Are you still relying on guesswork and approximation to futureproof your workforce against market uncertainties? Businesses need precise estimations to stay profitable and sustainable in this hyper-competitive era.
For easy comprehension, let us assume a scenario where an organization bags a crucial pipeline project. While fulfilling positions, the resource manager needs to identify if he has the required skill sets and forward plan accordingly. Besides, they also need to ensure that no excess capacity is wasted while optimizing the workforce.
Here’s when resource forecasting comes into the picture.
Resource forecasting helps businesses to stay forewarned and make timely decisions. It allows organizations to find and allocate appropriate resources to various projects and ensure that they are optimally utilized. It also prevents budget overruns, thus guaranteeing successful completion and delivery.
This article discusses the importance of resource forecasting and its role in successful project delivery. Let’s get started:
1. Resource forecasting: Definition and its importance
It is the process of estimating a company’s future project resource demand and various other metrics such as supply, project vacancy, on the bench, etc., ahead of the curve.
It helps ensure that an organization is suitably staffed and has enough resource capacity to fulfil current and future projects. It helps estimate the total workload, project financials, resource cost, etc., and identify skill gaps and excess/shortage of resources. This enables organizations to implement corrective measures.
Furthermore, since forecasting also prevents overutilization of resources, it eliminates the chances of employee burnout and disengagement. Thus, with the right resource forecasting solution, businesses can deliver projects on time and within budget, resulting in high client satisfaction and profitability.
Now, let’s understand how it helps in timely project completion.
2. Role of resource forecasting in timely project delivery
Resource forecasting aids managers at every step of a project, from its approval stage to delivery. Let’s see how:
2.1 Minimize resourcing cost in projects
Resource forecasting ensures that the right resources are available at the right time for project execution. It helps managers foresee project demand, estimate the required resources, and allocate skilled and cost-effective resources to the project in advance. One can also identify and allocate cheaper global resources across matrix boundaries to reduce overall project costs without compromising quality.
Forecasting ensures competent resource allocation and prevents assigning projects to costly and under-skilled or overqualified resources. For example, using forecasting techniques, managers can also replace expensive highly-skilled senior resources and utilize a similar skilled junior resource. In addition, since managers can acquire resources well in advance, it prevents the last-minute hiring of high-cost resources.
2.2 Plan pipeline project demand
Forecasting plays an essential role in planning pipeline projects and estimating skill demands. It allows managers to thoroughly analyze the resource capacity vs. demand and identify any shortfalls or excess of resources. Accordingly, managers can implement corrective measures to bridge the capacity gap proactively.
For example, they can adjust the timeline for non-time-sensitive projects or hire permanent or contingent resources considering the project’s duration. In addition, since managers can view the project demands in advance, they can also train existing employees to meet the skill requirements. Thus, forecasting and gauging the gap prevents last-minute hiring and resultant cost escalations.
2.3 Maximize billable resource utilization
Forecasting gives detailed information about a resource’s billable and non-billable work activities. Since non-billable work does not produce any revenue, managers can improve billability by mobilizing resources from non-billable to billable and strategic projects periodically.
Timely forecasting also helps optimize the workloads and eliminates the under/overallocation of resources. Managers can implement optimization techniques to redistribute the workload if any resource is over-utilized. This helps maintain the resource health index, enhance productivity and deliver the project on time.
2.4 Monitor and control project financials
Resource forecasting gives information about various financial indicators such as cost, revenue, overheads, and profit margins. This helps keep the project budget on track, thus eliminating budget overruns.
Managers can also track and compare the estimated budget against the actual spending throughout the project lifecycle. In case of any variance, they can implement remedial measures to control project costs. Additionally, forecasting project financials also helps to improve future estimations for similar projects and align them to the actual expenditure.
2.5 Reduce bench time of resources
Effective forecasting gives information about the ramp down of resources in projects. Since it also shows the pipeline project demands, managers can allocate these resources to appropriate billable or strategic work before hitting the bench.
Also, if managers find out that the resource’s skills do not align with the pipeline project requirements during the forecasting, they can facilitate training or shadowing opportunities. This will keep them engaged and prepare them for future projects.
Modern resource management software can help you in forecasting. Let’s see how:
How can resource management software enable efficient forecasting?
Saviom’s resource management solution provides 360-degree visibility across the enterprise, enabling managers to view the resource profiles, including their skill sets, competencies, cost rate, etc. This allows them to identify suitable resources aligned with the project’s skill requirements and cost rate.
The various reports on the tool, such as forecast v/s actual cost, show the difference in estimated value. In addition, other reports such as availability, capacity v/s demand, utilization reports facilitate efficient resource forecasting. Accordingly, managers can take some course-corrective actions.
The capacity v/s demand reports provide the gap analysis and help managers gauge the gap proactively. On the other hand, the utilization report gives real-time insights about resource utilization levels to ensure productivity and profitability.
The bench reports also help predict when a resource will end up on the bench, and thereby managers can schedule them for future projects in advance and reduce the bench time of resources between projects.
All these features of the resource management tool facilitate efficient resource forecasting.
In summary, resource forecasting helps managers plan for future demands by considering all the probabilities and outcomes. Therefore, it is a vital aspect of an organization’s decision-making process. Furthermore, by leveraging the right resource management tool, managers can implement customized forecasting measures for successful project delivery.