Construction Forecasting Beyond Financials: The Owner’s Guide

Just because a project is large in size, scope or social importance does not mean it will have infinite flexibility and budget. Projects can’t just change their offered service or timelines at the drop of a hat, and project owners and developers face a myriad of challenges from the very start — not to mention the ones that originate once the project is underway. 

Financial forecasting is a useful strategy to understand where a project is, how it got there, what happens next and planning for the future. It’s a tactic that can mitigate risk and maximize success.

However, there’s more to forecasting than just the numbers. In this article, we'll discuss how project owners and developers can help their teams employ a forecasting mindset in all areas of a project — which can improve outcomes across the board.  

Set your sights on every possible road.

Financial forecasting puts a forward-looking perspective on the numbers. Embracing this approach, both individually and with team members specifically tasked to look ahead, will give projects a malleable ethos in which any and all outcomes are possible. 

Looking ahead is an investment.

Changing technology and advances in medicine can cause large adjustments in a project’s ability to meet the growing needs of the industry and its stakeholders. Sudden crises such as weather events only add to the uncertainty of a project’s relevancy once operational.  That’s why it is in an owner or developer’s best interest to invest in looking ahead.

Master planning elevates opportunity.

Working closely with a master planner from the very start can help owners and developers hone their long term vision and plan for any complications that may arise. 

Having a person on staff who is solely responsible for envisioning the future of the project allows more ideas to be possible. Even the loftiest ideas at design can be filtered through that master plan to have its feasibility tested later on. Doing it this way and this early keeps it clear, leaves enough time for feedback and avoids last-second shifts.

Be flexible and intentional.

Regardless of the size, scope or planning, no project will move through the phases without changes to schedule, timelines, financials or personnel. That’s why staying one step ahead by remaining intentional about your decisions and being flexible when handling them is an important aspect. 

Balance cost and schedule.

Growing supply chain disruptions can make balancing cost and schedule difficult. Furthermore, owners and GCs may have different preferences regarding staying on schedule or staying on budget. Spreading out procurement locations and vendors and engaging a quicker purchasing strategy can be a successful maneuver to mitigate these problems. 

Rolling forecasting keeps things current.

It’s not uncommon for subsequent cash flows to differ from their original forecasts. That’s because once a forecast is built around the original schedule, it's basically a guarantee that things are going to change.

A rigid insistence on a prior plan won’t tackle the problems in the immediate moment. Using rolling forecasting can be a successful way to keep track of the original financial parameters while accounting for new and unexpected financial changes. 

When creating such flexible forecasts, intentionality can be further expanded to consider the bigger unknowns facing the industry today. With governmental changes, possible tariffs and unpredictable natural occurrences like major storms or fires, it’s important to find the best ways to integrate those components into forecasting as well.

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Embrace collaboration.

Collaboration doesn’t mean egalitarianism or a world without strong leadership.  The best road to a solid collaborative flow starts from the top. Owners and developers who embrace and encourage collaboration with their downstream partners will create teams capable of handling problems like disruptions, overruns and waste. 

Encourage multiple perspectives.

Putting the right people together can yield big results. On projects with so many moving parts, specialty needs and long project leads, getting the right people together with leadership as early as possible puts the project and those involved a step ahead.  

Good collaborative practices create mutual benefits for everyone. By including clinical, compliance, regulatory and construction expertise during planning and design phases it allows the integration of necessary reviews and checkpoints along the way rather than at the end. This alignment builds the trust necessary to hit the ground running addressing needs, decreasing risk and reducing expenses.

Breed success through transparency.

Perspective is influenced by the information at hand. If data isn’t readily available for all teams, or they have to parse through it to find their needs, a project can encounter slowdowns or become vulnerable to unexpected changes out of their control. 

Remember: Compartmentalization hinders collaboration.

Maintaining uniformity from a stratified project becomes complicated the more teams can’t see the forest for the trees. Selecting the right number of teams you trust will make early communication clearer and long term collaboration more succinct. 

Over-fragmentation of a project can hinder progress and inflate budgets due to miscommunication, duplicated efforts, schedule conflicts between teams and change orders arising from incomplete information. In the end it will be the owner left responsible for untangling the knot of a confusing and possibly irreparable build. 

In the short run, chopping up sections of a project and bidding them out to multiple firms can decrease the bottom line but can ignore the possibility of unseen costs incurred from an over-complicated work flow.

Depend on data.

Forecasting requires a deep understanding of all the numbers, not just the financial ones.

Schedules, logs, pricing charts, market information, vendor details, previous analytics and more are all part of the large bundle of data that gets accumulated over the life of a project.

Before an owner can utilize this data with the digital tools at their disposal, they have to be able to correctly identify the good data that will be usable for them and their projects. 

Software can save time.

Utilizing software and staff to keep data updated and available is in an owner’s best interest. An investment in time and efficacy can yield opportunities to utilize funds on other projects and improve work across a larger portfolio.

With a clear handle on the best data that illuminates before, during and after a project’s life, owners can proactively respond to complications, make the necessary changes, keep the pace up and make sure the ROI remains in the black. 

Crunching and cross-referencing can happen at the start.

Having the data at your fingertips means you can look at it from a variety of perspectives. This gives owners and developers the opportunity to think deeply about financial needs in light of time constraints, schedule hiccups and more. 

Investment in strong construction management software that can put the most useful data from multiple vantage points in front of you can create an advantage when dealing with interruptions that affect the long term operational efficiency of a healthcare project.

Looking Beyond the Forecast

Given the unforeseen challenges a project can encounter, its owners need to be mindful that financial forecasting alone is not enough.

It's equally important to apply the concepts of forecasting beyond the numbers to include other critical aspects of the project such as the schedule, acquiring good data and breaking free of communication silos to increase collaboration both vertically and horizontally.

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