Resource Forecasting: Best Practices & How to Guide

What Factors Affect Resource Forecasting?

Factors that inform optimal resource decision-making include:

• Budget: Knowing your budget allows you to prioritize return on project investment and allocate resources strategically. 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 your decisions on project resources. It also helps you avoid scope creep, which can negatively impact resource forecasting accuracy.
• Team member skill and experience level: Tasks require different skill levels and levels of effort. Align high-skill and high-experience team members with critical tasks, low-skill and low-experience team members with less essential tasks and redundant or recurring tasks.
• Vacation time and unexpected absences: Attendance dramatically influences the accuracy of resource forecasting if you don't account for planned time off or estimate unplanned time off. To reduce unexpected absences, build strong connections based on communication, trust, transparency, and psychologically safe leadership practices.
• Full-time vs. freelance or part-time team members: Evaluating how best to use 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 longer tasks, and freelancers are a good option for tasks that require specialized skill sets for a short duration.
• Upcoming and unexpected projects: Keep your team flexible by giving them enough work to fill 80% of their week. If team members are at 100% capacity, your ability to remain agile in the face of competing demands is nonexistent, and your resource forecast will become irrelevant.
• Organizational tools and technology: These provide access, visibility, and capability in planning resources to help you make strategic decisions. The right resource management tools let you mitigate risk and maintain profitability.

Why Is Resource Forecasting Important?

Resource forecasting gives you control over how your project turns out, because you know what you'll need before you need it. Here's what it does for you and your team.

• Gives stakeholders what they need to decide: A clear forecast shows leaders the cost, timing, and staffing behind each project. They can approve, delay, or reprioritize work based on facts instead of guesses.
• Keeps delivery on schedule: When you know who's needed and when, you can book people before they're committed elsewhere. That means fewer delays from missing skills or overbooked team members.
• Protects your budget: An accurate forecast shows true resource costs upfront. You'll avoid surprise contractor fees, rush hires, and overtime that eat into your margins.
• Prevents conflicts across the portfolio: Forecasting shows how your project's demand overlaps with other projects. You can work out shared resources with other project managers before two deadlines collide.
• Builds benchmarks for future projects: Each forecast you compare against actuals teaches you something. Over time, you'll have real data to plan similar projects faster and with fewer surprises.

How to Forecast Project Resources in 7 Steps

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

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1. Review Your Project Pipeline

Reviewing your project portfolio will clarify which shared resources are being used for other projects. Communicate with other project managers to get your project on the team's plates effectively without disrupting other projects.

This will give you a sense of when your project can happen and a realistic duration based on resource capacity.

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 & Skill Requirements

Create 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.

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.

Action Items:

• Use your 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 Current Availability & Skills

Explore existing team member profiles in your resource 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. Document these variables in your resource forecast to track the acquisition and usage of all resources on a project.

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 required skills, you can assign tasks to your team. 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.

Action Items:

• Use resource 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 Absences, Attrition, & Hiring Trends

It is non-negotiable to account for unexpected or planned absences, attrition, and hiring trends. In doing so, you can proactively mitigate 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 and fill planned time off gaps early.
• Cross-train team members and document key processes.
• Stay updated on hiring trends and adjust plans accordingly.

7. Monitor & Adjust As Needed

A resource forecast is just one component of your project resource management plan. Continuously monitor your project and adjust your resource forecast as necessary, and make use of data and communication tools to stay flexible and responsive to changes.

I recommend 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.

Action Items:

• Use resource 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.

Resource Forecasting Techniques

The most useful resource forecasting techniques are analogous forecasting, bottom-up estimating, three-point estimating, capacity vs. demand analysis, scenario planning, and rolling forecasts. Here's how each one works and when I'd use it.

• Analogous forecasting: Use data from a similar past project as your starting point. If your last website redesign took 300 design hours, start there and adjust for differences in scope. It's fast, but it's only as good as your historical data.
• Bottom-up estimating: Break the project into tasks with a work breakdown structure, then estimate the people and hours for each task. Add them up to get total demand. It takes longer, but I trust it most for complex or unfamiliar projects.
• Three-point estimating: For each task, get an optimistic, most likely, and pessimistic estimate from the person doing the work. Average them and give extra weight to the most likely figure. This builds realistic buffers into your forecast instead of padding everything by a flat percentage.
• Capacity vs. demand analysis: Compare the hours your project needs by role with the hours your team has available. A resource gap analysis tells you where to hire, bring in freelancers, or shift timelines.
• Scenario planning: Build three versions of your forecast: a base case, a delayed start, and a scope increase. When the client pushes a deadline or adds features, you'll already know what it does to your team.
• Rolling forecasts: Forecast the next four to eight weeks in detail and keep later phases high level. Update the forecast every week or sprint as you learn more. Use this for long or agile projects, where detailed plans six months out rarely hold.

Best Resource Management Software

Here are the best tools to schedule, track, and optimize project resources.

Clicks on the links below may earn a commission, which supports our independent testing and review of software and services. Learn more about how we stay transparent.

1. 1. Dayshape — Best AI powered Resource Management for Professional Services firms
2. 2. Productive — Best resource planning and capacity forecasting
3. 3. Saviom — Best for resource planning & capacity management
4. 4. Retain — Best for multi-departmental complex organisations
5. 5. Scoro — Best for forecasting team utilization
6. 6. Float.com — Best for resourcing with financial visibility
7. 7. Runn — Best for real-time team capacity planning
8. 8. Kantata — Best for people-centric resourcing
9. 9. Teamhood — Best for capacity planning on a low per-seat cost
10. 10. Resource Guru — Best for resource visibility with heatmaps

Resource Forecasting Example

Let's say you're working on a four-month mobile app build for a client (The Fun App). The team includes an in-house project manager, designer, developer, visual creative, and QA tester, plus a freelance copywriter at $50 per hour.

1. Review your project pipeline: Check which other projects share your designer and developer over the next four months. If another launch takes up the developer in month two, agree on a start date with that project's manager before you commit to the client.
2. Determine resource requirements and skills: Break the scope into a work breakdown structure and list the skills each deliverable needs. Add non-labor costs too, like two software licenses at $100 each.
3. Review data from similar past projects: Pull actual hours from your last app build. If development ran 25% over estimate, use that number to adjust this forecast before you share it.
4. Determine resource availability: Compare each person's bookings and planned time off with the phases they're needed for. You'll find the designer is free in month one, but the QA tester is on leave for a week in month four.
5. Match resources to assignments: Assign the designer to phase one, the visual creative and copywriter to content, and the developer to build and launch. Move QA testing earlier in month four so it finishes before the tester's leave.
6. Plan for absences, attrition, and hiring: Keep a short list of backup freelance copywriters, and name in-house staff who can cover for the designer or developer.
7. Monitor and adjust as needed: Compare actual hours with the forecast each week. When a phase runs long, rebalance tasks or timelines before it pushes into the next one.

Resource Forecasting Best Practices

The forecasting best practices will help you optimize and standardize resource management so you can deliver successful projects.

• 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.
• Communicate and collaborate: By communicating on an ongoing basis with the project team and stakeholders, you can build relationships that will help you access resources, fill gaps, and leverage your network to see challenges.

Common Challenges in Resource Forecasting

The most common resource forecasting challenges are scheduling gaps, client delays, unrealistic timelines, unclear budgets, an uncertain sales pipeline, and unreliable historical data. Every forecast hits at least one of these, so here's how I'd plan for each.

Challenge	Solutions and Considerations
Resource scheduling: Planned time off, sick days, and people booked on other projects leave holes in your forecast.	Add known time off to your forecast before you assign work. Cross-train at least one in-house person for each role, and track bookings in a scheduling or capacity planning platform so nobody goes over 100%.
Client delays: Slow feedback or late assets from the client leave your team idle, then push work into weeks where they're already booked.	Write feedback windows into the contract, like three business days per review round. If the client misses one, shift the affected tasks right away and rebook the team instead of letting the overlap pile up.
Unrealistic project timelines: Deadlines set by sales or leadership often ignore what your team already has on its plate across the portfolio.	Check the timeline against current capacity before you commit. If the numbers don't work, bring other project managers and stakeholders options, like a later start date, a smaller first release, or extra freelance help.
Budget transparency: Without a full view of planned and actual costs, you won't notice a resource overspend until it's too late to fix.	List every budget line, including freelancers, licenses, and travel, and roll them up to the project total. Log actuals as invoices come in, and compare them to quotes so you catch variances early.
Uncertain sales pipeline: New projects often land with little warning, and you either scramble to staff them or hold people back for work that never comes.	Add likely deals to your forecast as tentative bookings with a probability (e.g. 50% or 80%). Meet with sales so you can firm up or release those bookings before they affect real work.
Unreliable historical data: If your team doesn't log time against tasks, past projects can't tell you much about future ones.	Ask your team to track time against tasks on every project, not only billable ones. Until you have a few projects of clean data, lean on bottom-up and three-point estimating instead of past averages.

Resource Forecasting FAQs

What’s the Difference Between Resource Forecasting and Resource Planning?

Resource forecasting estimates what resources a project will need and when. Resource planning decides how you’ll get and assign them. I think of forecasting as the demand side and planning as the action you take. You need a forecast first to build a realistic resource plan.

What’s the Difference Between Resource Forecasting and Capacity Planning?

Resource forecasting predicts the resources a project or portfolio will need. Capacity planning looks at what your team can deliver with the people and hours it has. Compare the two, and you’ll see where to hire, outsource, or move deadlines.

How Far Ahead Should You Forecast Resources?

Most teams forecast three to six months ahead, with the next four to eight weeks in detail. Short agency projects may only need a month or two. Long enterprise programs often look out a year, but expect the later months to change.

Who Is Responsible for Resource Forecasting?

On most teams, the project manager forecasts their own project’s needs. In larger organizations, a resource manager or PMO combines those forecasts across the portfolio and settles conflicts. Either way, I’d involve team leads, since they know how long the work takes.

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