Common in financial planning, rolling forecasts are also an essential tool in resource management. Here’s what you need to know.
Rolling forecasts are essential in resource management – if you want to make well-informed business decisions based on the latest data. And who doesn’t want to do that?
Rolling forecasts differ from traditional forecasts because they’re updated continuously. This means decision-makers respond to current market conditions – not the state of the market when the forecast was first written.
In a dynamic landscape like project management and professional services, resource planning based on information from who-knows-however-many-quarters-ago just won’t cut it.
That’s why rolling forecasts are a must for resource managers - and in this guide, I'll be showing you why. And once you know why, you'll be wanting to understand how you can create one for your context. So, I'll be digging into that, too. Let's get stuck in!
To understand a rolling forecast, you first need to understand what a forecast is. A forecast is a predictive tool that businesses use to anticipate future business conditions and make better-informed decisions.
It uses information – like historical data, current performance, and projections – to predict what the next 12 months will look like. The aim is to help business leaders make decisions based on best estimates rather than pure guesswork. I'm sure I don't need to tell you how vital this is in resource management!
(Want to learn more about forecasting in resource management? We have a whole webinar on the topic ➡️)
There are two types of business forecasts – static and rolling.
Given the goals of a forecast – to facilitate better business decision-making – a rolling forecast is highly beneficial compared to a static one, especially in fast-moving sectors.
A rolling forecast updates regularly to reflect the latest data available, capturing shifts in demand or market trends. This helps leaders make more timely, informed decisions that are based on current conditions – rather than relying on outdated assumptions.
As such, a rolling forecast provides the up-to-date information that leaders need for confident business decisions.
Resource managers can use rolling forecasts to improve their resource allocations, plan capacity better, and support workforce planning.
Since rolling forecasts update continuously, they offer a dynamic, real-time view of resource needs, helping managers stay agile in a fast-moving environment.
A resource manager’s rolling forecast might include:
When the forecast updates, new information is added. Such as changes to staff levels, new projects entering the pipeline, and other projects being completed.
With this information at their fingertips, resource managers can use rolling forecasts to:
By referring to a rolling forecast – rather than a static one – resource managers can ensure their resourcing decisions are effective, proactive, and strategic.
The benefits of rolling forecasts in resource management are the same as the benefits of resource management itself. They just support the process better than more static sources of information. Some of the top benefits are:
Rolling forecasts let organizations anticipate future workforce needs based on changing business conditions. This means:
Read more about capacity management and effective capacity planning strategies.
Rolling forecasts let organizations respond quickly to market fluctuations or unexpected challenges. By adopting a rolling forecast, companies make their planning process more flexible, letting them adapt more readily to changing market conditions and evolving project needs.
By constantly monitoring and updating forecasts, companies can spot potential cost overruns early, ensuring that resources are being used within budget and adjusting as necessary. Rolling forecasts also help avoid unnecessary costs associated with last-minute resourcing and project overruns.
Imagine you are a resource manager in a consulting firm. You set up an initial 12-month forecast. Then, every month, it is updated to include new project wins, major changes in project scope or schedule, changes in the workforce, etc.
Looking at the forecast, you see a new client has been onboarded and their project will need 10 additional consultants in three months. This insight lets you initiate the recruitment process with HR.
Having this information in good time means the gap can be filled with permanent staff recruited through the usual channels rather than reactively hiring consultants last minute, at a higher cost.
On the flipside, if a forecast reveals reduced demand, the firm can manage that scenario too – for example, retraining and redeploying resources that are in lower demand, to avoid the need for costly layoffs.
Now you know the benefits of creating a rolling resource forecast, you’ll want to know how to do it. We’ve got you covered.
The first step is to define the scope of your forecast. That includes:
To be useful for resource planning and management needs, you’ll need to include information like staffing levels, full-time equivalent (FTE) needs, utilization rates, turnover, etc.
Next, gather relevant historical data to populate your initial forecast. Look for stats on staffing levels, client demand, and project numbers.
In addition – and this is probably the hardest part – look at external factors and consider how they might impact your business over the next year. This will enhance your forecasting accuracy.
Next, it’s time for some educated assumptions on how business will unfold over the forecast period. These are past averages that help predict the future 🔮
It’s important to remember that these need updating during your rolling forecast. If you acquire more clients than usual – or if staff turnover increases – update your forecast and assumptions to reflect this.
Equipped with your assumptions, you can begin forecasting. But how will you do it? Common methodologies include:
Life will be much easier if you have access to resource management software, as it contains the historical data you need and predictive models you need to automatically create forecasts, and adjust them in real-time.
However, some businesses build their rolling forecasts in spreadsheets and update them manually – though this is obviously more time-consuming and prone to human error.
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Once your forecast is set up, you’ll need to update it according to your schedule – that’s the rolling part. Each month – or whatever frequency you selected – update the forecast with new information.
Adjusting your forecast with real-time data is essential for dynamic resource planning that reflects the current reality of your business landscape.
It isn’t enough to set up a rolling forecast and update it. You need to monitor whether your forecast is accurate and delivering improved business outcomes. Establish KPIs for your rolling forecast, and use variance analysis to determine your forecasting accuracy, eg:
This will ensure your rolling forecast planning process is effective or identify any room for improvement.
Rolling forecasts help dynamic businesses make better decisions and stay ahead of their fast-moving market. For resource managers, it’s a must-have to support better resource utilization, capacity planning, and workforce development.
If you don’t fancy fussing with spreadsheets and manual calculations, Runn creates automatic rolling forecasts, so you can accurately forecast without the hassle.
