Set Forecast Methods
Use Case
When the project is first underway, the project manager establishes best practices for how the project team should forecast their budget items. Best practices include basing the forecasted remaining work on budget values at first, then basing it on average performance later. In addition, his team can use certain approved custom forecast methods as needed.
InEight Control includes several built-in forecasting methods, along with the ability to create your own custom forecast methods.
A common way to change forecast methods is at the individual cost item level:
Using Forecast Methods
The forecast methods you use will likely change based on the stage and circumstances of the project.
Current Estimate/Current Budget Forecast Method
At the beginning of the project, since you don’t have many actuals recorded yet, you will likely use Current Estimate or Current Budget as your forecast method.
Average Performance Forecast Method
After your project has progressed for some time, you may want to use the Average Performance forecast method to incorporate the current CPI into your remaining forecast.
For example, if you are running a .7 CPI, you may want to include that factor in your forecast, so you can have the visibility to address that and avoid having the overrun continue growing month after month.
This allows you to incorporate all the good, earned value information you’ve captured.
Custom Forecast Method
You may also elect to use a custom forecast method. For example, you might like to include a factor on top of your average performance to indicate how much better or worse than average the item is performing.
Important! The Forecast (T/O) qty and completed quantities need to be accurate to drive accurate forecast values.
Watch the video to learn more:
Committed Cost Forecast Method
Your committed cost represents the total cost you are under contract for with your subcontractor. In InEight Control, your Committed total cost can update automatically from InEight Contract if you have that setting turned on. Or you can have your Committed total cost update automatically from your ERP system. If your committed cost values come from an ERP system, you’ll likely use this method.
Using the Committed Cost forecast method, you can compare your Forecasted total cost to your Committed total cost to see if you are spending more than you had committed. Notice in the example below, the Forecast total cost is more than the Committed total cost. This would likely prompt you to look into why more cost has been paid out to the subcontractor than originally planned.
Warning! Forecasting based on committed costs is heavily reliant on all commitments being recorded in the system of record. Forecast should always be equal to or greater than the total commitment value and should also account for purchase orders that have not yet been recorded.
Contract Forecast
This method pulls the cost that is associated to a specific cost item from Contracts. This includes any anticipated or potential change orders for the contract. If you have all your vendor information in InEight Contract, this method gives you the benefit of automatically including any anticipated or approved change orders in the forecast total cost.
In the HVAC and Plumbing example below, because the Contract forecast method is selected, the Forecast total cost includes any potential change orders even though they are not yet contributing to the Committed total cost. This can give you a more up-to-date and accurate forecast for your vendor work.
