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5 Ways Resource Forecasting Helps in Successful Project Delivery

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5 Ways Resource Forecasting Helps in Successful Project Delivery

Do you often find it challenging to mitigate skill shortages?

Are you frequently resorting to last-minute hiring and increasing the project’s cost?

Are you unable to optimize the productive utilization of your workforce?

To overcome the above challenges, managers need precise estimation and accurate insights into resource data instead of approximation and guesswork. This is where resource forecasting comes into the picture.

Resource forecasting enables organizations to identify and bridge skill gaps effectively and ensures that best-fit resources are available for the right projects at the right time.

This also helps managers to utilize their resources optimally and secure the project’s fate by completing them on time and within budget.

Thus, resource forecasting helps business stay forewarned and make timely decisions to ensure profitability and sustainability.

This blog discusses the significance of resource forecasting and how Saviom’s resource management solution helps implement the same.Let’s get started:

1. Factors that influence resource forecasting in project management

Resource forecasting involves predicting various resource metrics for a specific period, such as supply, demand, project financials, vacancy, etc., in advance.

Some of the factors that influence resource forecasting are-

  • Complexity of matrix structure

A matrix organization allows the re-deployment of resources into different projects between multiple departments.

However, since many organizations still use silos of spreadsheets, it may lead to inaccurate estimation of resource requirements.

Therefore, the complexity of the matrix structure must be considered while forecasting.

  • Resourcing strategy and market conditions

Organizations leverage contingent resources for short-term assignments and full-time employees for critical roles or long-term projects.

However, since the quality of these contingent resources cannot be guaranteed, it can affect the project quality.

In addition, if a permanent employee is hired from a low-cost location, there is a high chance that they might leave the organization for better prospects.

Therefore, skill requirements and attrition rates must be factored in during resource forecasting.

  • Technological development

Technological advancements have led to the emergence of new skills like IoT, AI, etc.

In addition, numerous traditional skills have become obsolete; therefore, it is crucial to forecast both future and current resource demands.

Furthermore, this enables the existing workforce to update their skills and stay relevant. Thus, it’s necessary to analyze future projects’ skill demands as a part of the forecasting process.

  • Client Requirements

Often, the client/customers’ requirements may change due to multiple reasons such as market conditions, budget limitations, climatic conditions or a global pandemic such as COVID-19.

Thus, it is vital to have an agile resource forecasting process to cater to dynamic needs.

Now that we know the factors let’s understand the benefits of forecasting in project management.

2. Significance of resource forecasting in project delivery

Resource forecasting plays a vital role in successfully completing a project.

Here’s how –

1. Reduces resourcing costs in firms

Resource forecasting enables managers to foresee project demands and assign the right resources to projects in advance.

In addition, it also helps identify and allocate cost-effective resources from low-cost locations to reduce unnecessary resource costs without compromising quality.

Furthermore, resource forecasting prevents the allocation of under/over-skilled resources to projects, eliminating the risks of budget overruns.

The forecasting techniques also enable managers to replace an expensive senior resource with a skilled junior counterpart.

Thus, forecasting helps create the right resource mix that suits the budget and minimizes unnecessary cost escalations.

2. Provides foresight into pipeline project demands

When resource managers don’t get sufficient lead time to identify best-fit resources, it leads to last-minute firefighting and hiring high-cost employees.

Thus, they need to gain foresight into pipeline projects in advance and analyze the capacity vs demand gaps.

Resource forecasting allows managers to identify excess or shortage of resources and implement measures to bridge the gaps.

If there is an excess of resources, managers can bring forward project timelines, sell additional capacity, etc.

Alternatively, a shortfall of resources can be mitigated by bringing in employees from other departments, implementing training and upskilling, conducting planned hiring, etc.

Thus, forecasting helps bridge skill gaps and reduce last-minute hiring hassles.

3. Maximizes billable utilization of resources

One of the primary responsibilities of resource managers is to ensure the optimal utilization of resources in the firm.

Therefore, they need accurate insights into resource utilization rates to prevent under/overutilization.

Forecasting gives a complete picture of a resource’s billable and non-billable work activities.

Since non-billable work does not produce revenue, managers can improve billability by mobilizing the workforce from non-billable to billable and strategic tasks.

It also helps optimize the workloads through resource leveling and smoothing and eliminates the under/overallocation of resources.

This helps maintain the resource health index, enhance productivity and deliver the project on time.

4. Helps track and monitor project financials

Resource forecasting provides information about financial indicators such as cost, revenue, overheads, and profitability. It helps eliminate budget overruns by keeping the project on track.

Furthermore, managers can track and compare the estimated budget with the actual expenditures during the project lifecycle.

If there is any variance, the project manager can implement remedial measures to control costs.

In addition, project financial forecasts help improve future estimations of similar projects and align them with actual expenditures.

5. Facilitates effective bench management

When a project experiences a sudden ramp-down, resources end up on the bench. This affects their productivity and performance and can negatively impact profitability.

Resource forecasting will provide foresight into when resources are rolled off from projects, and managers can implement measures to reduce the bench size.

For instance, managers can allocate these resources to appropriate billable or strategic work before hitting the bench.

Moreover, if the resource’s skills do not align with the pipeline project requirements, they can streamline training and shadowing opportunities. This keeps them engaged and diversifies their skill sets for future projects.

Now that we know the importance let’s understand how a futuristic tool will help.

3. How can a futuristic resource management tool help?

Saviom’s advanced resource management software helps managers, accurate forecasting employees.

Here’s how-

  • The tool 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.
  • Further, the tool’s forecasting capabilities and capacity-vs-demand report help foresee the skill gaps by leveraging appropriate internal and external channels. Thus, it reduces the last-minute firefighting and high-cost resourcing hassle.
  • The people-on-the-bench and project vacancy report 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.
  • Moreover, managers can leverage the modeling and simulation functionality of the tool. It helps analyze various scenarios and compare outcomes by changing multiple metrics such as availability, cost rate, etc. This allows them to arrive at the most viable outcome and apply it to the actual resource plan.

4. The Bottom Line

Resource forecasting lets managers plan for future demands by considering all the probabilities and outcomes.

As a result, it plays a crucial role in an organization’s decision-making process.

Furthermore, by leveraging the right resource management tool, managers can create customized forecasts for successful project execution, enhancing profitability.

So, are you ready to take the necessary steps and reap these benefits?

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