Baselining and forecasting are both important in running successful projects. Baselining provides a solid foundation to measure performance while forecasting helps project managers anticipate and address challenges. 

Baselines and forecasts are important in project controls, helping with planning, monitoring, and adapting to project changes. Together, they enable project teams to maintain control, make informed decisions, and increase the likelihood of project success.

In this blog, we will discuss what baselining and forecasting are, the benefits of using these techniques in projects, and how they can improve project outcomes. 

What is the difference between Baseline, Forecast and Actual?

In project management, the terms “baseline,” “forecast,” and “actual”, whilst related, refer to separate aspects of project planning, prediction, and real-time performance.

Some of the key differences are around the timing: baselining is established at the beginning of the project, forecasting is an ongoing process throughout the project lifecycle and the actual reflects real-time data as the project progresses.

To summarise, the difference between baseline, forecast and actual is:

• Baseline: Includes the original project plan, including schedules, budgets, and scope.
• Forecast: Provides estimates and predictions for project performance.
• Actual: Reflects the actual data and performance metrics observed during project execution.

What is a Project Baseline?

The baseline is created before the project begins, in the planning phase of the project lifecycle. The baseline provides a fixed reference point for project teams to refer to throughout project execution. This benchmark is used to compare with actual project figures, enabling project managers to see if goals are being met within the planned schedule, budget and scope. If there are significant variances between the expected and actual numbers/progress, project managers can act fast to fix the project. 

Why is Baselining Important?

The process of creating a baseline requires a clear understanding of the project in terms of scope, cost and schedule, providing a solid foundation for the project team in terms of understanding what is required and expected. The most significant aspect of a baseline is that it provides a clear standard used in project controls to monitor a project’s progress. Project controls continually compare actual project performance against the baseline. This involves tracking progress, costs, and timelines.

Other benefits of having a baseline include: 

• Early Intervention: Deviations from the schedule or budget can be identified earlier and addressed more quickly. 
• Stakeholder Communication: The baseline sets realistic goals and informs stakeholders about project expectations within the given time. In instances of project change it is also useful to have the baseline to manage stakeholder expectations and realistically show how a change in scope will affect the baselined schedule and cost.
• Earned Value Calculations: The baseline can be used in project controls calculations. For example, in Proteus once you have locked in your baseline it becomes the basis for calculations like earned value which lets you know how your project is actually performing against what was planned. 
• Project Evaluation: The baseline at the end of the project helps assess performance and identify successful and unsuccessful actions. 

Can the Baseline Change?

Resist making changes to the baseline where possible. However, in reality, projects often change in terms of cost, budget, and scope, especially in energy and engineering sectors. In these cases, changes to the baseline must be tightly controlled with all potential changes carefully logged and put through the appropriate approval process.

Proteus ensures that changes are managed properly with formal change control processes, for example, scope changes can only be approved by certain specified individuals. These change control procedures are important in re-baselining projects to prevent negative impacts such as scope creep. 

How to Create a Baseline for a Project?

1. Outline the project scope

Determining the scope of your project lays the foundation for creating a project baseline. This involves outlining a comprehensive list of the project objectives and deliverables. This is important because it ensures that from the beginning all stakeholders are agreed in terms of the requirements and expectations of the project. 

2. Create a detailed project plan 

Creating a thorough plan is integral to formulating a project baseline. A good way to do this is by creating a detailed work breakdown structure. A WBS breaks the project into smaller, more manageable tasks and makes the project team aware of the required work. 

3. Create a project schedule 

Estimate the realistic duration of each task and select milestones. Selecting project milestones is key as they provide specific checkpoints for project teams to monitor that the project is performing according to plan. A gantt chart may be helpful to map out your project schedule at this phase. Also, examining historical project data can be useful to assess how long similar tasks have taken in the past. 

4. Set a budget 

To establish the cost baseline you must consider direct costs, indirect costs as well as setting aside contingency funds. Project managers use this budget as a benchmark to track actual costs against the planned ones. 

5. Get approval from stakeholders

Once you have determined your project scope, schedule and budget all stakeholders must approve of the baseline. It is important to make sure that everyone is on the same page before the project starts. 

6. Use project management software to monitor project progress

After confirming your baseline and the project has begun it is imperative to closely monitor project progress. Project management software provides up-to-date information on project progress, helping project managers stay on track and take proactive measures.

What is Forecasting?

The Project Management Institute defines forecasting as “taking the project status information and extrapolating the current project performance to the end of the project”. Essentially, forecasting uses historical data and current data to predict the future performance of a project. 

To make accurate predictions and assess risks, it is recommended to wait until a project is 25-40% complete before forecasting. This is because forecasting requires a sufficient volume of data, according to PMI.

Common types of forecasting in project management include:

• Duration: Predicts the time it will take to complete the overall project as well as smaller tasks and milestones. 
• Cost: Involves estimating the financial resources needed to complete the project successfully.
• Quality: Predicts the quality of the project outcomes and deliverables to ensure that they will meet the promised standard. 
• Resource: Analyses the amount and type of resources required by the project including equipment, software and people. This encourages optimal resource allocation and planning.
• Risk: Enables project managers to anticipate potential risks and develop appropriate risk mitigation strategies. 

Why is Forecasting Important? 

Forecasting is a game-changer for risk management and helps increase the chances of project success. The data helps project managers anticipate, identify and address many potential issues such as cost overruns, a change in resource availability or a delay in a deliverable. Forecasting helps project managers make proactive decisions to address challenges before they become bigger problems.

Other benefits of forecasting include: 

• Improved resource management as forecasting predicts resource needs and enables project managers to be more efficient in their resource allocation. 
• The use of historical and current data in forecasting provides a sound basis for informed data-driven decision-making for project managers. 
• Project teams can continually learn and improve their forecasting process. After a project is completed, the project manager can examine how accurate the forecasts were throughout the project and work on refining their technique.

How Project Management Software can be used in Forecasting 

Forecasts are only as good as the data they are based on, so leveraging technology is crucial to getting the most accurate insights. Project management software conveniently automates the processes of gathering, analysing and presenting data. This eliminates the chances of errors and saves project teams valuable time. Moreover, the access to real-time data provided by project management software is unrivalled.

Proteus supplies project teams with a single source of truth allowing project managers to closely monitor project progress as it happens. Proteus does all the heavy-lifting using data for forecasting project controls calculations such as Estimate at Completion (EAC) and Variance at Completion (VAC). The accuracy of these forecasts enhances project managers’ decision-making capabilities. 

Conclusion

In the dynamic world of projects, baselining and forecasting are invaluable tools for success. Baselining provides a solid foundation for projects, whilst forecasting enables project managers to navigate uncertainties and challenges. By using these techniques, project managers can enhance their decision-making capabilities and improve their project outcomes. Project management software supports project managers in the delivery of successful projects, making baselining and forecasting easier and quicker.

About Proteus Project Software

Xergy Group’s Proteus project management software works with your existing systems and scales as your business grows. Created by project management leaders, for the diversified engineering consultancy sector, Proteus delivers an end-to-end work management software platform with detailed workflows from the early opportunity stage through to project delivery.

Proteus’ end-to-end project management software is a cloud-based system designed for businesses of all sizes to handle projects of unlimited complexity. Proteus is compliant with common project management frameworks and ISO standards. Each feature aims to make bottom-line improvements by improving utilisation, streamlining workflows, providing quick and efficient access to resources, and reducing overheads. Check out some of our client case studies to learn more about how Proteus makes a tangible difference.

How to get Proteus

We recommend getting setup on a free trial. Proteus operates under a software-as-a-service (SaaS) model. We offer Enterprise packages and flexible pricing solutions: contact our team to learn more.

We designed Proteus to be simple, and that means you can get up and running on Proteus without an IT team or support from a programmer. You will want to spend a bit of time configuring the admin console so that you have everything set up to suit your company structure, but it’s very intuitive and you don’t need a PhD in IT. However, we want you to get the best out of what is a brilliantly powerful tool, so don’t hesitate to ask for our support. We have a team of product experts who are ready to help you with the configuration process, so get in touch today by filling out the form below: