Project management forecasting is an exercise to predict the end results of a work endeavor. It comprises aspects like historical data and trend analysis. Also, the project cost should align with the quantitative data and project budget. Hence, project forecasts are essential for securing the go-ahead.
A good forecasting technique is all but necessary for getting a project underway. It projects all important aspects, including the project success rate. However, the project manager should keep on adding data to the forecast for better accuracy.
Project Management Forecasting – A Definition
Forecasts revolve around assumptions of the various endpoints of a project. The analysis changes as the project continues within a shifting time frame. However, random variations make the project duration hard to predict. Still, honing in on future performance remains a feasible goal when starting with project forecasting.
The 20%-40% mark of the project completion is relevant for this method. Taking a look back at those points in time speaks volumes about the project’s trajectory. Once you have enough data, compare the current standing with the original estimate.
Project Management Forecasting – Common Uses
Assessing the Total Duration
Before the start of the project, project managers must have an idea of the ballpark regarding the timeframe. This ties in with the supposed target the projects should meet in the end. To reduce risk, the project team first focuses on resource management.
Trend Analysis
Extrapolating the end results of similar projects can shed light on the optimal resource allocation path. If prior projects show a linear trend, the survey method can produce accurate forecasting of the total project cost.
Qualitative Data
To realistically forecast performance, you need to focus on deliverables. This means keeping an eye on all developments after the planning stage concludes. So, the forecasting tool gauges project performance each step of the way via fresh data.
Proper Budget Planning
The size of your staff and necessary equipment add to the starting cost of a project. However, theater stages introduce more space for sudden expenses. That’s why forecasting resource usage involves all of the possible outcomes.
To avoid overreaching, you’ll need to plan ahead and prepare for the first case scenario. When dealing with a looming deadline, fine-tuning the remaining hours is even more important. Therefore, carefully weigh in any dependent variable when forecasting project activity.
Essential Tips for Forecasting
Focus on the Immediate Future
While historical data analysis is a helpful method, forecasting focuses on more pressing matters. Thus, an effective forecast project management yields currently applicable results. As the situation develops, up-to-date data becomes more prevalent.
Reduce the Risk Factor
All forecasting techniques aim to unmask the upcoming hardships. Even when dealing with fewer projects, you shouldn’t rely on regression analysis as a last resort.
Prevent Deviations From the Critical Path
When juggling multiple projects at once, the straight line may become blurred. Next, accidental mishaps start to multiply and hurt your budget. Hence, prepare for such situations during the forecasting phase.
Ensure Proper Cash Flow
Updating the monthly figures results in actionable quality markers. The resource costs may also change over time, producing new cash flow issues later. To avoid such corners, include only relevant data in your calculations.
Aim for Milestones and Achievements
Successfully clearing a project goal can mean many things. A myriad of factors, like the list of objectives and projected costs, funnel into this assertion. Thus, project managers direct the workflow to ensure a smooth string of completed sub-tasks.
Gain Usable Insight
Forecasting can help you stay resourceful when dealing with various targets at once. Adjusting your plans within the forecasting process is a smart way to keep everything in check. That way, you’ll have an easier time micromanaging the competing tasks.
Fulfill Client Demands
Knowing when to outsource certain tasks can take much of the pressure off. Yet, such execution relies on the usable knowledge at hand.
If done correctly, maneuvering outside of the base team can easily result in a satisfied client.
Shoot for the Projected Project Completion Date
Any project forecasting technique puts extra attention on resource costs. Having the means to cover ongoing expenses across multiple projects is the end goal. At the same time, assigning each team member to a fitting role is equally important.
Hence, when forecasting, focus on what each person can do and how much a task will cost you. Then, derive the optimal way to spread your resources and leave nothing up to chance. This ties in with the goal of passing a given profit margin.
Forecasting Basic Techniques
Qualitative Forecasting Technique
Taking expert opinion into account is as important as using raw numbers and data. At the start of the project, relying on such insights can paint a detailed picture of what to expect. Plus, you probably won’t have actual numbers to orient upon at that stage.
Similarly, trying your hand at a new business model requires qualitative forecasting most of the time. It may even allow you to project results way further down the line. However, which path you’ll take will depend on your personal judgment.
Quantitative Forecasting Technique
Short-term forecasting often uses measurable data to gauge performances. So, it focuses on the project tasks completed thus far to summarize the total project progress. For example, using actual sales numbers can show you what to expect later on.
This method uses applicable patterns and historical data as well. Also, take the full scope of the project into account when predicting the final outcome. Here are a few examples of relevant techniques for this:
Trend analysis
Trend projections (straight-line forecasting) revolve around spotting trends and deciding whether to follow them.
To that end, this method uses current project spending data. Although often rough estimates, such approaches correlate with the goal of profitability.
Cost-benefit analysis
This method starts by shortlisting the costs, benefits, and other values a project entails. Next, it’s about comparing the end outcome of one ongoing task with another prospect.
That way, managers can better decide how to allocate resources and prioritize certain tasks.
Break-even analysis
As the name implies, this method focuses on whether a project can be worth its initial costs.
Thus, investors will know if a given series of tasks may lead to a wanted result. In other words, if an endeavor can generate enough funds to at least cover for itself.
Forecasting Tips and Tricks
Organize All Relevant Data
Project managers should start by grouping the available data. This task often includes sheets and various software.
Know Your Team Members
Successful forecasting demands having detailed insight into your team primarily. So, make sure to take their strong suits into account when assigning new roles. Also, consider expanding their skill set and finding a fitting position for each.
Don’t Rely Solely on Historical Data
While a great starting point, historical data shouldn’t linger in focus later on. Instead, you should keep on populating the timeline with fresh data and look for patterns.
Calculate Proper Leeway
Even the most accurate forecasting report will start showing dents at some point. Hence, remember to input buffer time between tasks to ensure you won’t lag behind.
In other words, don’t underestimate a task and create more issues once the project begins.
Have Multiple Plan Bs
Instead of going all in on one forecasting effort, it’s better to craft several that you can later combine. Randomness is always a factor in forecasting, so covering as many fronts as you can, should be your main goal.
Present Your Findings Clearly
Cost estimation is a key principle of forecasting, but knowing how to present it is also pivotal. Therefore, once you collaborate with the right team to gather data, ensure to document it well. Afterward, all team members will easily get up to speed in terms of performance.
Identify Project Blockers
Recurring problems may combine, escalate or even sink a project. To prevent such an end, diligently observe the workflow. If there are common pain points, do all that’s necessary to remove them.
Take a Thorough Look Back
Before your next project, review your starting forecast for the recently completed one. Focus on the costs of each phase and your teams’ efficacy. If the actual timeline differs a lot from the projected one, try to learn from your mistakes.
Conclusion on Project Management Forecasting
Laying down a basic outline of how a project should evolve is a worthwhile effort. Good project forecasting relies on both historical data and current market trends. As such, the prediction shows how a project might end in the best-case scenario. In that sense, it can even signal when an idea can’t produce enough of a bang, to begin with.
After the start of the project, forecasting can show your current metrics and performance. Enriching such data with more variables will make for a more accurate estimate. However, real-time changes may happen at a much faster rate still. Therefore, it’s best to walk in prepared for as many unforeseen developments as you can.
If you liked this article talking about project management forecasting, you should check out this one with innovation frameworks.
I also wrote about similar topics like project management techniques, what is crashing in project management, what is a war room, the s-curve in project management, lag time in project management, and primary and secondary stakeholders.
