5 Ways to Get Project Forecasting Right

Author: Tim Short

Predict and mitigate project risk to delight PSO customers and stakeholders

Projects are a complicated process with many moving pieces and factors to consider. Each stage of the project lifecycle brings upon its own set of challenges, but in my experience, the better you can forecast your project, the higher likelihood of success you will see. As important as forecasting is, it is often undervalued or overlooked altogether, with higher emphasis on the execution phase. I believe this to be a huge error for any project manager, and a severely missed opportunity for a PMO or PSO leader.

Forecast or flounder

If you’re in the project business, it’s pretty clear that you’ll need to forecast your promises to the organization and make sure you are able to deliver on them. In the professional services world, this is even more true. Guide stakeholder expectations, manage budgets, and accurately predict risk to project outcomes with better forecasting. Let’s say you’re pitching a new client and are about to sign a contract. If you can manage expectations with the client and with your finance department about how long the contract will last and the resources it will need, you’ll build a collaborative environment where everyone is pulling for the same definition of success—not just for their project, but for overall enterprise goals.   

Limited tools, manual processes, and moving targets can make this process challenging. But if you’re armed and ready with accurate data, you’ll be able to advise and make better decisions on where changes need to be made. Resource allocation tools that provide visibility and transparency for all your project team members help you “back into” project forecasts using historic data from a library of templates. These templates hold the key to your ability to either turn a profit for your PSO or, if you’re IT, aggravate your executive sponsors and overcharge their cost centers to the consternation of everyone involved. Does your PSO include easy-to-use resource and role-skills libraries with costs attached to each one? Does it work with multiple project methodologies? If so, you can forecast and create assignments that provide more project success than ever.

Forecasting is important for organizations and professional services in particular because it forms a commitment to the organization and builds both credibility and trust. Your forecast is your commitment on what you plan to deliver – and the closer you get to delivering on exactly what you promised, the more trust you’ll gain from the organization. But of course, forecasting is not easy to do – for it to be impactful, it should happen intermittently and continuously to account for changes along the way. To begin, you’ll need to gain command of your project resourcing capabilities.

Right now, and for the foreseeable future, the answer is “no”

Gaining an end-to-end view of all of your resources, as well as the percent you’ve already utilized, might be the easiest metric you can get and the one that gives you the most insight about project capacity. However, being able to communicate about what the utilization number means from a thousand-foot approach is sometimes trickier, and even more crucial. You’ll need this data to be able to say “no” to a noisy sponsor’s pet project. Even if you need to say “yes,” capacity visualization among all of your projects allows you to communicate the impact of whatever is coming next as accurately and consistently as possible. You need to lock in a demand planning protocol that everyone can live with. Whether that’s more accurate intake templates or scoring models, forecasting is the taproot that feeds better decisions and knowing what is coming your way is the first step.

That’s not too good to be true. Resource management success—no matter what’s thrown at you, should include every single datapoint in the portfolio. Taking on commitments and following through builds trust. If you’re always complaining about your resource issues to those who will sign off on getting you relief, you’ll not be perceived as a business partner. Once you can prove the shortfalls to executives using one or two screens and hard numbers, you’ll have better luck and their perception of your professional abilities as a project leader will improve. Forecasting both consistently and intermittently will create a predictable PSO and allow you to get your forecasting more accurate with each iteration. As you deliver more often, you can strategically focus on the projects that add more business value.

It's all about the resources

Once you’ve got a handle on resource capacity constraints and a realistic view of demand coming your way, you can then start to outline what you can – and can’t – take on. From there, it is important to either accept that you will not be able to accomplish everything that is coming your way, make a plan to prioritize what is important and get to the rest later, or make a case for more resources if there is important work that just won’t fit in the forecast. In any case, there are decisions to be made at this point, and it is important to communicate the constraints of the organization to understand and proceed with the best course of action.

Resourcing is usually the hardest part. Not only are you constantly hitting moving targets with project needs changing, it’s also a matter of people shifting roles, updating skills, being added/removed and any number of other changes that impact your resource pool. It is important to make plans and contingent plans for your highest priority projects so they are always moving forward.

Five things to do now to improve project forecasting

To understand the impact of taking on work that’s outside the scope of what’s already been planned, your forecasts must be accurate. Then, you can have a reasonable discussion when milestones are going to be missed or met—is the investment to get back on track too much to be borne? Go- or no-go decisions on these “yellows” in your portfolio can eat up the bottom line if you’re not working from a single version of the truth that reflects everything that’s going on. Here are five activities to start building your project forecasting activity:

1.       Understand bandwidth – learn where you are with resource capacity—and trust it

2.       Accelerate communication – Communicate frequently with requesters so they have an awareness of enterprise-wide demand. 

3.       Learn from experience – Use complexity of work to set timelines and deliverables while continuously assessing skills.

4.       Prioritize focus – Encourage negotiation and allow stakeholders to determine priority of work when there is a conflict.

5.       Removing obstacles – Identify potential delays early to minimize or avoid risks; brainstorm with stakeholders to identify cost/benefit potential.

Forecasting is critical to communicate with key stakeholders, and in my case, senior leadership depends on it. As you create forecasts, remember that you likely won’t get it right the first time but the important thing is that you continually get better and more accurate. Tools