The Definitive Guide to Project Forecasting Techniques

Last updated on September 6, 2018

By

Every project invites an adrenaline rush associated with using real knowledge, skills and product awareness onto a practical application. And while the intent to bring about a change remains, your way forward is marred by the fact that project risks and challenges go with the territory.

Forecasting readies you for these ‘attacks’ by letting you know what lies ahead. Every project manager knows when to expect progress updates on ongoing projects from experience alone. But as one yourself, you’d also want to know the chances you should take on future opportunities. And with it, the value addition your decisions stand to bring.

Project forecasting techniques improves the accuracy with which you make your estimates for the future. The type of forecasting you do, however, depends on your role and which technique is likely to benefit you the most and least. The whole idea behind it is to ensure your profits outstrip your losses by a wide margin. And this starts by getting resources from all departments talking.

By filling you in on the data they’ve been using so far as well as what’s missing, incomplete or inaccurate, you’ll pool measurable and relevant quantities straight into a digital master repository that your staff can refer to as and when needed. What’s more, you’re assured of your data remaining safe and streamed to the right parties by role, team size and department. For example, your accounting department would benefit from knowing previous project quotes sent out but wouldn’t be able to access staff profiles from within a resource scheduling software. Consequently, they use data solely relevant for number crunching as new bids arrive on the scene.

Project Forecasting Techniques

Here’re the steps you’d need to get your forecasting techniques right

1. Align Project Priorities to Team Efforts

Forecasting is the driving force behind demand management. It predicts the likelihood and quantity of foreseeable work, giving your staff the heads up they need to prepare for it appropriately. This way, even if a pipelined opportunity doesn’t convert, your team’s knowledge around changing requirements remains updated and ready for deployment.

Once your resources are oriented around the enterprise’s objectives, not only are their individual priorities clarified at the earliest but they also get to see the business value tied to the task they’re working on.

Since there’s no force fit of your team’s efforts with complicated work thrown in the last minute, their collaborations become effective. Moreover, they’d be better equipped to accelerate project delivery if they’re handed as much information as possible, which lets them reuse earlier work or work alongside temporary resources possessing hyper specialized skills. For projects of a similar nature, this means your time to realize value and time to market a new launch is greatly reduced.

2. Use the Lessons Learned to Communicate and Collaborate

For Any project forecasting technique to succeed, your stakeholders and project teams have to stay closely involved and engaged throughout the process. Nothing moves forward without their consent and this includes their input on the technique you should consider adopting. Besides, your stakeholders are invested in the company’s best interests, meaning that they’d know which techniques benefit the firm the most.

Since preprogrammed work schedules and busy periods dictate people’s availability, not everyone whose input is required for this exercise will be ready to sit down with you when you need them. This is where lessons learned on previous project reviews come in handy. It lets you present to your stakeholders the action items, task breakdown and time taken to reach milestones. It also lets them see if rigorous quality checks were applied at each stage of the project lifecycle to ensure that the deliverables agreed upon matched client expectations. Further, it documents the contingency plans that were in place to help your teams resolve conflicts and escalate issues to concerned project experts.

Lessons learned pose a key benefit to your project teams as well. When you take on several projects of a similar nature, future teams will be able to recycle information from the lessons learned documented extensively by their colleagues, thus minimizing chances of rework. As time passes, it gives them a comprehensive overview of the routes that did and didn’t work. Besides, it also informs them of the data critical to get workflows going as planned and whether time or budget constraints were introduced as a result of working on the wrong action items.

Collaborative efforts let your teams recount their experiences in time to optimize effort investments on future projects. Consequently, you’ll not only commit them to projects that maximize their skills but also invite projects with defined deliverables . Further, it lets them outline the work influx, changes requested versus how many were practically doable as well as the risk mitigation measures taken.

Project Forecasting

3. Expert Opinion with Subjective Forecasting

It’s fairly easy to predict how the coming week’s work packages will look like, given that you’ve already assigned them to the right and available resources and don’t foresee a complete change thwarting the course of action. But what guarantee exists that the resources you require 2-5 years down the road would be available to take up project activities?

A project manager who has seen it all and borne witness to projects crashing would give you numbers that reflect factual accuracy. Not only can they manage stakeholder expectations but can also level their team’s efforts against what is practically possible. Subjective forecasting combines a project manager’s guesswork with earned value to give you management estimates.

This project forecasting technique is particularly useful when you have little data to begin with and while working with a time constraint that compromises objectivity. Subjective forecasting relies on expert opinion and educated guesses based on previous project history.

Changes in technology can drastically alter the business landscape if you continue to rely on skills that are obsolete in the current market. In order to penetrate the market successfully, you’d need to make use of judgmental methods that draw from a wealth of personal experience on why, how and where fluctuations interests in a particular range of products rise. While it is the question of making an educated guess, subjective forecasting extrapolates data from surveys and lets you rewrite scenarios by incorporating assertions and observations made by previous project experts.

4. Time-Series Forecasting

Time series refers to historic data spanning days, weeks, months or even years on end. It serves as a comparator that tells you the mistakes made on previous projects and how to perform damage control if the same mistakes repeat on current work.

Given that time series data is historical, it decomposes down to 4 components, those being:

a. Trend: Data that encompasses an increase or decrease in behavior over time. It factors in current project spending and extrapolates the rate at which spending happens till the project closes.
b. Seasonal: This data repeats and creates a pattern that’s easily identifiable and captured.
c. Cyclical: A pattern is said to follow a cyclical outlook if quantities rise and fall periodically. While seasonal and cyclical fluctuations sound similar, the difference between the two lies in the fact that information changes even as the period you’re considering remains the same.
d. Random: Better known as ‘noise’ or unknown-unknowns, random data leaves a question mark in terms of its likelihood, importance, impact and relevance. You can’t afford to completely dismiss it nor factor it in so it is left in until clarity over where it applies and fits is received.

5. What-If Projections

When you tweak project scenarios you inadvertently bring out their best and worst features. This lets you discover those factors that are detrimental to project health in the long run and the extent of constraint overruns before making the decision to go full steam ahead.

What-if scenarios project different outputs based on the inputs you provide, letting you monitor deviations to normal and expected behavior. It lets you verify claims of a particular method working and prevents anyone from falsifying or doctoring data. It ensures that a project constrained by resources don’t have cost and schedule overruns by levelling actual and planned costs and hours.

Now that you’ve found an area that rightfully utilizes the phrase, ‘your guess is as good as mine’, tell us which of these techniques worked for you and your project teams as a whole!

FREE eBook

The Definitive Guide for Resource Planning and Forecasting

Download

Namratha Mohan

Comments are closed.

Recommended Articles

Book your free customized trial today

See how intuitive and effective our resource management solutions is by booking in a free, custom-configured trial.