What is Resource Forecasting?

Resource forecasting is finding ways to maximize your resources by predicting future demand for materials, and labor. The key is that resource forecasting is an inherent function of project planning— not a separate step. In the following article, you will learn how firms implement effective resource forecasts and their methods for overcoming potential barriers.  

The process of predicting and analyzing the number of resources that may be required to complete a project is termed resource forecasting. It analyzes past performance, market conditions, business operations, and other factors to predict future resource needs.

Forecasting is conducted for all aspects of a project, including

• Time
• Costs
• Resources
• Profits 
• Benchmarks

A forecast helps indicate whether the project will be completed on time and within budget. It can also help identify potential risks that could impact the business or tasks before they happen.

Why Resource Forecasting is important?

Resource forecasting is important because it can help identify areas of a business or project at risk of failing, allowing the business to increase budgets and ensure the success of projects. Forecasting will also help a company predict future workloads, which allows for determining whether they have enough resources and people to complete planned projects. A forecast will also assist businesses in planning for growth.

Resources are the foundation of successful projects, so you must forecast the number and type of resources you need. Resource forecasting can be done by counting available resources or modeling what will be required and it’s essential to do before you start your project to ensure you have enough people with the right skills. 

The Result You Want By Forecasting Resources

It might seem obvious what you want the result to be – such as on-time completion and a satisfied client or customer. But it’s important to state this clearly in your forecasts, so the team involved knows what constitutes success. The success criteria for each project are different, but all will depend on the task at hand and the organization’s overall strategic plan.

Your Actual Results from Resource Forecasting

After you know what constitutes successful completion, it’s feasible to forecast how many resources you’ll need. What types, such as staff members, contractors, or a combination of both, have specific skills? How much each help will cost to hire might take more work to forecast. That depends on job qualifications, experience, and personal qualities that are important for the particular project. Resources are also necessary because you can only forecast your labor needs once you know how many staff members you need. There needs to be more point in firming up the number of resources before you know what type of project your organization is involved in.

For example, let’s say a new corporation asked its human resources department to produce a way to predict how many staff members it would need in different departments if it decided to start expanding its business overseas.

What Are the Benefits of Resource Forecasting?

The benefits of resource forecasting include increased efficiency, better workforce planning (and, in turn, happier employees), better allocation of resources (which saves money), improved inventory management due to shorter lead times, increased customer satisfaction, and reduced waste.

• Increased efficiency

Resource forecasting is about predicting the future, so it’s harder to forecast resources than raw materials. So resource forecasting results in better use of resources. It also helps a company plan ahead, so they get their resources quicker. This means they can react faster, like buying new equipment when needed – reducing work-in-process inventory, and having less scrap. This increases efficiency and decreases costs by eliminating waste/averaging, poor or delayed resource allocation, or excessive inventory. This leads to better productivity and higher levels of customer satisfaction. Better staffing planning will lead to satisfied employees (which means more efficiency and less overhead), eventually leading to lower costs and more savings for the company.

• Better allocation of resources

For a resource forecasting system to be accurate, it must consider many factors like scarcity in one area, and its effect on other areas like sales, etc. Depending on the role of resources, planning can take place in multiple stages like planning, executing, etc. This way, various stages of the process can be planned depending on demand.

• Maximize resource utilization for billable and strategic work:

This involves looking at the entire process. Resource forecasting manages resources throughout the whole process. This helps to minimize delays and make way for new projects.

• Effective management of pipeline projects

Resource forecasting helps to manage pipeline projects effectively. This is because it allows you to plan the whole timeline from start to finish, so there is no chance of exceeding the estimated hours. This will result in a more profitable business with a good reputation which leads to more sales and happier and more efficient employees.

• Improved customer satisfaction:

Resource forecasting results in better availability of resources as and when needed. This prevents shortages and keeps your customers happy by providing them with the quality of service that they expect. Your customers will recognize this and return to you, making you more profit.

How to Do Resource Forecasting?

Forecasting is projecting future economic conditions and events based on available information and using historical patterns to predict likely outcomes. It helps in making decisions on investment, and many other things in business, finance, and economics. 

It is a prediction that uses official data collected during the past years and months to predict the amount of a good or service needed in the future to allow sufficient time for manufacturing or buying it before it is necessary for current demand. 

To do resource forecasting, you must collect data about the resources needed for each project and correctly analyze the data. The information that should be considered is how much material, man-hours, and other resources will be used for each milestone of the project and, therefore, how many resources to be provided. 

Resource forecasting can be automated with software that tracks information from previous years and months based on currently available data. The forecasting software uses this data to predict the future needs of resources.

 The process of manual resource forecasting is complex and requires painstaking analysis of the production data. 

Resource forecasting is imperative to prevent any problems in the future. If not enough resources are available, there can be a problem that may lead to erroneous results or might terminate the project. You must continue resource forecasting, or else you will face severe problems. Every company needs to do resource forecasts to ensure it has enough resources for current and future projects.

Conclusion

Business owners can use a few simple techniques to improve accuracy when forecasting. Regression analysis uses historical data to predict future outcomes. Business owners can also use consensus forecasting techniques to determine the most likely outcome.

Forecasting is necessary for businesses of all sizes that rely on projects and events to drive their income and existence. It is essential for business owners to understand the importance of forecasting and learn about methods that can help increase the accuracy of their forecasts so that they can prepare adequately for future challenges. 

With Juntrax, you can easily track your project and analyze project costs, resources and others. Juntrax will also enable business owners to adjust budgets or plans necessary to maintain success within a project or portfolio. This way, you can easily reach your goals and objectives with a planned budget line and forecast new plans.