Construction Forecasting Done Right: A Key to Successful Project Planning

Construction forecasting isn’t just estimating costs. It’s about making smarter, more strategic decisions to keep your projects on schedule, your revenue streams steady, and your resources properly allocated. Yet many contractors only forecast for active jobs, missing a critical piece of the puzzle: bids and future workload projections.

Why is this a problem? It leaves future workloads uncertain and potential bottlenecks unseen. Without including bid data in forecasts, you risk making hiring, purchasing, and scheduling decisions without the fullest picture. And that makes it difficult to accurately plan for growth, workforce needs, or potential slowdowns.

Let’s explore the importance of accurate construction forecasting, the risks of limited forecasting, and how you can take control of your future success.

Why Accurate Construction Forecasting Matters

In construction, predicting labor and resource needs is essential for profitability. But many companies still struggle with forecasting accuracy, leading to last-minute staffing changes, unanticipated costs, and revenue disruptions.

Common Challenges in Construction Forecasting

• Historical data, market conditions, and predictive analytics are often overlooked: Without leveraging these insights, contractors struggle to accurately predict win rates, project timelines, job resource requirements, and potential delays.
• Construction cycles are unpredictable: Material costs fluctuate, projects are delayed, and labor shortages can upend even the best plans.
• Many companies rely on outdated forecasting methods: Spreadsheets and disconnected systems don’t provide real-time data for accurate predictions.
• Most forecasts focus only on current jobs: Without bidding data, historical project data, contractors risk surprise slowdowns and missed revenue targets.

Let’s take a closer look at why construction forecasting is crucial and what happens when it’s not done correctly.

1. Workforce Planning: Avoiding Labor Shortages & Overages

A workforce shortage can delay projects, increase overtime costs, and force contractors to hire expensive subcontractors at the last minute.

For example, let’s say a contractor only forecasts for active jobs and assumes their crews will be busy for the next three months. But bid losses cause a sudden gap in scheduled work, leaving workers idle and revenue stalled. Without forecasting labor needs ahead of time, they failed to adjust their hiring strategy.

How to fix it:

• Integrate labor forecasts with bid data. If you see a gap ahead, you can ramp up bidding efforts or delay hiring to match demand.
• Use historical data to track seasonal slowdowns. If projects slow in winter, proactive planning prevents staffing issues.

2. Cash Flow Stability: Preventing Revenue Gaps

Cash flow is one of the biggest financial challenges in construction, with contractors constantly balancing invoices, expenses, unpredictable payments, and ensuring cash flow will support project commitments.

Let’s look at an example where a general contractor secured several large projects but didn’t forecast revenue dips between phases. As a result, his company found itself short on funds when waiting for milestone payments, leading to delayed subcontractor payments and strained relationships.

How to fix it:

• Factor in bid win rates. Knowing how many bids typically convert into jobs helps forecast incoming revenue and expected commitments.
• Use historical project data, customer payment history, and receivables to predict cash flow.
• Project cash flow beyond active projects. Looking ahead 3-6 months prevents surprises and ensures steady operations.

3. Bidding Strategy: Balancing Opportunity and Risk

Without an effective forecasting system, it’s easy to accept too many projects at once, which can lead to resource strain and costly project delays. On the other hand, not bidding aggressively enough may leave revenue gaps and underutilized crews.

As one example, a specialty contractor didn’t track win/loss rates or bid performance trends. Instead, they just assumed they needed to submit more bids. However, their data revealed they were actually losing jobs due to poor pricing strategy – and not a lack of opportunities.

How to fix it:

• Analyze bid opportunities against active projects to spot revenue gaps and current commitments.  Bid aggressively to fill the gaps and less aggressively when resources are scarce.
• Analyze past bid performance. Identify what types of projects are most profitable and worth pursuing.
• Prioritize high-value bids. Instead of chasing low-margin work, focus on projects that match your company’s strengths.

How to Fix the Forecasting Gap

Many contractors rely on systems like Procore or ERP tools to forecast workforce needs and financial performance. While these tools provide valuable insights into active projects, they don’t provide a complete forecasting solution by themselves. This is where PowerBI comes in.

For many people, Power BI is a helpful tool – it’s well-known, widely used, and even has a free version. But there’s a catch with using Power BI for construction projects: it wasn’t built for contractors like you.

ZenTek Consultants provides a solution that transforms forecasting: bringing together job cost accounting, project management, estimating, CRM, inventory, and bidding data into one platform with business intelligence dashboards designed specifically for contractors. And by leveraging AI, machine learning, and market trends, it delivers predictive analytics for the most accurate forecasts possible.

When forecasting is done right, you don’t just react to changes: You stay ahead of them.

Learn more about how ZenTek Consultants can help.