With the construction industry undergoing a digital transformation in recent years, a strong emphasis has been placed on collecting accurate data to inform the decision-making process at the company and project levels. “Forecasting” has quickly become a buzzword and an important criterion when evaluating construction resource management software. However, there is sometimes a disconnect between contractors in regard to what workforce forecasting is and why it matters to their organization. This article will define workforce forecasting and why it should matter to you.

What is workforce forecasting?

Workforce forecasting uses historical and forward-looking workforce data to predict or identify trends in workforce planning and utilization rates. This data is meant to answer important questions like:

Do we have the capacity to take on a new project?

Understanding your workforce capacity can help to identify future projects that may require an increase in the price you bid because you will need to bring on more team members to complete the project in the event that the bid is won.

Where can we take on more work?

Your forecasting should highlight dips in your workforce utilization rate and identify team members who are being underutilized. Time is money, and if team members are underutilized, it costs your organization money. Accurate forecasting will help keep your team working at your desired capacity and ensure no one falls through the cracks and becomes an expensive mistake.

How will a new project, or change in a current project, impact our workforce strategy?

Things change frequently in construction. It’s the nature of the industry that dates frequently get shifted, changes in project scope happen, and adjustments need to be made. Identifying, in real-time, the impact that project changes will have on your workforce plan and strategy helps to make informed decisions regarding how those changes are managed to remain as profitable as possible on each project. The same goes for new projects. Seeing the impact on your workforce plan allows you to plan better new projects to mitigate risk and increase productivity and profitability.

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Is my workforce spread too thin?

The flipside of underutilized team members is overworked team members. Being able to identify periods of high utilization can help to scale back project allocations where needed. It’s typical in construction to have your team working at a pretty high utilization rate, but running your team on high for too long can lead to unhappy workers, heightened stress on the job site, and potential safety risks. Workforce forecasting helps to identify these high utilization trends so that leadership can take action to right the ship ahead of potential conflict. Visit this page to learn more about the Bridgit Bench Forecasting Dashboard.

Do we need to hire?

Staying ahead of recruitment to mitigate future project risk can significantly impact your bottom line, especially in the current competitive hiring environment in construction. With nearly 5.1 million construction and extraction workers expected to retire in the coming years, that competitive environment will only be amplified when looking for skilled workers. Accurate forecasting can help identify projects requiring new team members to keep you ahead of the competition when the time comes.

Why is workforce forecasting important for construction?

Construction is a long game. With projects often extending for months or years, knowing exactly how a new project will impact your business or how a dip in your workforce utilization will affect your company’s profitability is crucial to playing the long game successfully.

Today, more and more general contractors are migrating their workforce planning and forecasting to automated software. This push comes from a desire to plan, execute, and manage projects and their respective allocations more effectively and productively.

Not only does using an automated system to forecast your workforce supply and demand help to improve a company’s profitability, it can also help to enable collaboration within your organization. When everyone on the team has access to the same information, it helps to ensure that your team is equipped to contribute to the decision-making process and understand the impact those decisions will have on the workforce planning strategy.

Labor shortages are also a consistent challenge for the construction industry. The Bureau of Labor statistics has indicated that the number of job openings in the industry has almost doubled since 2014, with only a 14% increase in new hires. It’s important for general contractors to forecast their workforce needs and be proactive instead of reactive in regards to their recruitment process. Identifying gaps in the workforce early allows contractors to stay ahead of their recruiting, which can make the difference between a good and bad hire in such a competitive environment.

Digital technologies and construction software, like Bridgit Bench, provide real-time, accurate forecasting data and insight into utilization rates to make informed decisions around project bidding and allocations. This insight can help to keep the project pipeline on track and has quickly become a competitive advantage for general contractors that have migrated away from their manual processes and welcomed the digitization of core operations.

Bridgit Bench is the leader in construction resource management and workforce planning. Our solution helps operations managers better understand their workforce forecasting with clear-cut, highly visual utilization reports and allocation breakdowns on upcoming projects. The utilization reports can be filtered by team, division, region, or any custom people field. They can also be used to compare utilization by different people properties. If you wanted to see your utilization rate for a specific region and further compare by title, Bridgit Bench is the right tool for the job. The forecasting dashboard can also be viewed up to 5 years out to stay ahead of any potential drops in your workforce utilization.

Key Methods for Workforce Forecasting

Workforce forecasting is an essential process for preparing organizations to meet staffing demands. Companies rely on a mix of methods—data-driven models, expert insights, and hybrid approaches—to anticipate changes in workforce needs and improve resource allocation. Below are the primary methods used for workforce forecasting:

• Quantitative Methods
• Qualitative Methods
• Hybrid Approaches

Quantitative Methods

Quantitative methods utilize data and statistical analysis to provide reliable workforce predictions. These techniques work best in predictable environments where historical trends offer valuable insights.

Trend Analysis
Trend analysis evaluates past workforce patterns to estimate future needs. By studying data such as employee turnover, hiring rates, and retirements, companies can make informed staffing decisions. Identifying gaps early ensures smooth workforce transitions​.

Time Series Analysis
Time series models analyze time-ordered data to reveal recurring trends, including seasonal spikes or cyclical fluctuations. Industries with predictable workforce demands—like construction—benefit from this method to ensure operations remain on track​.

Regression Analysis
Regression analysis identifies relationships between workforce needs and external variables, such as economic indicators or project schedules. It helps organizations understand which factors drive demand, allowing for targeted workforce strategies​.

Qualitative Methods

When numerical data is sparse or situations are uncertain, qualitative methods fill the gap. These rely on expert judgment, scenario planning, and managerial insights to forecast workforce requirements.

Expert Opinions and Delphi Method
The Delphi method gathers input from subject-matter experts through iterative rounds of discussion. Over time, forecasts converge into a well-rounded, informed prediction. This approach works well for complex, large-scale projects​.

Scenario Planning
Scenario planning creates hypothetical situations based on different assumptions, helping organizations prepare for diverse outcomes. It’s particularly effective when sudden changes—like shifts in project timelines or market demands—are likely​.

Managerial Judgment
Managerial judgment taps into the experience of leadership teams to forecast workforce needs. Combining real-world knowledge with business objectives allows organizations to craft realistic, adaptable staffing plans​.

Hybrid Approaches

Hybrid approaches merge the strengths of data-driven methods and expert insights, providing a comprehensive forecasting framework. These methods ensure flexibility and accuracy when planning for uncertain futures.

Demand-Driven Hybrid
This approach uses historical data alongside frontline insights from project managers to fine-tune workforce predictions. Organizations adapt staffing levels more effectively based on real-time needs​.

Technology-Enhanced Hybrid
Blending trend analysis with expert insights from technology leaders ensures workforce forecasts account for emerging tools and skill demands. It’s especially valuable for industries undergoing rapid innovation​.

Market Expansion Hybrid
When entering new markets, organizations combine scenario planning with regression analysis to anticipate workforce gaps. This dual strategy ensures smooth transitions while minimizing operational risks​.

Key Elements of Workforce Forecasting

Successful workforce forecasting relies on a set of core principles that help construction managers anticipate staffing needs and adapt to shifting project demands. By mastering these components, companies can make smarter decisions, allocate resources efficiently, and minimize operational risks. The four essential elements of workforce forecasting are:

• Data Gathering
• Data Interpretation
• Selecting the Right Model
• Forecast Execution

Data Gathering

Data gathering is the starting point of effective workforce forecasting. By pulling together relevant and accurate information, organizations lay the groundwork for realistic workforce plans. Whether it’s historical labor trends, current project performance, or economic data, every data point helps shape a clearer picture of workforce needs.

Key sources of data include:

• Workforce utilization records
• Project timelines and milestones
• Market demand analysis
• Economic forecasts and industry reports

Companies that prioritize organized, high-quality data gain a major edge in avoiding missteps during staffing. With tools like Bridgit Bench, contractors can simplify this process by centralizing data for real-time access and streamlined analysis​.

Data Interpretation

Once the data is in place, the next step is data interpretation. Here, raw data transforms into actionable insights. Workforce managers analyze historical trends to identify patterns, pinpoint inefficiencies, and spot anomalies that could disrupt operations.

Techniques used during this phase include:

• Time-series analysis to forecast future staffing needs.
• Visual dashboards for identifying gaps in labor distribution.
• Statistical methods like regression to uncover workforce trends.

By leveraging advanced workforce management software, organizations can convert complex datasets into easy-to-understand visuals and practical solutions​.

Selecting the Right Model

Choosing the right forecasting model is essential for aligning predictions with business realities. The ideal model depends on the type of project, available data, and organizational priorities. Workforce planners may rely on one or more of the following:

• Time-series models: Analyze recurring labor demands and project cycles.
• Causal models: Evaluate how external factors impact workforce availability.
• Expert-driven models: Incorporate insights from managers and on-site professionals.

Selecting an effective model ensures accurate workforce allocation and minimizes costly errors like overstaffing or delayed recruitment. For dynamic projects, blending multiple models often provides the best results.

Forecast Execution

Finally, forecast execution puts the insights and models into action. This phase turns analysis into a concrete workforce plan. Workforce managers simulate various scenarios, assess potential bottlenecks, and adapt strategies to handle unexpected changes.

Core activities include:

• Running scenario analyses to plan for best- and worst-case outcomes.
• Adjusting staffing forecasts based on changing project requirements.
• Aligning forecasts with broader business strategies to optimize results.

When regularly updated, these forecasts become a cornerstone for smooth operations, helping organizations stay ahead of labor challenges and capitalize on emerging opportunities​.

Selecting the Right Forecasting Model

Choosing the appropriate forecasting model is critical for accurate predictions and effective workforce decision-making in construction. This section explores key considerations for selecting a forecasting model, such as data characteristics, forecast requirements, and practical organizational factors.

• Data Characteristics
• Forecast Requirements
• Model Characteristics
• Organizational and Practical Factors

Data Characteristics

The nature of your workforce data influences the choice of forecasting models.

1. Amount and Type of Available Data
The quantity and nature of historical data are fundamental in selecting a model. Quantitative methods, such as linear regression, require extensive numerical data, while limited data may necessitate qualitative approaches. For example, exponential smoothing models work well with less historical data, making them ideal for firms with restricted datasets​.

2. Data Patterns
Workforce data often reflects patterns that can guide model selection:

• Trend: Long-term directional shifts in labor requirements.
• Seasonality: Recurring patterns tied to project cycles or specific seasons.
• Cyclical: Fluctuations driven by broader economic conditions.
• Irregular: Unpredictable variations caused by external factors.

Models like Holt’s exponential smoothing work well for trends, while Winters’ method handles trends combined with seasonality effectively​.

Forecast Requirements

The requirements for accuracy, horizon, and purpose influence the ideal forecasting approach.

1. Accuracy Needed
The precision required for a forecast will determine its complexity. More sophisticated models provide higher accuracy but may come with increased costs and resource requirements. Simpler models, while less precise, can still be effective for smaller-scale workforce planning​.

2. Forecast Horizon
Short-term needs, such as monthly staffing plans, align better with simpler methods like moving averages. Long-term forecasting, such as workforce demand for multi-year projects, requires models capable of capturing macro trends and patterns over time​.

3. Purpose of the Forecast
The intended use of the forecast is also critical. For general planning or market entry assessments, rough estimates may suffice. However, detailed workforce allocations or budgeting demand higher precision from models like time-series decomposition.

Model Characteristics

Understanding the explanatory power, adaptability, and stability of models can improve workforce planning outcomes.

1. Explanatory Power
Statistical models provide better insights into relationships between variables, making them more interpretable for decision-making. Machine learning models, while powerful, may focus on accuracy over explainability, which can limit user understanding​.

2. Stability of Results
Traditional statistical models offer greater stability in forecasts, particularly for individual workforce series. In contrast, machine learning models, though flexible, may show variability in results when rerun with minor data changes​.

3. Adaptability
Construction projects often face dynamic changes. Machine learning models excel in adapting to evolving data, while statistical models may require manual adjustments to reflect shifts in workforce requirements​.

Organizational and Practical Factors

Practical considerations, such as expertise, implementation complexity, and cost, influence forecasting model choices.

1. User Expertise
Complex models require teams with advanced technical skills to set up and maintain. Simpler models, such as straight-line forecasting, are easier to implement and can provide sufficient insights for firms with limited technical resources​.

2. Implementation Complexity
Advanced models may deliver greater accuracy but often come with higher costs and longer implementation timelines. Construction firms must weigh these trade-offs to determine the best-fit solution​.

3. Cost-Benefit Analysis
The value of improved accuracy must be evaluated against the costs of implementation and maintenance. Smaller firms may prioritize cost-effective models, while larger contractors may justify investments in sophisticated tools for long-term benefits.

Workforce forecasting FAQ

What is workforce management forecasting?

In construction, workforce management forecasting involves predicting future workforce needs based on historical data, trends, and the current situation. Using workforce management forecasting, you can plan for staffing requirements, allocate resources efficiently, and make sure you have the right resources with the necessary skills. This is critical in construction where having tradespeople schedule on time can help keep projects on schedule.

How to forecast manpower requirements? 

Forecasting manpower requirements is a key component of forecasting. You will need to analyze historical data, consider future project needs, and evaluate your current workforce’s capabilities. Forecasting software can help you to model out different scenarios and determine how to schedule employees for your construction projects.

What are the benefits of workforce forecasting? 

Workforce forecasting has a few key benefits like improved resource planning and allocation, more accurate project planning, reduced labor costs, increased employee satisfaction, and overall better preparedness for current and future projects. Forecasting is useful so you can adequately staff projects, avoiding costly overstaffing issues or causing delays from understaffing a project.

How do you create a workforce forecast? 

To create a workforce forecast, gather and analyze historical workforce data, assess current staff capabilities, predict future staffing needs based on upcoming projects, and use workforce planning software to model and visualize different scenarios.

What is KPI in Workforce Management?

A Key Performance Indicator (KPI) in Workforce Management measures how well a team meets operational and strategic goals. Essential metrics like workforce productivity, schedule adherence, labor costs, and turnover rates offer clear insights into performance. By tracking KPIs, construction leaders can pinpoint inefficiencies, optimize resource use, and align workforce efforts with long-term success​.

What are the 4 Core Components of Workforce Management?

Workforce Management comprises four foundational elements essential for effective resource planning. Workforce forecasting involves projecting staffing needs by analyzing past data and anticipating future demands. Scheduling ensures the assignment of the right team members to tasks at the appropriate times to meet deadlines efficiently. Time and attendance tracking focuses on monitoring hours worked, absences, and overall availability to maintain operational efficiency. Lastly, performance management emphasizes evaluating workforce performance through goal-setting, real-time feedback, and metrics that drive results. Together, these elements form a comprehensive approach to managing and optimizing workforce resources.

How is Forecasting Different from Prediction?

While both forecasting and prediction aim to anticipate outcomes, they differ in their methods and focus. Forecasting relies on historical patterns and statistical models to estimate future trends. For instance, a construction firm might forecast peak labor needs based on data from previous projects during busy seasons. In contrast, prediction incorporates assumptions, real-time changes, and external influences to determine specific outcomes. An example of this would be estimating the likelihood of workforce shortages caused by sudden economic shifts or unexpected project expansions.

What are the Five Steps in Workforce Planning?

Workforce planning is a structured process aimed at aligning labor resources with business needs. It involves five critical steps to ensure effectiveness. First, cross-team collaboration brings together HR, finance, and operations to ensure alignment and accuracy. Next, aligning workforce plans with overarching business objectives ensures they support the company’s strategy. Data-driven insights play a crucial role by leveraging workforce analytics to make informed staffing decisions. Gap analysis helps identify mismatches between current workforce capabilities and future project demands. Finally, solution implementation involves executing strategies such as hiring, training, or redistributing resources to address identified gaps and meet organizational goals.

What is a 3-Way Forecast Model?

A 3-way forecast model combines three interconnected financial views to provide a comprehensive financial outlook. The income statement forecasts revenue, costs, and profit margins over a specified period. The cash flow statement projects cash inflows and outflows to ensure the organization maintains liquidity. The balance sheet tracks assets, liabilities, and equity to uphold financial balance. In workforce forecasting, this model enables construction firms to align staffing decisions with financial plans, anticipate budget risks, and proactively manage resources. By integrating these three financial perspectives, businesses gain deeper insights, which enhance decision-making and improve risk mitigation strategies.

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