Forecasting – How to Look Ahead for Your Construction Business

Just as a good set of binoculars allowed the leaders of pioneer groups to see what they were moving toward, what was on the horizon, and what they could expect as they moved forward, today’s leaders of construction companies need a means to look at what lies ahead. What are the safe paths? What provisions are needed? What obstacles can be expected? What precautions should be taken? How will the journey proceed? 

The “see ahead” tool used by today’s savvy construction leaders, which allows them to gain an informed perspective on future scenarios, is known as forecasting.    

Forecasting – What Is It?

In the construction industry, what is involved in forecasting? 

Forecasting is the process of making predictions based on past and present data and management insights. Forecasting gives you a more informed perspective on future scenarios. It is a decision-making measure that savvy construction contractors use to estimate future growth.  

If you’ve read our past three posts, How Experienced Construction Contractors Control Costs, Financial Planning in the Construction Industry, and Estimates Provide a Foundation for Spending Plans, then you have a better understanding of the part spending plans (budgets) play in the overall health of your construction business. 

In this article, we’ll explore how project spending plans and forecasting are closely related processes that majorly impact your construction company.

Vital Forecasting Components

Just as a properly working excavator has vital components (the boom, the arm, the bucket, and the cab), proper forecasting also relies on vital components.     

Materials – Anticipating the quantities and costs of materials needed for a project.

Cost – Assessing the financial aspects of a project, such as labor, materials, equipment, and subcontractors.

Project Duration – Estimating the time required to complete a project.  

Cash Flow – Predicting the timing of income and expenses to ensure available means and to manage financial risks. 

Forecasting is More than Cost Estimations

In the construction industry, forecasting goes beyond simple cost estimations. It takes a systematic approach. The spending plan establishes the initial financial intention. Forecasting helps refine that plan through the use of real-time data.

Woven together, a spending plan and forecasting become a critical process for project planning and management. 

Spending Plan + Forecasting 

By combining a spending plan and forecasting, you can:

• Establish achievable project goals. 

• Efficiently manage resources.

• Effectively strengthen risk management practices.

• Enact decisions based on data-driven insights. 

• Energetically improve overall project outcomes.

Forecasting and Profits 

Putting it all together – Construction companies can maintain healthy profit margins by accurately predicting costs and managing resources effectively. Need I say more? 

The team at The Profit Constructors has the know-how and the tools to help you pick up your binoculars, adjust the settings, and see what lies ahead. Contact us to see how we can help you get the most out of your spending plan and your forecasting activities. 

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

• Clients and customers

• Employees and subcontractors

• Vendors and service providers

• Governmental entities 

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

• Remain informed

• Avoid hassles

• Reduce risks

• Be future-ready

Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735