What is resource forecasting and how can it benefit your small business?

Discover how resource forecasting can revolutionize your small business operations.

Whether or not a project is successful depends on how you utilize the available resources. You may have limited resources (especially if you’re at a small business), but how you manage them can have a huge impact on project performance.

However, effectively using your resources doesn’t happen overnight. It begins long before the project starts through resource forecasting— a process that involves predicting the resources you’ll need throughout a project lifecycle.

In this blog post, we’ll explore resource forecasting—what it is, why it matters, and how to implement it effectively. 

Let’s dive in. 

What is resource forecasting? 

Resource forecasting helps project managers and their teams figure out what they’ll need to successfully deliver their projects. While project managers look at everything from equipment and materials to time and budget, it’s the people who matter most—they’re the ones who actually get things done.

Basically, resource forecasting lets teams see who’s working on what and whether they have enough bandwidth to handle it all. Project managers use these insights to make sure work is spread out fairly. After all, when just a few team members end up doing most of the heavy lifting, they’re bound to burn out—and both their morale and work quality will take a hit.

Resource forecasting is one piece of a bigger picture 

While resource forecasting is crucial to any successful project, it is only a part of a process known as resource management. Resource management encompasses resource forecasting and resource planning. Here’s how the entire process works:

After you have made accurate forecasts, the next step is resource planning. This involves determining the resources required to deliver projects and allocating and scheduling them based on team capacity.

Once you successfully plan your resources, you can then manage them. Resource management is the final step — the bigger picture. This step involves monitoring and adjusting resource allocation as the project evolves. As a result, resources are adequately employed.

For example, through resource forecasting, a company can predict that it will need ten additional developers. Afterwards, the company may plan for these resources by hiring the necessary staff, allocating a budget and software, and creating a project timeline.

Finally, it will manage these resources by monitoring the progress of the development team and adjusting workloads as needed. The company will also ensure the project is launched on schedule and within budget.

So, in essence…

Without resource forecasting and planning, resource management couldn’t fulfill its purpose of allocating and optimizing resources to the right tasks.

Benefits of resource forecasting

Think of resource forecasting as your crystal ball for project success—instead of constantly putting out fires and hoping for the best, you can actually see what’s coming and plan for it. 

Here’s a breakdown on why it’s worth the effort. 

Reduces project cost

One of the most effective ways to improve your return on investment (ROI) on a project is to reduce its costs. You can accomplish this with an advanced forecasting tool to anticipate future resource needs.

This gives you enough lead time to implement essential resourcing strategies for building a solid resource pool. In turn, it eliminates the need for last-minute scrambling to secure competent resources or resorting to expensive recruitment cycles.Resource forecasting also ensures your workforce has sufficient tools to do their jobs. For example, it can help determine the right number of licenses needed for cloud-based services like cloud PBX systems, preventing over- or under-provisioning.

Clearer hiring picture

Smart resource forecasting also lets you spot talent gaps early on, so you can bring in the right people before you’re in a crunch. This means you’ll avoid common issues like overstaffing, relying too heavily on temporary workers, or losing good people because you can’t keep them busy with meaningful work— all of which saves you money in the long run.

Enhances resource utilization for billable and strategic work

Forecasting resources enables you to gain visibility into non-billable, billable, and strategic work ahead of time. Thus, resource managers can enhance profitability by periodically deploying resources from non-billable to billable and strategic projects and eradicate under and overutilization of resources. 

Identifies potential challenges and hurdles

Resource forecasting helps you spot potential hurdles before they trip you up—whether it’s planning for growth opportunities or making sure your team has the training they need. Getting ahead of these challenges means they’re much easier to handle down the road.

Let’s face it: teams change. People move on to new opportunities, get sick, or need time off for personal matters. That’s just part of doing business. Smart forecasting takes this natural turnover into account, helping you create realistic plans that won’t fall apart when life happens.

Make the most of your team’s time

Lastly, good forecasting helps you spot when team members are about to wrap up their current projects. Instead of letting people sit around, you can plan ahead to line up their next assignments. 

Better yet, when there’s a gap between projects, you can use that time productively—whether it’s getting team members involved in training or having them shadow other teammates to learn new skills. This approach keeps your team engaged and billable, while helping them grow their expertise.

How to perform your own resource forecasting 

Performing a resource forecast can seem daunting, considering all of the variables involved. But it doesn’t have to be. Here’s our step by step guide to help you get started. 

1. Review the project pipeline

Start by getting a clear picture of what’s already on your team’s plate. Take a look at your project portfolio to see who’s working on what, and for how long.

Your project management software can help you map out your project pipeline, but don’t just rely on the data. Instead, connect with other project managers to discuss resource needs and timing. These conversations help you understand when you can realistically kick off your project based on your shared team capacity.

Once you have this overview, you can build out accurate estimates for the resources, time, and budget you’ll need to make your project successful.

2. Determine resource requirement

Take time to map out all the resources you’ll need in your project management tool—think of it as creating a detailed blueprint for success. Look at your project scope and break down everything from team skill requirements to necessary equipment and software.

While you’re planning, consider both the obvious costs and the ones that often get overlooked. Sure, you need to budget for your team and materials, but don’t forget about things like permits, travel expenses, and specialized tools. Looking at the full picture helps you build a more accurate resource budget forecast. 

3. Analyze historical data

Learning from your past projects is key to better resource planning. By analyzing previous work, you can spot patterns in timelines, resource needs, and common challenges that help shape more accurate resource forecasts.

Keep an eye on how your resource needs change throughout the year. Every business has its natural rhythms—busy seasons, holiday slowdowns, and times when clients typically need more support. Understanding these patterns helps you plan ahead for everything from staff vacations to increased workloads.

To make the most of this historical data, gather it all in one place and look for clear trends. Break it down by department, region, or service type to get a detailed view of what your business really needs. This granular understanding lets you create flexible resource forecasts that can scale up or down as demand changes.

Modern forecasting tools can give you an extra edge here. Just as AI in logistics can predict supply chain disruptions, AI-powered software can quickly analyze mountains of data to spot patterns you might miss, helping you make smarter decisions about your resource needs, from staffing levels to materials to tools. 

4. Scenario planning

While you can’t see into the future, you can prepare for different possibilities. Think of it as creating a “Plan A, B, and C” for your resource needs.

Start by identifying what factors could impact your resource planning—things like unexpected client delays, team members taking time off, or sudden spikes in demand. Then map out different scenarios: What does your resource allocation look like when everything goes smoothly, with projects finishing early and teams working at their best? What about when multiple challenges hit at once, like high absence rates during your busiest season?

Having a game plan for these different situations helps you respond quickly when things change. The more scenarios you consider, the more confident you can be in handling whatever comes your way.

5. Utilize software tools

Finally to strengthen your resource forecasting efforts, use resource management software that can automate and streamline the process. Many solutions offer seamless software integration to connect your existing project management and HR systems, providing a holistic view of your resource landscape. 

These tools often come with built-in forecasting algorithms and visualization features that make spotting trends and potential bottlenecks easier.

When selecting a resource management software, be sure to look for features such as:

• Real-time resource availability tracking.
• Capacity planning and workload balancing.
• Skills matching and resource allocation optimization.
• Customizable dashboards and reporting.
• What-if scenario modeling.
• Integration capabilities with other business systems.

By leveraging these tools, you can make informed decisions and adjust your resource allocation strategies quickly as project demands change.

Setting Your Projects Up for Success

Resource forecasting might seem like a lot of work upfront, but it’s one of the best ways to set your projects up for success. By taking time to understand your future resource needs, you can make smarter decisions about everything from team allocation to project timelines. Not only does this help you avoid costly surprises and reduce risks, but it also helps your projects run more smoothly and profitably.

The steps we’ve covered will help you build more accurate forecasts and keep your projects on track. Remember: good planning today means fewer headaches tomorrow.