Estimating resource future demand and allocating those resources accordingly is not only important for managing your projects, but crucial to organizational success. Resource forecasting is an essential project management process that allows you to make informed decisions about future resource planning based on historical data, trends, and team goals. It’s a strategy that allows you to proactively manage your resources, prevent staffing bottlenecks, and deliver high quality projects. In this article, we’ll explain resource forecasting in detail, how it contributes to team and project health, and give you some tips on how to get started with resource forecasting.
Understanding Resource Forecasting
Resource forecasting is a strategy for determining future resource needs based on historical data and market trends. The resource forecasting approach allows you to determine the materials, tools, employee headcount, funds, and time allowance your team needs to complete a project. It’s a crucial part of project planning that, when done well, can result in optimal resource utilization and high-quality projects delivered on time and within scope. Resource forecasting bridges the gap between what is currently available and what you expect to need based on historical project data.
Resource Forecasting vs. Scheduling: Key Differences
Resource scheduling and resource forecasting are similar concepts, but they differ in a few key ways. Resource scheduling is the approach by which leaders allocate existing resources to specific tasks, projects or locations so that workloads are balanced and projects are completed efficiently. On the other hand, resource forecasting is a process for predicting future resource needs based on data about past project lifecycles and team goals. You can think of resource forecasting as a future-focused strategy, whereas resource scheduling is focused on managing resources in the here and now.
Key Factors in Resource Forecasting
There are several key components to a successful resource forecasting approach. The number one component is data.
You need to take a look at past project data to understand timelines, planned and actual resource usage, and project outcomes. Using past project data and historical resource usage is critical to accurate forecasts.
Second, it is important to leverage tools that ensure data accuracy. The right tool can help streamline data analysis and help you interpret your analytics without worrying about inaccuracies or inconsistencies in the numbers. PPM tools like Prism help this process, enabling you to make accurate and actionable resource forecasts.
The Benefits of Resource Forecasting
Whether we’re talking about equipment, funds, or staff, you don’t want to wind up empty-handed in the middle of a project. That’s why resource forecasting can be helpful. By using resource forecasting, your team will see:
- Enhanced efficiency through optimized resource allocation and utilization;
- Cost savings as a result of a reduction of wasted resources, which can help you avoid over-budgeting.
- Improved planning, since you’ll be aligning resources with project timelines and goals;
- Mitigated risk of potential bottlenecks or shortages;
- Increased agility, which allows you to quickly adapt to changing project demands or priorities;
- Better collaboration, because you’ll experience improved communication and alignment across teams.
As Benjamin Franklin famously said, “If you fail to plan, you’re planning to fail.” This rings true for Resource forecasting and serves as a reminder of the importance of proper planning at every stage of a project.
How to Perform Resource Forecasting: Techniques and Steps
How do you get started with resource forecasting? Try using the following steps as a blueprint for designing your resource management strategy.
Step one: Analyze past projects and resource usage. Understanding historical project data will help you map out what you’ll need for your current project. Consider all of your resources, including time, materials, tools, staffing, and financial limitations.
Step two: With that data, dig deep to identify any trends or patterns. For example, if you notice you consistently overallocate staff on certain types of projects, leaving them underutilized and unavailable for other work, make note of that and use that information in the following steps.
Step three: Evaluate your current resource availability and the specific skills your project team possesses. Your teammates may have skills that aren’t being put to use, so this aspect of your resource arsenal is important to note.
Step four: Forecast future resource demand using techniques like capacity planning, scenario planning, and predictive analytics. In our previous example, if you consistently use overallocated staff, you can make a plan to avoid doing so in the future by using strategies like resource leveling to make more conservative estimates in line with past actual hours required, while still ensuring those hours are directed at the most important tasks.
Step five: Develop multiple scenarios to adapt to changing priorities. You want to be prepared for anything, so drafting more than one resourcing scenario will ensure you’re ready for anything in case demand or project goals change. Alternatively, you can use a platform like Prism PPM to create “what if” scenarios as new issues come up, giving you the ability to recast resource plans with real data at any time.
Step six: Regularly refine forecasts based on feedback and new information. Consistent communication and resource check-ins are important. Regularly evaluating your resource strategy over time will help you identify any snags in real time, so you can overcome obstacles as they arise. A tool like Prism PPM can help you keep tabs on your data in one place and highlight any trends or problem areas with your resourcing strategy early, empowering you to switch gears when needed.
Real-World Applications of Resource Forecasting
Here’s a real world example of resource forecasting in action. A recent case study with the City of Roseville’s Electric and Environmental Utilities departments highlights the struggle to balance joint project staffing with their regular workloads. Because both departments were sharing staff on joint projects while also running their respective projects, the challenge lay in ensuring resource levels were communicated effectively and distributed evenly without anyone becoming overutilized.
In order to solve this issue, both departments leveraged Prism PPM to elevate transparency when it came to resourcing and were able to standardize their project plans and create “what if” scenarios using Prism PPM’s forecasting tools to accurately predict resourcing requirements. Because of this, both departments were able to deliver on all projects more effectively, avoiding staff overallocation, removing the fear of employee burnout, and improving inter-department collaboration.
Key Challenges and How to Overcome Them
Resource forecasting can make your whole resource planning strategy run smoother, but it’s not without its challenges. There are a handful of factors that can make resource forecasting and allocation difficult, and being aware of these can help you avoid making avoidable mistakes.
- For one, since resource forecasting relies so heavily on data analysis, it can be negatively impacted by incomplete or faulty data streams. You’ll want to be sure the data you use to create forecasts is high quality, up to date, and gives you a full picture of your resource needs.
- Automated resource planning software tools can be immensely helpful for collecting and storing data, but adopting them and training teams on using them can be a learning curve.
- Rapid changes to project priorities can also lead to issues, as can misalignment or miscommunication between stakeholders. It’s crucial to keep lines of communication open and to make a plan for training all relevant parties on the tools you plan to use to keep track of your data.
- Not using standard project types or structured project plans can leave you without the data you need to accurately forecast, as you have nothing similar to base your future project on
Best Practices for Long-Term Forecasting Success
Resource forecasting can support your team’s success and the health of your projects in the long run by allowing you to proactively plan, manage, and optimize your resource usage. In order to make sure your forecasting efforts are sustainable long term, be sure to follow these best practices:
- Regularly update forecasts to reflect real-time changes. Keeping your data up-to-date consistently will enable you to make informed decisions.
- Involve stakeholders in the forecasting process for better alignment. Communication is everything, and fostering regular conversations about your forecasting strategy will help you fine tune it, while getting executive buy-in.
- Use historical data as a baseline.. Analyze past projects, identify trends, and use what you know to plan for future demand.
- Monitor and refine forecasting accuracy through feedback and iterative improvements. Your project and demand landscapes are always evolving, and your resource forecasting efforts should evolve alongside them.
Implementing Resource Forecasting in Your Organization
Ready to start testing out resource forecasting for yourself? Here are some steps you can take to get started exploring this strategy for your team.
Step one: Audit current processes and identify gaps. What’s working currently, and what isn’t? Where can you improve your resource management strategy, and are any of your resources particularly strained? Beginning by identifying your strengths and weaknesses is a great way to figure out what areas you need to tend to.
Step two: Define goals and metrics for forecasting success. To know your forecasting efforts are working, you’ll need a concrete way to measure your wins. For example, if your goal is to optimize your human resource utilization, metrics like percent time utilized on strategic projects can come in handy.
Step three: Select tools that align with your resourcing needs and goals. When it comes to resource forecasting for projects, an integrated tool like project portfolio management software is key.. A PPM with built-in resource management,like Prism PPM, will help you consolidate resource data,, provide you with real-time updates, and support detailed task allocation and schedule management.
Step four: Train teams on forecasting techniques and tool usage. Set aside time in everyone’s schedule to get them acquainted with your forecasting plan and get them collaborating in the tool you plan on using. That way, all stakeholders are on the same page and can all contribute to your resource management plan’s success.
Step five: Start small before scaling forecasting organization-wide. Don’t bite off more than you can chew – get started with resource forecasting on lower profile projects, or a single department, and keep an eye on what works and what doesn’t. Testing your plan on a smaller scale will help you become comfortable with the associated processes, allowing you to improve them and increase your likelihood of success when it’s time to scale.
Tools That Simplify Resource Forecasting
As mentioned earlier, data is a central component of successful resource forecasting. But managing it all, and making correct use of it, can be time consuming and prone to errors without the right tools. A good resource forecasting solution can streamline your strategy, automate repetitive processes, and empower you to scale your plan with ease. When seeking out a resource forecasting tool, look for the following key features:
- Real-time data, structured data visualizations, and customizable reporting,
- Forecasting models and scenario planning,
- Intuitive interfaces and ease of use,
- Compatibility with project management processes and project governance workflows
Seeking a tool that supports all these functions? Look no further than Prism PPM. Our best-in-class resource management capabilities include resource forecasting and scheduling customizable workflows, detailed project planning and templates, and integration with external platforms like Jira.
After reading this article, you now understand how resource forecasting supports project success. If you’re looking for the right tool to help you get started with resource forecasting, book a demo with us to learn how Prism PPM can support your resource management and more.