What Is Forecasting in Project Management?
Forecasting in project management is the process of making predictions, guesses, or assumptions of the possible outcomes of a project. These project forecasts are made through the analysis of historical project data as well as predicted future performances.
The main aim of forecasting is to predict possible outcomes, reduce project risk, and increase the chances of project success. This means that you can learn how likely it is that a project will be successful, evaluate the risks involved, and identify areas for improvement. As a result, project managers are armed with sufficient knowledge to anticipate project duration, cost overruns, project budgeting and forecasting, and resource needs.
Note that an adequate amount of data is necessary during project forecasting. Ideally, you begin forecasting when the project is at least 20% complete. There are different methods of demand forecasting in project management. However, there’s no silver bullet when it comes to applying each technique.
Some forecasting techniques in project management include trend analysis, historical data analysis, survey method, and regression analysis. Before choosing a particular forecasting technique, it is important to examine some factors such as the availability of project historical data, expected outcome of forecasting, and the degree of accuracy needed. This ensures that the right technique is applied relative to the scope and versatility of the project.
Key performance metrics to track during project forecasting
Project cost estimate: When implementing cost forecasting in project management, an applicable technique is trend analysis. In this case, project managers can evaluate past and present project spending patterns and extrapolate the spending data until the project is completed. This provides a forecast of the expected project cost.
Project duration: The main point to consider when forecasting project duration is to understand the risks and uncertainties of the activities involved in the project development. A project with inadequate funding or resource availability will hinder the progress of the project cycle.
There are different analytical project budgeting and forecasting tools that are designed to provide insights into the past, present, and future project performance.