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24th Aug 2021
If you actively and systematically track the performance of your project during actual working hours, you can make educated predictions about what the final result might be.
Read on to discover how project forecasting has benefits that extend beyond a better night’s sleep, see forecasting examples, and hear expert tips from seasoned project professionals.
A forecast is a prediction of what will happen based on evidence or assumptions. In project management, forecasting means looking at the current status information and figuring out what the performance will be at the end of the project.
Forecasts are not wild guesses. They are thorough estimations or predictions based on a careful evaluation of all the information and knowledge at hand. Forecasts should be updated and reissued as the project progresses. Things change, and this will impact forecasts.
“The quality of your forecast always improves as you progress through a project. As time passes, your confidence improves because there is more actual project performance data in your estimate, and less need for crystal ball gazing.”
Les Carleton, Program Director
Les Carleton, Program Director
The success of any project is judged by how well it meets its performance targets. Most projects gain initial approval based on their forecasted outcomes. And many projects are at risk of cancellation if the forecasted outcome no longer stacks up. As project managers, we need to regularly update our forecasts so that the organisation can make the right decisions based on the latest information we have.
Project forecasting is an effective planning tool that helps management lessen the uncertainty. By using past and present data, analysing trends, and reporting regularly, decisions can be data-driven rather than shots in the dark. Effective project forecasting can:
As the project manager, you should be forecasting:
Your project schedule is a critical document that helps keep you on track to meet your deadlines. You’ll work out what tasks are needed, what order to do them in and how long they’ll each take. This helps you arrive at your project completion date. As the project progresses, you’ll monitor how each task is tracking against the plan, forecast the likely result, and adjust as needed to resolve any issues that arise.
Your performance against the budget forecast ultimately determines whether your project is a success. There’s a lot riding on this one. When you develop your budget, you’ll estimate all the labour, material, and operating costs associated with every project activity. During the project, you’ll need to track and monitor the actual spend against the budget and forecast the end result. This will help you quickly identify any issues and pull the project back on track before it’s too late.
Making sure you have all the resources you need to complete your project is essential. When building your budget, consider all the resources you need to create the deliverables and forecast the number of staff, equipment, and supplies. Once the project is underway, you’ll need to constantly monitor the resource usage and forecast and timeline remaining hours, materials, and equipment to ensure you’re still tracking well. Being over or under-resourced creates problems, so it’s important to keep reviewing and adjusting to keep the project on track.
Typically, projects are approved based on their business case and the commitment by the project team to deliver an outcome. It can be a trap to focus on just ticking off the tasks. Ensure each team member knows their role not just in completing the tasks but completing them well. If you don’t, you risk ending the project with a disappointing result that doesn’t achieve the performance or quality promised. This is no good for the business, team morale or your career. So, ensure you’re monitoring performance and check that you’re tracking for the result you need.
It’s a good idea to communicate uncertainty in your forecast, to manage expectations on the reliability of the outcome you’re predicting.
When you forecast, it’s ok to make statements such as:
This gives decision-makers some context to the variability that is always involved in forecasting.
There are some helpful online tools available to create probabilistic estimates, or your finance team may be able to assist.
Forecasts are essentially trying to predict the final result of projects. There are several techniques that you can use alone or in combination to establish your forecasts:
It’s a good idea to collaborate when forecasting. Actively check progress with the project team members because they are closest to the day to day issues they are encountering. Check with suppliers, as they might be able to see future issues with supply well before you can.
There are a couple of different approaches to forecasting as a team:
Forecasting capability in project management software is growing in popularity and there’s no shortage of options to choose from. Different platforms have their strengths and weaknesses, so do your due diligence if you’re going down this path.
Some advice from senior project professionals on taking your forecasting to the next level:
Forecasting is an essential skill for project managers. It’s all about being able to set expectations about how the project is going to turn out. Knowing how you’re tracking will give you confidence that you’re headed for post-project high-fives, plus you’ll have the chance to resolve issues before they are out of control.
As you progress through your project management career, it’s important to hone your skills and keep learning. Membership with a peak industry body, such as the Australian Institute of Project Management, is a great way to access resources, connect with other project professionals, and improve your career prospects.
Join now to unlock the benefits of Australia’s leading body for project professionals.
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