Got your crystal ball ready? While nobody can truly tell the future, project forecasting comes pretty close. Construction project forecasting takes data from past projects and current factors and uses it to predict how much projects will cost, what elements might impact their schedules, and which disruptions might get in the way of smooth project operations.
Accurate forecasts can make a very big difference to project outcomes. When construction teams have an idea of what’s to come, they can bid better, plan better projects, and work quickly to avoid looming disasters.
Even with a lot of accurate data inputs, there are a ton of changing factors that can make it tough to make accurate predictions. This article will discuss some best practices and important things to consider for the best construction project forecasting possible.
What is Construction Project Forecasting?
Forecasting construction projects involves collecting relevant data and applying it to new project parameters to come up with its expected costs, cash flows, materials needs, timelines, and outcomes. There are a few sources of information project managers can use to create construction project forecasts so they can plan and lead more successful projects.
Project scope
Forecasting a project means knowing exactly what the project entails, including all the work, responsibilities, and criteria for successful completion. Project managers have to work through any vague descriptions to get a detailed scope before putting together accurate costs and timelines.
Project duration
There are multiple variables in establishing project forecasts, with one project factor affecting the others. Project scope, duration, and labor numbers are great examples of the interplay between these variables. Project forecasts might be responsible for predicting how long a project will take to complete. However, if there’s a hard deadline for owner occupation, like a hotel that needs to be open for guests by the time a major sporting event comes to town, the project may require more laborers to get the entire project scope complete in time.
Historical data
Past project data is absolutely essential to construction forecasting. Crunching numbers can get project teams pretty far when predicting future project outcomes, but there’s nothing like real-world scenarios to educate future behaviors. All the numbers may claim a team of 20 workers can finish a task in 10 days, but if it’s actually taken 12 days on the past three similar projects, then I think we can all agree the team should allot 12 days to the task.
The information from past projects is a gold mine for construction firms – the amount and accuracy of data can have a big impact on the strength of predictions.
Take a look at other, similar projects the team has already completed. How much labor and materials did it take to do the job? Factor in price fluctuations, new company processes or workforce, and any other changes that have occurred to figure out what the current numbers will look like.
The Challenges of Forecasting in the Construction Industry
Beyond looking at past data, accurate project forecasting requires project teams to look forward to anticipate how the changing construction environment will impact the project. It’s no small task, considering many projects last a year or more.
Material cost fluctuations
How can anybody anticipate materials costs when they can change so drastically in such a short period of time? Costs for softwood lumber, steel, and aluminum have experienced pretty drastic changes in recent years, thanks to fluctuating supply-and-demand, inflation, and volatility in global markets.
Project teams must look at forward projections to piece together where price and supply timelines may be going by the time the project gets rolling. Some builders have secured prices by buying early and storing materials until installation – a method that introduces storage and insurance costs into the equation.
Labor shortages
It can be very difficult to forecast project costs and timelines when teams have trouble putting together labor pools large enough to complete the work. When it’s impossible to get enough labor on site to do the work, the project can be delayed or the employees on site may be subject to higher overtime pay rates.
Extreme weather
Weather can drastically impact the costs and schedule on a construction project. A particularly rainy season or unseasonable heat can throw off project projections. Teams must consider those things they can predict – like a project based in Chicago is likely to face some cold weather and snow from December to March – and factor them into their predictions.
The Benefits of Mastering Construction Forecasting
Project teams who use past project data together with future insights to accurately predict project outcomes set themselves up for greater project success.
They are able to:
- Distribute costs effectively across a project for improved cash flow.
- Make clients happier by following through on budget and schedule expectations.
- Allocate resources appropriately for smoother operations over the course of the project.
- Keep all stakeholders aware of changing conditions early and often, so that they can react quickly to get the project back on track.
Accurate forecasts help teams negotiate change more effectively for better cost control and fewer delays, which ultimately leads to greater profitability, happier clients, and a strong reputation within the competitive construction landscape.
Methods of Project Forecasting
Predicting project outcomes involves a lot of insight and analysis that can take a number of different forms.
Quantitative forecasting takes advantage of as many expert opinions is possible, gathering pros from different fields and specialty areas and putting them in a room together to sketch out an idea of future trends and put together possible scenarios of project outcomes.
Qualitative forecasting crunches the numbers, analyzing past project data to come up with the most likely outcomes going forward. Technology is pushing qualitative analysis even further, using algorithms in machine learning to predict what will happen with ever-greater accuracy. Those technological systems can be used to continually forecast outcomes as the project progresses.
Whatever the balance each team strikes between expertise and mathematical equations, complete and accurate data from past projects plays a key role in forecasting. Teams should use project management systems that build data collection processes into their daily routines so that they can improve operations over time and create accurate forecasts that drive effective decision making.
Best Practices in Construction Project Forecasting
Forecasting will achieve more relevant and insightful data if project teams take the task seriously, seeking lots of input on an ongoing basis. Here are some best practices construction firms to use to get the best and most usable project forecasts.
Continued effort
As the project progresses, both project activities and actual costs are likely to deviate from the original plan. Continually reassessing and looking ahead helps with forecasting accuracy so project teams can adapt and be more prepared.
Work together
Collaboration is the key to success on construction projects. Worth with contractors, materials suppliers, and job site laborers to get their ideas about the time and cost of completing upcoming tasks. Use all available expertise to get better forecasts that can help project operations.
Use the available tech
Technology can take a lot of the time and legwork out of project forecasting, and may provide more accurate look-aheads for the team to use. Use tech to put data gathering and organization on the front burner for the whole construction team. Use machine learning to better predict outcomes. Finally, use technology to automate forecasting so there’s a constant stream of new, helpful information that can steer project operations.
Accurate Forecasts for Effective Project Management
Project forecasts are an extremely effective part of the project management effort – they help contractors manage risks, react to changes, and plan effectively. However, the quality of the output depends a whole lot on the quality of input.
Forecasts are likely to be more accurate and useful if they use quality data, are created using the expertise of many project stakeholders, and get updated on a regular basis. Technology can help gather, organize, analyze, and automate construction project forecasting to give project management efforts a leg up in a competitive construction market.
