Did you notice that the projects you’re currently working on have become more challenging than in the earlier years of doing business?

If so, you’re not alone.

A recent study by KPMG proves that 67% of project managers believe that the complexity level of programs and projects have drastically increased in the last ten years. These twists and turns have led to the downfall of some organizations that have not been able to cope with the times.

Transversely, such challenges also brought out the best in businesses that were able to adapt, optimize, and execute systematic project strategies.

This proactive approach of monitoring the performance of any project provides significant insights that will enable you to develop smarter estimates, decisions, and solutions swiftly. In project management, this method is called forecasting.

What is forecasting in project management?

From the term itself, forecasting is a process of predicting the possible outcome of any plan or strategy. These assumptions, however, aren’t merely wild guesses. In a business setting, most projects gain early validation because of the anticipated results, the same way that some projects are put off or ultimately canceled.

As such, forecasts should be based on the most recent data available on the project you are currently working on. Ideally, a project is approximately 20% complete for you to have enough information on where it’s headed. This data will run through a comparative analysis which will serve as the backbone for a smart forecast. It means that meticulous observations and insights are required in digesting the data in order to build sharp predictions.

Keep in mind, however, that each project may have multiple possible outcomes. It’s crucial to identify all of these possibilities and determine which of the results will be most beneficial to your business.

Project managers rely on forecasts to be able to make swift and perceptive decisions on the projects they handle. These estimations play a critical role in project management and planning as it provides relevant information that is crucial in addressing challenges and leveraging opportunities.

As projects progress, forecasts have to be optimized based on the latest data you have. Depending on the timeline, updates may be applied periodically in different phases of the project. Doing so will help you make data-driven decisions, consider unknown variables to reduce risks, and increase chances of a successful outcome.

What are the components of a good project forecast?

Before developing the actual forecast, there are three key elements that you first need to consider: the project’s timeline, cost, and quality.

• Project Timeline 

In order to develop an accurate project forecast, you need to know how much time is needed for the whole project to be accomplished. To come up with a feasible approximation of the duration, you can simply break down the project into smaller tasks or phases, which will allow you to itemize how much time it takes for each of the activities. Combining the hours together will give you a close estimate of the project’s timeline.

Professional project managers often utilize time tracking software to automate the process of logging hours spent on tasks. These apps also streamlines data so you can easily generate reports on how much time is actually invested in every project or activity. As a result, you’ll have more credible information that will further refine forecasts moving forward.

• Project Cost

Cost estimates may not always turn out to be 100% accurate, given that anything can happen as a project progresses. In this case, your best bet is to obtain historical data from recently completed projects similar to the one in progress. Using previous project costs as reference will enable you to develop realistic estimates. 

Note, however, that you will need to consider the scope of work, tools, manpower, and other operating expenses specific to the project you’re working on in modifying the cost estimate.  Furthermore, keeping track of the project expenses as you progress is important in ensuring that your team is operating within the agreed upon budget. A cost monitoring system will help you forecast where you may need to cut costs, and the areas you can allot more resources on.

• Project Quality

Quality is ultimately impacted by costs. However, it’s not impossible to produce excellent products and services with a limited budget. The trick is to prioritize the most essential aspects of a project to ensure that the quality will not be compromised, while sticking to the planned resource allocation.

What’s important is taking the limitations into account when creating your project forecast. How will the compromises affect the results? What are you willing to shelve so you can prioritize another, more valuable task? How will these decisions impact the final outcome?

On the other hand, there are projects willing to go above and beyond for quality assurance. In this case, the project duration and costs will be influenced as it may require more time and budget to get the most qualified people for the tasks, or to procure the finest materials for a product.

How to implement accurate project forecasting with a time tracking software

Time is a critical aspect of project management and forecasting. Alongside budgets, quality, resources, manpower, and other operational requirements of a project, keeping track of timelines and having reliable time data will ease the complexity of developing close-to-accurate estimates.

Here are some useful tips to guide you in ensuring that your project forecasting runs smoothly:

• Develop multiple forecasts

Regardless of how well-planned a project is, there will always be a possibility for unforeseen events to happen, altering the flow and outcome altogether. In fact, a Harvard Business Review study shows that 1 out of 6 IT projects have an average cost overrun of 200% and a schedule overshoot of 70%, ultimately causing the project to fail. Similar results can be found in other industries, whether you’re offering products or services.

Just think of it this way: it’s better to be prepared particularly in time-sensitive and budget-restricted projects. As such, it’s ideal to have at least two comprehensive predictions on-hand that will allow you to shift strategies as the situation requires. Likewise, considering different scenarios and preparing appropriate plans for each will allow you to get closer to predicting the actual results. 

• Set up a system for organization

Being organized is the top skill required for any project to be successful. This means monitoring all the tasks being accomplished, addressing issues along the way, and ensuring that timelines as well as budgets are on track. Having a system in place will help employees do their work efficiently and effectively, enabling project managers to optimize plans and forecasts accurately. In turn, this collective effort will lead to higher chances of positive results.

• Utilize automated tools

Because project forecasting and planning relies heavily on data accuracy, exploring tools that can help make collection, reporting, and analysis easier is a wise decision. Automated time tracking software will bring numerous benefits to your organization and the success of the project. It can provide all the essential information you need to develop realistic project forecasts, including:

• Precise data on time spent on each task which is used to improve estimates on project timelines and costs
• An overview of the project’s status- what each person is currently working on and what they have accomplished thus far
• Real-time project expenses including receipts of purchases, labor costs, and other operating expenses

With more reliable data on these key aspects that affect any project, you will be able to develop more targeted strategies, streamline workflows, and improve forecasts to generate the desired results.

• Set feasible timelines and schedules

We’ve established that projects frequently experience unpredictable situations that cause delays or budget overshoots, despite your forecasting and planning. It could be as simple as a key team member being absent, or something more complicated as changes in one of the project objectives– either could set your team off-track. This is why it’s important to schedule tasks ahead of time and have contingencies in your timelines to mitigate the possible impact of these unforeseen events.

Through a time tracking app, you will gain better visibility into the progress of tasks and determine which activities take longer to complete than estimated. Likewise, you will have access to view who is working on what which allows you to redirect certain tasks as the need arises. In result, you will have reliable references to improve project forecasts that encounter less delays and budget overshoots.

• Actively track performance and optimize forecasts as necessary

While an automated software generally records and reports time and employee performance, it’s still necessary for you and the project managers to proactively monitor the data. Close observation of the movements in your timelines, costs, and quality will help you mitigate or resolve any issues before they impact the project. Addressing such challenges may somehow affect the duration and budget of the project, which is why it’s important to update your forecasts based on the most recent developments.

It is then imperative to have a time tracking software which offers a streamlined dashboard that’s easy to view, navigate, and customize according to your project’s or organization’s requirements. Through this automated tool, you can manage projects effectively and optimize forecasts based on accurate data.

Forecasting and planning increases the chances for your project’s success

Reliable forecasts are what separates successful projects from those that fail. By making intelligent and informed predictions while considering all possible scenarios and risks, you will be able to approach each phase of your project with data-driven courses of action.

Keep in mind that project forecasting is generally a complex and continuous process that takes plenty of time, the right tools for data collection, and comprehensive analysis. With tools that automate certain aspects of the project management process, such as a time tracking software, you will be able to focus on interpreting data and monitoring progress which will lead to improved forecasting.

It’s time to get Productive.

Productively is a time tracker app that lets you elevate work efficiency with advanced time tracking, real-time reports, and powerful analytics. We believe that if you can manage your hours, you can handle everything else.

With a streamlined dashboard that lets you visualize time tracked by days, weeks, months, or even by client and project, you will be able to make more informed decisions based on accurate data. Its seamless invoicing feature allows you to automatically generate account statements for a more organized billing and receivables system. Altogether, it provides a comprehensive view of your teams’ efficiency, hours worked, billables, and profit.

Bolster productivity, reduce unnecessary costs, and improve the way you do business with the app that empowers you to visualize your untapped capacity.

Learn more about us at https://productively.io/schedule/