Resource Forecasting: Best Practices, Steps & Examples

It’s typically done using resource management software. 

What Factors Affect Resource Forecasting?

When planning a new project, start with a clear understanding of its type and scope and the delivery framework. This information will inform your capacity planning decisions around available resources. Resource utilization metrics that inform optimal resource decision-making include:

• Budget: Knowing your budget allows you to prioritize return on project investment by allocating resources strategically to different activities. A healthy budget is clear on strategic priorities and has an appropriate risk buffer (between 10 and 20 percent).
• Scope: A well-defined scope informs and guides the identification and selection of project resources. It is the compass to reference for scope creep, which can negatively impact resource forecasting accuracy.
• Team member skill and experience level: Team members are allocated different tasks, and the level of effort (LOE) each requires to complete their tasks will vary. To ensure a healthy resource forecast, align high-skill/high-experience team members with critical tasks, low-skill/low-experience team members with less essential tasks, and appropriate redundant/recurring tasks.
• Vacation time and unexpected absences: Attendance dramatically influences the accuracy of resource forecasting if planned time off or estimated unplanned time off percentages are not included. To mitigate unexpected absences, build strong connections based on positive and consistent communication, trust, transparency, and psychologically safe leadership practices. 
• Full-time vs. freelance or part-time team members: Your resource forecast strategy can be optimized by strategically evaluating how best to use the existing resources in-house (full-time staff) and when outsourcing is required (part-time or freelance hires). Full-time employees are an economical choice for tasks that last a long time. A part-time or freelance team member is a good option for tasks requiring specialized skill sets for a short duration. 
• Upcoming and unexpected projects: Having clarity on what is critical and not and building flexibility into your resource forecast allows you to anticipate future resource needs to support project schedules within the portfolio. Keep your team flexible by giving them enough work to fill 80% of their week. If your team members are at 100% capacity, your ability to remain agile in the face of risk or competing demands is nonexistent, and your resource forecast will become irrelevant. 80% is the new 100% to avoid burnout.
• Organizational tools and technology determine your access, visibility, and capability in planning resources to make strategic decisions that will optimize project performance. The right resource management tools enable you to mitigate risk and ensure profitability.

Why Is Resource Forecasting Important?

Resource forecasting is a critical planning effort directly linked to project health and successful completion. Optimizing how you plan projects enables you to control the outcomes of projects more effectively.

Accurate resource forecasting leads to successful project results, such as timely deliveries and strong financial performance. Forecasting resources will account for resource demands at the portfolio level, mitigating delays due to scheduling. 

Repeating this best practice will provide you with access to knowledge benchmarks for future projects to ensure project health. A resource forecast provides stakeholders and project managers with what they need to make informed decisions.

How to Forecast Project Resources in 7 Steps

Here’s how to forecast project resources and make it a regular project resource management practice:

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1. Review Your Project Pipeline (The Project Program Portfolio) 

Reviewing your project portfolio will clarify which shared resources are being used for other projects. You must communicate with other project managers to collaborate on how to integrate your project into the portfolio effectively without disrupting other projects. 

Doing this will give you a sense of when your project can happen and a realistic duration based on shared human resource capacity. Once you have reviewed the pipeline or portfolio, you can determine the complete resource requirements and skills needed for the project to estimate time and budget.

Action Items:

• Use your project management software to map out your project pipeline.
• Schedule meetings with other project managers to discuss resource allocation.
• Adjust project timelines based on shared resource availability.

2. Determine Resource Requirements & Skills Needed For The Project

Apply your working knowledge of the resources and skills needed by creating a resource breakdown structure (RBS). Think about the project scope and outline the skills, experience levels, employment type, equipment, software, and materials required for your project. Include all costs, both hard and soft, to create a comprehensive resource budget forecast. Don't forget to consider costs for things like travel expenses, permits, tools, and other fees.

Once you've determined the resource requirements and skills needed for your project, you can review data from similar projects to inform your resource management planning.

Action Items:

• Create a detailed RBS in your resource management tool.
• List all required skills, resources, and costs.
• Use past project data to inform your budget estimates.

3. Review Data From Similar Past Projects 

Next, benchmark similarities between historical project data and your current project. What went well with past project resourcing? What needed improvement? Note which project resource estimates varied the most from actuals.

After reviewing data from similar past projects, document how you, as the project manager, will implement improvements in your project. Be sure to account for potential risk items at crucial points in the project's timeline.

By analyzing data from past projects, you can determine resource availability and required skills, adding reliable structure to your resource forecast.

Action Items:

• Use your project management software or marketing agency reporting software to pull reports on similar past projects.
• Identify patterns in resource usage and adjust your forecasts accordingly.
• Document improvements and resource risk mitigation strategies.

4. Determine Resource Availability & Skills Your Team Has

Explore existing team member profiles in your workflow management software. Identify who has the skills your project requires and check their availability.

If certain team members are unavailable, discuss potential flexibility in their schedules. Once you know which team members have the skills needed and have confirmed their availability, you can match them to project assignments. 

For all other resources, identifying the time, price, and path to access them will vary. It is essential to document these variables in your resource forecast to track the acquisition and usage of all resources on a project. Once you have determined resource availability and skills, you can formally match team members to assignments. 

Action Items:

• Update team member profiles in your software with skills and availability.
• Confirm resource availability with your team.
• Adjust project assignments based on team members' capacity.

5. Match Resources To Assignments

Once you understand your project's needed skills, you can begin to assign out tasks to your team. It's important to talk to your team members to get a better understanding of how complex different project tasks are. They may have insights regarding task length, needed resources, and time gaps. Once you match resources to assignments, you can estimate the effort and time for each task. 

Action Items:

• Use project management software to match resources to tasks.
• Communicate with team members to refine task estimates.
• Adjust assignments as needed to ensure optimal resource allocation.

6. Consider Unexpected Absences, Attrition, & Hiring Trends

It is a non-negotiable in resource forecasting to account for unexpected or planned absences, attrition, and hiring trends. In doing so, you will ensure project health by proactively mitigating the potential impact of these factors on project timeline and budget. 

Project managers may use buffering techniques and contingency planning to account for absences. Succession planning is a useful, internal way to navigate attrition in addition to having a proactive hiring strategy in place.

Action Items:

• Build contingency plans into your project schedule.
• Cross-train team members and document key processes.
• Stay updated on industry hiring trends and adjust plans accordingly.

Here are some techniques to help you prepare: 

• Fill the planned time off gaps during the planning phase (arrange a back-up project manager to brief into the project if you have planned time off)
• Hire early on and give time to this effort
• Address resource skill gaps early (you can find these using resource gap analysis)
• Ensure frequent and purposeful communications between yourself and the team
• Cross-train project team members who are interested in the skill area and who could offer support in the event of an absence
• Leverage workflow automation tools
• Embrace flexible work wherever possible as this allows people to work from anywhere based on their needs

7. Monitor & Adjust As Needed

A resource forecast is just one component of a stellar project resource management plan. You must continuously monitor your project and adjust your resource forecast as necessary, leveraging real-time data and enhanced communication tools to stay flexible and responsive to changes.

I recommend using resource management software to monitor and adjust project activities as needed. These tools are your trusted companions in providing visibility into people, timelines, and activity status. The benefits of cross-functional collaboration are made simple and accessible. 

With enhanced centralized communications, you can remain flexible and respond to change quickly.

Action Items:

• Use your project management software to track progress and make adjustments.
• Schedule regular check-ins with your team to discuss resource allocation.
• Update your resource forecast based on real-time data and feedback.

Best Resource Management Software

The best tools to schedule, track and optimize project resources.

1. 1. Float — Best for resourcing with financial visibility
2. 2. Scoro — Best for forecasting team utilization
3. 3. Kantata — Best for people-centric resourcing
4. 4. Resource Guru — Best for resource visibility with heatmaps
5. 5. Smartsheet — Best for advanced and custom workflow automations
6. 6. Adobe Workfront — Best for strategic resource allocation
7. 7. Hub Planner by Milient — Best for midsize and large companies
8. 8. monday.com — Best for simple workload planning
9. 9. Saviom — Best for resource planning & capacity management
10. 10. Productive — Best resource planning and capacity forecasting

Project forecasting software is also useful for holistically forecasting resources, timelines, and project budgets.

Resource Forecasting Example

Here’s an example of you might do resource forecasting on a sample project. 

1. Project Overview

• Name: The Fun App
• Duration: 4 months

2. Resources Overview

Based on the scope definition, you will have an idea of what will be required. However, this will only partially inform the resources list. You must break your scope into a work breakdown structure (WBS). This can be done using a digital whiteboard, specific WBS software, or WBS template.

In your WBS, you will see the tasks and activities required to complete the project. You can then ask yourself what is required for each deliverable and conduct a skills analysis. With a clear idea of what’s required, you may estimate the resources for each task. 

Next, calculate the length of time (duration) of each task in the WBS. With this information, check the availability of your team members and other resources. Do any risks arise?

Identify potential risks to inform your risk management plan—consider absences, markets, and technology. Assess how these factors may impact the project and adjust accordingly. 

Establish your resource forecast plan by clearly describing how all project resources will be allocated and managed throughout the project's duration. Define roles and responsibilities clearly and openly, and have your contingency plan ready—it is your closest tool to a crystal ball.

Here’s what this exercise returns:

Project team: consists of in-house staff plus one copy freelancer

• Project Manager x1: responsible for project health, delivery, and client needs discovery
• Application Designer x1: responsible for user journey, wireframing, design for code requirements, and complete visual prototype
• Application Developer x1: responsible for successful functionality of app scope, complete, fully functional prototype, and successful product launch
• Visual Creative x1: responsible for all visual content
• Copywriting freelancer x1: responsible for all written content
• Quality Assurance Tester x1: responsible for testing and mitigating issues/bugs in the app

Other resources: 

• Design and development software licenses x2 @100 per license
• Freelancer fees x1 @ $50 per hour
• Equipment: existing, no new hard costs
• Materials: office space existing, no new hard costs

3. Resource Breakdown

• Phase 1: Design
  • Designer, Project Manager
• Phase 2: Content Creation
  • Visual Creative & Freelance Copywriter, Project Manager
• Phase 3: Development
  • Development, Project Manager
• Phase 4: Testing & Revisions
  • Quality Assurance Tester, Project Manager
• Phase 5: Launch
  • Developer, Project Manager

4. Contingency Plan

• Absences:
  • A roster of contract contacts to backfill in the event of an absent copywriter.
  • In-house staff with overlapping skills who can step in for absent designer, developer, or project manager 
  • The client can provide feedback once at the start and end of each phase.

5. Monitor and Adjust

• Review project progress in workflow automation (project management) software and adjust tasks, allocation models, or time as required to ensure project health.
• Utilize risk tolerance gaps to adjust based on unforeseen circumstances.

Resource Forecasting Best Practices

Best practices in resource forecasting for project management will help you optimize and standardize practices to ensure many successful project deliveries. 

• Plan ahead: Explore what is required, when, and for how long using the steps mentioned above. 
• Optimize resource allocation: Spend more time on billable or high-value efforts and less "work about work." 
• Be prepared to adapt: Change is inevitable. Build flexibility into the time and budget of the project, especially where forecasting has come short in projects historically.
• Use project management software: Workflow automation and forecasting tools are called different things and provide similar features across the board. Choose one to optimize project and team performance.
• Communicate and collaborate: With the project team, throughout the business, with your stakeholders, and in your network. Appropriately and consistently communicate to build relationships. Communication and collaboration will help you access resources, fill gaps, and leverage your network to see challenges, whether a deal on software licenses or backfilling an absent employee.    
• Regularly check and update the resource forecast: This will help you stay on track, mitigate risk, and respond promptly if other business units or project teams need to borrow resources. 
• Practice: Try new resource skills and practice consistently. It is a skill; each time you practice, you will see more results.

Find more resource management best practices here. 

Common Challenges In Resource Forecasting

Never fear if you encounter challenges in resource forecasting. They will come up. It is not about how to avoid a challenge, but rather about being prepared with a plan when a challenge arises. Embrace challenges bravely and with tact. 

• Resource scheduling: Plan to backfill for team members with planned time off and cross-train in-house employees to step in to avoid hiring fees and delays. Never overbook employees and use a resource scheduling tool or capacity planning platform to monitor capacity. 
• Client delays: Clients can delay progress if they are slow to communicate. Consider building feedback requirements into the contract. 
• Inaccurate project timelines: To avoid strained resources or even project failure, consider the project portfolio and the needs of your project, and work with team members to insert projects while ensuring a balanced portfolio. Communication and negotiation skills are critical.
• Budget transparency: Ensure you have access to the complete list of all items in the project budget and their budget estimates rolling up to the total project budget. As spends come in (actuals), add them to the budget and track the variances. Ensure budget health by cross-referencing quotes to invoices, ensuring accuracy and only reasonable variances. 

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