Interestingly though, even if a business does try to match up skills supply and demand, there is a quantifiable benefit to doing it well. If projects over-forecast the need for skills, then valuable resource is allocated to existing work, instead of new opportunities. I call this the opportunity cost of over-forecasting. For every labour-week over-forecast consider the opportunity cost to be the lost contribution to margin, which is quantifiable. If projects under-forecast the need for skills, then we are back in over-time situations, or even worse, a critical failure to produce a deliverable on time. I call this the direct cost of under-forecasting. Consider every labour-week under-forecast to be at least the cost of overtime for that week, which is again quantifiable.

One organisation I worked with started to track forecast progress every month, against what they actually achieved in the month. It related that to the resource demand forecast every month, and reconciled it against what resource was actually supplied to the project. So it worked out, had projects actually been supplied with what was demanded (which does not always happen, as resource managers need to prioritise allocation), what progress would have been. In general this organisation found consistent over-forecasting. The principle is: for the hours you forecast to burn in the next period, what do you forecast to earn. And what did you actually burn and earn? Comparing these two ratios gives you your resource forecasting accuracy, and variability in this allows you to quantify the opportunity and direct cost of inaccuracy. I estimated the opportunity cost to the business I mentioned earlier to be in excess of £5M annually, on a £100M turnover and £15M net profit. Making a relatively small investment in resource forecasting accuracy would have resulted in a significant increase in profitability.

So how can business improve their resource forecasting capability, and how do Earned Value and BIM help? Here are my thoughts on this:

1. Develop a business dictionary of key skills that you need to track on projects. Involve HR, Engineering, Project Delivery and Finance personnel in agreeing this – they are all stakeholders.
2. Make sure all your design activities are explicitly planned – in timescales and resource requirements. Don’t go too detailed here – it is normally impossible to tell in advance how many check/rework cycles you might have on deliverables so my tip is to keep design activities relatively high level – at a level engineers would be comfortable booking time to. This level should be the level of your logic linked and resourced design plan. It is no good just scheduling out resource demand without linking it to timescales for delivery – resource manager who do this often get caught out as they are locked into thinking only about deploying the resource they have, or identifying shortfalls to deliver the work they know about – it is virtually impossible to see dependencies or wher work can be re-allocated within the business to under-utilised areas without an overall resource plan linked to design deliverables and dates.
3. Use Earned Value and Earned Schedule analysis at the activity level to condition forecasts for remaining duration and resource demand. Automate this process and sense check the results rigorously. This will need a degree of commonality of data structures across a variety of business systems to relate scheduling and time-recording systems, but it is not hard to do with the right drive, conviction and expert help. It is important when sense-checking to compare resource levels currently on each project with those demanded in the future few periods. Large ramp-ups immediately after the data date are indicative of either unrealistic demand forecasting, or incomplete rescheduling of activities ‘riding’ on the data date.
4. Make sure you break down the activities into design deliverables (weighted steps) and updat these regularly to give accurate assessments of % complete. Here is wher BIM helps – your BIM execution plan should be describing what the maturity of design deliverables is at any stage, and your BIM model or Common Data Environment can be interrogated to assess the maturity of each element of the design.
5. link your estimating system (with skills requirements) to your programme of work at high level and develop parametric estimates. One organisation I worked with was subsequently able to produce a rough cut resource demand plan within 2 hours of receiving information (published and available on line) about customer investment plans. link all of these resource plans together and you quickly have a programme of resourced opportunities for your portfolio. Which ones can you deliver? Which ones do you need to recruit for? Which ones must you turn down to avoid over-commitment?
6. Present the results clearly, and regularly. If you can, enable on-demand analysis for your manager in simple-to-drive dashboards. Don’t expose your managers to the complexity of the scheduling system. But do involve them in building and understanding the forecasting process, or there is a risk that if resource forecasts show an unpalatable result, your business experiences the ‘not invented here syndrome’ and fails to take important action.
7. Build metrics to monitor the effectiveness of your resource forecasting process and value the improvement to demonstrate the effectiveness of your investment in project controls.

So what sort of output might you get and what situations will this help you manage? Well for starters, if you pay attention to the results and choose the appropriate management actions, you will improve margin through reduced opportunity cost and direct cost. You will deliver more reliably on commitments because you will be able to spot resource hotspots and bottlenecks in time to do something about them. You will be able to plan for long term growth.

And there is one other, very important side-effect: better resource management means more continuity for your engineers. There is nothing as disruptive to the design process as the constant stop-reallocate-restart-stop: it takes a considerable time for your engineers to re-assimilate the background of an incomplete task in order to restart it. This has a significant demotivating effect. And with skilled engineering resource being as scarce and as hard to retain as ever it was, better resource forecasting means a more motivated, committed and satisfied pool of engineers. That surely makes a difference in any engineering design business.