Project Time and Cost Forecast

Forecasting the time and cost of completing project deliverables is a crucial project management task. There are (2) types of forecasting: top-down typically done by senior management and bottom-up typically performed by the team members doing the work. Project stakeholders prefer accurate forecast as it supports good decisions in the process of developing cash flow needs. Project status reports depend on reliable forecasts as the major input for measuring variances and taking corrective actions when necessary. With that said, it is recommended that Project Managers have a database of detailed schedule and cost forecasts for every work package in a project. It is important to understand the different factors that can influence project forecasts:

  • Planning Horizon where current events are close to 100% accurate but are reduced for more distant ones.

  • Project Complexity which can expand time and cost in an increasing, non-linear fashion.

  • People as they can greatly influence the quality of time and cost forecast.

  • Project Structure which helps manage productivity and associated costs.

  • Padding which creates reserves for unforeseen project roadblocks.

While the above factors are mainly internal, please note that external factors can also influence forecast. Forecasting can be a complex process but its quality can be improved by considering the above mentioned factors early on during project initiation phase.

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