How better forecasts can separate your company from the field
Gettyimages.com / NicoElNino
By
Nick Wakeman
Unanet's annual GAUGE report looks at how improvements to the forecasts of your operations helps make better decisions and improves your company's position.
When companies talk about differentiation, they mostly talk about a technology offering or methodology that helps them stand out from their competitors.
But the results of Unanet’s 2023 GAUGE report identify another area of differentiation that many companies overlook: forecasting.
Accurate forecasting can separate your company from competitors because it can give you a better understanding of your operations and help you make better business decisions, according to a pair of executives I spoke with at Unanet.
Chris Crowder, Unanet's executive vice president of government contracting; and Kim Koster, vice president of product marketing; walked me through the 2023 version of their company's GAUGE report.
That acronym stands for Government contract compliance, Accounting, Utilization, Growth and Efficiencies. GAUGE is an annual survey of government contractors.
The 2023 survey puts more focus on forecasting along with other parameters such as confidence in the market, growth expectations and project management challenges.
Koster and Crowder said the findings give companies a benchmark to measure themselves against.
These types of forecasting are highlighted in the GAUGE report:
- Pipeline
- Project cost
- Labor resources
- Indirect rates
- Cashflow
- Backlog
- IT spend and costs
- Capital assets expenditures
Unanet picked forecasting as a theme for this year’s report because over the prior seven years the company has conducted the survey, forecasting is generally among the three most-cited challenges.
To dive deeper into forecasting, Unanet asked respondents to compare importance of a forecast with its accuracy.
“We learned that the pipeline forecasts are very important but they lack accuracy, “ Koster said. “On the flip side, cashflow also was very important but the forecasts were very accurate.”
One challenge with forecasting is that different parts of a business do different kinds of forecasting for different reasons. The work often takes place across stovepipes with little internal communication.
“You’ve got business development over there doing their thing and you’ve got the finance people over here,” she said. “It’s difficult at best.”
Organizations tend to use either a bottom-up or top-down process for conducting their forecasts, Crowder said.
Only 36 percent of respondents said they are using a mix of those two approaches, which is what Crowder and Koster recommended.
The report also highlights areas where companies can improve, such as policies that govern how forecasts are conducted and how often.
An appendix to the report explains the benefits of mature forecasting practices such as better financial planning, risk mitigation, and better resource allocation,
Navigating all those factors is a challenge in the government space because agencies rarely make an award when they say they will.
"It is difficult to measure and is all part of the forecasting puzzle,” Crowder said.
But consistent and accurate forecasting is critical for keeping projects on track and managing resources, Koster said.
The report includes what Unanet calls a “resource management maturity model”, similar to the capability maturity model integration best practices.
Crowder said companies can use the chart in the report to grade themselves across areas such as people and training, policies and procedures, tools and systems, and culture and vision. Companies can also look across several levels of maturity – ad hoc, project-by-project, organization wide, data-driven, and continued improvement.
Those are the different characteristics of good resource management.
“You can see where you stand,” Koster said. “We encourage everyone to do this one because you can do it in private and be as honest as you possibly can be.”
Some other highlights of the report include:
- 70% of firms reported some level of growth in annual revenue
- Win rates are on the rise
- 47% are cautiously optimistic about the current business environment
- 25% are very optimistic about the current business environment
Respondents also cited concerns in their company about about winning new contracts (77%), finding qualified talent (55%), and budget and funding for contracts (47%).
You can download the entire report here.
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