bench time.

Whatever the case may be, having a strong grip on your resources’ profiles and availability speeds up project forecasting.

5. Schedule in buffer time

Despite the forecasting tool you are using or how experienced you are, uncertainty is common — even if it doesn’t show regularly.

This is why it’s important you add buffer time before agreeing to a project completion date. Not only does it save in times of uncertainty but also in cases of planning fallacy (when humans tend to underestimate the time that goes into completing tasks). 

6. Clearly communicate project forecasts

After you’ve collaborated with the right people for creating your forecast and documented it, make sure you communicate it well too.

This helps with effective project management and for ensuring all project phases and tasks remain on the planned schedule. 

Using a forecasting software that serves as a project management tool helps with this. It allows you to break down projects into tasks that you can then assign to individuals with a due date. 

7. Track each project’s performance

Project forecasts are estimates. Both external and internal factors can derail them.

Adding buffer time adds some flexibility to these forecasts. But to ensure you can build a reputation of always delivering on time and satisfying clients, keep tabs on project progress.

Track how well tasks are moving as per schedule. This helps you see how accurate your forecasts are and identify any project blockers so you can jump in and resolve them before issues escalate.

Keeping an eye on project progress also helps you communicate any schedule changes or budget overruns with your client. In turn, this ensures you’re communicating well and on time with your clients. 

8. Review each project after its completion

The idea is simple: after a project hits its finish line, go back to its forecast to study how well the real-life timeline and costs match the original estimate.

This helps you learn where your past project forecast was lacking and how you can improve future estimates. It is also what helps you make sure the forecast outcome for the next project is closer to accurate.

What’s more, batch review similar projects together for an idea of what those projects typically cost and how much time and work go into them.

Bonus tip: Keep a record of time overruns. Then add the extra time to your future project forecast.

Project forecasting is essential for managing your projects. You can use it to predict the time needed for each task, or even to estimate how much money your project will cost. It's also a great way of keeping track of how things are going, because when something goes wrong you'll know exactly what caused the problem before it becomes too big! But remember that while having good data helps with forecasting accuracy, there are still many variables involved in any given situation - so don't rely solely on forecasts; instead, also keep an eye out for changes as they happen.

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