There are a few things you need to know before you dive into a new project, like project objectives and goals, your target audience, market interest, and project feasibility.

In addition, you must confirm you have the resources to complete the job on time and within budget. Resource forecasting can help you estimate the resources you’ll need (people, equipment, materials, money, etc.) to meet the project’s goals successfully.

In this article, we’ll discuss resource forecasting, why it’s essential, and some best practices to help you forecast resources.

What is resource forecasting for project managers?

Resource forecasting is a tool project managers use to estimate what resources are necessary for successfully developing and delivering a quality product. Resource forecasting can vary depending on the type of industry you are working in and the size of your company. 

What’s the difference between resource forecasting and resource planning?

Resource forecasting and resource planning are different but connected steps of resource management. 

Resource forecasting

This is the first step in resource planning. It focuses more on making educated guesses about who and what you’ll need in a project based on past projects, new project scope, industry standards, regulations, etc.

Resource planning

After you’ve estimated who and what you’ll need for the project, resource planning is where you iron out the details of how you will acquire new resources and allocate existing resources. The plan is necessary to ensure that the resources you’ve identified are available in the project’s scheduled timeframe and are used efficiently during project development.

Where does resource management fit in?

Resource management is the ongoing process of executing the resource plan. It includes monitoring resource usage and making allocation adjustments as needed as your team works on the project. It tracks how efficiently resources are being utilized so you can maintain a balanced workload and prevent or quickly resolve conflicts or bottlenecks.

Resource forecasting, resource planning, and resource management are interdependent and work together to help you allocate the right resources to complete your project on time.

Why is it important to forecast resources?

Forecast resource management helps you make informed decisions about what it will take to get your project up and running. It can help you run your project more efficiently, on schedule, and within budget while meeting quality standards and customer satisfaction. Additionally, using a resource forecasting tool can:

• Give you a clear picture of your current talent pool: Identify potential gaps in current employee skill sets to make informed decisions about hiring or training.
• Help you optimize resource allocation: When you understand how many people you need to complete your project and you understand their skill sets, you’ll be able to estimate how much time each phase of the project will last.
• Help you analyze potential challenges: Resource forecasting can help you plan for and address potential challenges like company growth, employee turnover, training requirements, and so on. By looking ahead at potential company challenges, you can identify potential bottlenecks or conflicts in advance to create contingency plans.
• Identify industry trends: Nothing stays the same in any market, and unpredictable events can significantly impact your industry. Accurate resource forecasting in project management can boost flexibility and adaptability during changes.

Resource forecasting best practices

Every business is different, and the resources they need vary depending on their industry type. However, the best practices outlined here will generally apply to any project you are working on.

Understand the project scope

Before estimating your needed resources, you should understand the project’s scope. This means knowing the objectives, the budget, the timeline, and which deliverables are included. This information can help you more accurately predict who you will need, what skill sets are required, etc.

Look at past projects

Save yourself a lot of time by looking at a previous project to review resources, challenges, risk mitigation, contingency plans, etc. Historical data can give you insight into your resource needs in upcoming projects. 

Allocate resources in advance

Resource forecasting in project management can help you assess current employees' skills and determine availability over time. This information can help you “pencil in” an employee or a skill set for an upcoming project. If you enter skill sets as a placeholder, you can look at the workloads of employees with those skill sets and assign the person with the most bandwidth later.

Measure utilization

A utilization report will help you understand how many hours employees work on various tasks. This information shows you where the demand for specific skills and people is. For example, if a UI designer has a high utilization rate, that might indicate that the employee is overworked. You might need to hire more employees with that skill set.

Identify skill gaps

You might not have all the skills you need to complete a project, which will require filling in the gaps. This might mean hiring new employees or identifying people within the organization who have the skills but haven’t had the opportunity to use them before.

Contractors, freelancers, and part-time workers

Companies often use contractors, freelancers, and part-time workers. You can use the skill sets of these workers to staff a project. Their skills and availability can help you fill existing gaps so you can finish your project within the budget and on time.

Planned and unplanned time off

Most normal full-time employees take time off from work for holidays and vacations. You’ll have to factor in these planned days off as you estimate how many resources you’ll need. 

Additionally, you’ll want to plan for uncertainties such as unexpected time off due to sick days, family emergencies, employees leaving the company, etc. Resource planning is an estimation, meaning some uncertainty is inherent. To account for uncertainties, include flexibility in your projects. You also might want to consider creating a range of resource estimates to reflect various uncertainties.

Balance realism and optimism

Try to make your resource forecast as realistic as possible, considering potential challenges and uncertainties. Being overly optimistic in your estimations might lead to under-resourcing your project. Try to balance what you think you need and what you actually need.