Forecasting

Overview

Forecasting tools try to assist with 3 key pieces of information, how much will a project cost at completion, when will those cost be incurred and when will the revenue to offset the costs be received. IPM addresses these requirements by providing a number of tools and approaches to allow users to easily record subjective information used in the process of determining a forecast. The types of information used for forecasting projects can include any and all of the following:-

Percentage Complete at a task level
Percentage Complete at a job level
Percentage Complete at a Contract item level
Production Units in place
Cost to Complete (based on a subjective assessment at the task level)
Cost to Complete (based on a subjective assessment at a detail level)
Resource Requirements at a detailed level
Accruals to reflect unclaimed progress against subcontracts.
Completion time frames at a task level
Projected Billings at a Contract Item Level

Most companies will have an established methodology that uses some of these elements to develop a forecast however most companies have a their own theories on how these various moving parts are combined to arrive at a forecast.

Entering Forecast Data

Entering Forecast data such as Cost To Complete and Accruals can be done at either the Job Task (Cost Code) level or at a detailed level. The main determining factor as to which is used is usually driven by your business model. If for example you are a general contractor and your usual process is to let subcontracts at the Job Task level and have few if any of your own resources then you may only need to record a single lump sum figure as a cost to complete at the task level.

Alternatively if you have a significant number of your own resources working on a project and/or a number of subcontractors working on each job task then a detailed approach may provide better information.

For some organisations a combination of both approaches may be appropriate where some Job Tasks have a single contractor for example Electrical whereas on the same project a Job Task for Excavation may involve multiple contractors.

Entering at the Job Task Level

Entering a forecast to complete, percent complete, production units in place and accruals and other values customizable by the business can all be completed in the Job Progress section of the main job screen. Although there is a basic calculation built into the right hand panel of the job progress screen, the main tool for utilising the entered data is the reports that IPM produces because the logic involved in calculating the forecast final cost can be customised to suit the organisation.

Entering at the Detail Level

Forecast Information can be entered at a detailed level by clicking on the drill through button on the detailed forecast column. This will open a detailed listing of the budget associated with a Job Task and allow information to be recorded against existing budget line items in the Forecast columns and the accrual columns. This information is then summarised on the Job Task record on closing the detailed window. If additional details need to be added they can be added by clicking the [+] button on the tool bar. This as a Forecast line on which the additional detailed information can be recorded.

Forecast Methods

IPM Provides for 3 forecast methods on the dropdown list on the Job Task. The methods are Budget Remaining, Lump Sum Forecast and Detailed Forecast. The logic associated which each method is built into the IPM reports where it can be adapted to suit an organisation.

Budget Remaining - The default logic used in the budget remaining approach is that essentially whatever Budget is available is what will be spent so no other amounts are included.
Lump Sum Forecast - The logic used in a Lump Sum forecast includes the Lump Sum Value recorded on the Job Task as uncommitted amounts that will be spent. For example if I know that a subcontractor is going to request a variation for $5000 that is sustainable and is not reflected anywhere in the data already then that $5000 should be recorded in the Lump Sum field on the Job Task and it will be added to all the other values to arrive at a Forecast as Completion.
Detailed Forecast - The logic used in a detailed forecast includes the Detailed Forecast amounts recorded in the details page as uncommitted amounts that will be spent. For example if I know that a range of resources I have included in my budget are required fro additional 4 weeks then I would record this against the relevant resource lines in the forecast units column. This would extend out and total up to the Job Task then that and it will be added to all the other values to arrive at a Forecast as Completion.

Production Units in Place and Percentage Complete figures can also be used in IPM reports however there are no standard examples of this in the IPM report suite.

Cash Flow Forecasting

IPM Provides a standard 12 month Forecast cash-flow report for on premise deployments. This report uses a forecast cost to complete figure and spreads it over the coming 12 months based on a flat spread. To do this it uses the dates from the Job Progress section of the Job Screen. Each Job Task has a start and end date presented on this screen and these can be maintained by dragging the progress bar for each task out across the Gantt periods presented or by simply keying in the dates. The report takes these dates and works out how many days in each period and performs a flat spread over the months.

Note: Development work is currently underway to store this forecast information on Job Snapshots to facilitate this same functionality for more than 12 months in both on-premise and online environments.

Project Snapshots

IPM Projects support a Snapshot Process that allows current project statistics to be stored on forecast records for later comparison with future periods. This process is workflow driven and needs to be configured to use an individual organisations approach to Forecast Reporting. Snapshots are accessible from the Forecast Tracking section of the main job screen .