Project managers are responsible for managing projects from start to finish, and this includes making sure that each phase of the project has the budget and resources it needs to keep running smoothly. No matter what your project management tool or methodology, there are certain elements that you need to make sure are in place.
One of these elements is forecasting, which will help you better anticipate the obstacles you may face during the project so you can work on fixing them before they become issues that derail your progress.
What is forecasting in Project Management?
This is simply predicting how much time it will take to finish your projects. When you can forecast project management it allows you to plan for upcoming projects much more easily than if you don’t use any at all.
Why is forecasting important?
When you’re managing a project, there are many things to account for. There are things that can cause stress and potentially derail your project’s success if you don’t think about them and prepare for them ahead of time.
Those things include everything from people factors (the human element) to external factors like unforeseen weather events. They also include cost management and accurate forecasting.
Cost forecasting is an important part of project management because it can determine your success or failure on any given project. To know whether or not you have enough money allotted in your budget to manage a specific set of tasks within a certain time frame, you need to be able to accurately forecast what those tasks will actually cost…and then adjust your spending as needed.
Accounting for all of these factors is the importance of forecasting in business management.
Project Forecasting Methods
There are several methods of forecasting and each project forecasting technique has its own benefits and drawbacks.
Planning Horizon Method
This approach uses three key factors – the work effort involved in completing each activity, time-varying risk, and resource allocation – to arrive at a more realistic assessment of how long projects actually take.
WBS (Work Breakdown Structure)
A work breakdown structure (WBS) is a project management deliverable that defines all of a project’s activities, components, deliverables, and scheduling detail. In short, it tells us what has to be done on a project to achieve its objectives.
Trend analysis involves looking at past project data to determine whether or not project performance is improving and then comparing that information with historical averages. When done over a long period of time, trend analysis can help you establish realistic expectations for future performance. It’s important to be clear about what you’re trying to predict and why before you start using trend data.
Historical Data Analysis
The Historical Data Analysis method is a forecasting technique that looks at past data to help predict future outcomes. The idea behind it is simple: if history repeats itself, then why not learn from it? It’s based on how our human brain naturally works.
The survey method is used when we want to find out information about something, such as what your customers think of a product or service. Surveys are an inexpensive and efficient way to get specific data. They also gather qualitative data (what participants say) as well as quantitative data (numbers and statistics).
Regression analysis is used to determine how one or more independent variables correlate with a dependent variable. In simple terms, regression analysis helps us understand how changing one thing will affect another thing. For example, forecasting retail sales can help you make decisions about staffing levels at your business and whether you should add an additional cash register. If sales are below projections, there may be too few registers and employees.
Six reasons why forecasting in Project Management matters
- Increases Accountability
Estimating and forecasting help managers hold team members accountable. Without it, they’re just asking team members to accomplish something without knowing if they’ll be able to get it done.
This is especially important when you have limited resources or funds. If you say I need you to get me these three things by Friday, but it’s really hard for your team member to predict whether he can deliver because he has no insight into how long that will take, then you’re not holding your team member accountable for results-you’re just asking them to do their best. That’s not enough.
You should be able to hold people accountable for meeting specific goals and deadlines. And if they’re going to miss those goals and deadlines, they should let you know as soon as possible so you can adjust accordingly.
2. Reduces Risk of Surprises
Keep your project on track and reduce risk by predicting upcoming challenges and problems. Developing a forecast will also help you identify potential obstacles early enough that you can take steps to avoid them, ensuring your project is on schedule and within budget.
Without a forecast, it can be hard to tell when or if you’re deviating from your plan so keeping it updated is crucial. Good project management software will allow you to see a quick snapshot of how things are going across all areas of your organization – making it easy for you to recognize problems before they turn into roadblocks.
Without accurate forecasting, it’s difficult to know what resources and tasks need attention first. This means that you could be putting out fires instead of preventing them and wasting valuable time and money on unnecessary activities.
Predicting future challenges allows you to take steps now that will help avoid them later on down the line. For example, by knowing that there may be a shortage of skilled workers during certain times of the year, you can start recruiting now instead of waiting until after your project has started. You could also decide to build in some extra time in case something goes wrong or schedule fewer projects at once so that resources aren’t spread too thin.
3. Ensures that Stakeholders are Engaged
You and your project team have a lot of work to do, from creating detailed plans to putting them into action. But one aspect that is often overlooked is explaining how each task helps your organization achieve its goals and, more importantly, what will happen if you don’t succeed.
By conveying these risks, you’ll help stakeholders understand why it’s so important to stay on track and why they should commit additional resources if something threatens to go awry. These insights can improve communication across teams and minimize risk management efforts later on. And there’s no better way to explain all of this than by forecasting possible outcomes with realistic timelines.
4. Enables Communication About Risks
It is impossible to prepare a detailed contingency plan without making forecasts. Without them, you can’t identify project risks and recommend strategies for dealing with them.
You won’t be able to tell stakeholders how likely certain risks are, how much they will cost to deal with if they occur, or how serious their consequences might be. When everyone on your team understands what’s at stake-and knows that someone else is watching for these potential problems – you’ll have far fewer crises to deal with.
5. Saves Time and Resources During Execution
Your project plan will provide a timeline for when various tasks will take place. By planning ahead and forecasting, you’ll be able to identify any risks or issues that could arise during execution and ensure you have a contingency plan prepared. This will save time and resources by helping you avoid potential setbacks, such as running out of supplies or missing deadlines.
These unexpected situations can easily throw off your entire schedule if they aren’t planned for ahead of time. In addition, it is easier to forecast when there are fewer changes being made throughout the course of execution. The more changes being made, the harder it is to predict what might happen next.
6. You Will Feel More Confident as a Leader
When you are able to predict how long a project is going to take and how much it will cost, your team will feel more confident about your leadership. People like working with leaders they can trust.
Your ability to forecast will show that you are confident in where you’re going which will earn the trust of your team and improve their motivation as a result. If you’re worried about being always right, remember that your team realizes that the forecast is a rough outline and that things will probably change down the line.
In conclusion, forecasting is important to the success of project management. It is used to ensure that you know where you stand and how you can prevent any surprises from derailing your progress.
Without it, projects can quickly spin out of control due to unexpected circumstances or even worse – budget changes. Therefore, it is important that every project manager considers forecasting an essential skill for managing projects successfully.