THE HIGH COSTS OF FAILING TO

FORECAST RESOURCE DEMAND

INTRODUCTIONIn the current volatile economic environment, businesses are operating under rapidly-changing dynamics with priorities for projects shifting on a whim.

•Such scenarios force management to juggle already overloaded employees on a weekly or sometimes daily basis.

Companies without the right intelligence often end up inaccurately forecasting resource availability. While it may seem like another everyday business headache expenses can be extremely significant.

•We often refer to these as the High Costs Of Failing To Forecast Resource Demand.

Let’s go through the high costs of failing to forecast resource demand…

1. Compromised Quality or Compromised Project Deadlines:When you aren’t using an accurate forecasting solution, it’s common to get caught in a position where you don’t have the right resource available at the right time for your project.

This leads to:

•Reduced quality in work output since a resource with a separate skill set ends up being allocated to the wrong job. •Unnecessary work delays since the team waits for the right

resource to arrive. • Project delivery timelines usually being pushed back further and

further

2. Last Minute Hiring Of Low-Quality, High-Cost ResourcesThe lack of a forecasting solution often leads to last-minute hiring to fill the gaps, especially when the dates of a high-priority project simply cannot be moved.

The end result?

•Under-utilization of existing resources within the company. •Hiring on a whim leads to hiring of low quality resources.

3. Unnecessary Hiring/Firing Cycle and Employee DemoralisationWhen an organisation doesn't get the opportunity to take corrective actions that minimise a large scale mismatch between supply and demand, it often triggers unnecessary layoff cycles.

This often leads to firing existing experienced resources and then having to rehire again once the demand shifts. This has several impacts:

• Proves to be highly demoralizing for staff in an unstable work environment. • Future talent will be harder to find since they will fluctuate towards

companies with greater stability. •High cost of requiring to train and retrain new or returning employees.

4. Maintaining people on the benchCompanies are often forced to hire and retain extra people and keep them on “the bench” for tentative projects that have not yet been won (these projects can be either in the sales or the internal project pipeline).

The problem with this strategy?In a scenario where a project has not been ‘won’ you end up with a large unutilized workforce, keeping payroll expenses high despite the minimal output.

5. Insufficient Lead Time to Train Internal Employees:When you don’t have enough lead time to train existing internal employees you can be forced to hire externally as you need those special skills now and cannot take the time to train an existing employee.

Nothing is more wasteful than hiring extra people when there are already extra people in your company who aren’t producing for the bottom line.

The Solution?Dedicated Resource Forecasting

Remember, project management solutions are not designed for this type of forecasting Organisations who want to fight back against such invisible costs need to look for a dedicated resource management tool.

You need a solution that can:Compare your future capacity against the demand (either in terms of skill, role, team etc.). Accurately estimate the number and type of people needed for projects that are in the pipeline

By doing this you can head off the greater portion of these costs in advance and see an immediate impact in the

bottom line.

Register for a free trial today and see how Saviom can help

you

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