Categories: forecasting
Forecasting realism and credibility, but when yours keeps changing, it can be hard to feel like you’re being taken seriously.
Forecast instability is a common frustrations for sponsors and PMOs, and project managers are often at the sharp end. We know it’s happening without being able to explain why, or at least be able to explain why with a decent reason rather than ‘we estimated wrongly (again) so it’s all messed up).
Whether or not you deliver to budget, you’re also being judged on how good your forecasts are along the way. If the numbers change every month, expect to erode stakeholder confidence quickly!
Even if you reckon by the end of the project you’ll be on track with whatever it said in the business case. The thing is, while stakeholders don’t expect everything to be perfect, they do expect stability and a bit of predictability, so wild swings up and down just make it look like the project team doesn’t know what it is doing.
A forecast shouldn’t be a guess (or look like it’s a guess). It should be a best estimate based on what is known today: actual spend to date, committed costs, and assumptions about the remaining work.
What makes a forecast change
Here are 3 things that make a forecast change.Over-optimistic remaining effort
Yes, of course we can do all that work in just a few weeks… Early in delivery, teams often underestimate how long tasks will take or how much rework will be required. We can be over-confident about how productive we can be in a day or what suppliers will get done.Late recognition of committed costs
Making sure forecasts include committed costs can be another mistake that causes a forecast to change. Purchase orders, contract variations, or resource commitments may exist in practice but not yet appear in the cost report, giving a false sense that there is more money available than there actually is.Schedule slippage masking cost impact
Schedule slippage can also hide cost impact, especially when time and money are reported separately, and then knitted together in a finance report. Be explicit about what’s already committed versus what’s still an estimate.Regularly revisit assumptions about productivity, delivery pace, and remaining scope, and document what has changed and why. That at least gives you the data required to have smart conversations with stakeholders about the financial figures.
Stabilising your forecasts
A stable forecast doesn’t mean one that never moves. It means one that changes for understandable reasons and moves in smaller, more controlled increments.Start with separating known costs from assumptions, especially if some costs haven’t come in yet.
Book yourself some regular forecast hygiene checks to force everyone to have a look at where you are with the numbers. Align your cost forecasting with the delivery plan, so that milestones and spend profiles tell the same story. That can also help with cashflow as well, so your finance colleagues will be happier!
The goal here is to really understand the drivers of change – stakeholders tend to be happier when they understand why changes are happening. While it’s obviously better not to have too many wild forecast shifts, if you do end up with some changes happening, at least you’ll be in a position to evidence and explain why they happened.
Posted on: September 02, 2026 12:00 AM |
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