Forecasting for the Year Ahead: Key Indicators You Can’t Afford to Ignore

Forecasting for the Year Ahead: Key Indicators You Can’t Afford to Ignore

By Dave Williamson, Kent Companies

As the year draws to a close, businesses are looking ahead and setting goals for 2025. In an  environment as dynamic as construction, accurately forecasting the year requires a balanced  approach. 

To build a robust forecast, you need to evaluate leading indicators, which signal future events, and  lagging indicators, which provide insight into past performance. Leading indicators help anticipate  changes and adjust strategies proactively. Meanwhile, lagging indicators reveal how well the team has executed its plans, offering a reality check against projections. 

Leading Indicators: Setting the Stage for Success 

1. Safety Performance 

Safety is the backbone of any construction project. Beyond its obvious importance for  protecting employees, safety performance is a strong leading indicator of operational  efficiency. A site that prioritizes safety will also be more organized and productive. By tracking near misses, safety observations, and training completion rates, companies can  identify potential risks and address them before they lead to incidents or slowdowns. 

2. Business Development 

The pipeline of future projects is directly tied to the business development efforts of today.  Metrics like new customer sale, bid volume, and proposal hit rates are vital. By investing in  relationships and exploring new markets, companies can position themselves for steady growth. Tracking these indicators ensures a healthy project backlog and helps identify  emerging trends in the industry. 

3. Sales Conversion 

Understanding market demand is crucial for capacity planning and resource allocation.  Indicators like client inquiries, bid volume, and awarded projects can signal upcoming work  volume. Monitoring these trends allows companies to adjust staffing, equipment, and  material needs to meet demand efficiently without overextending resources. 

Lagging Indicators: Learning from the Past 

1. Productivity 

Measuring productivity after the fact provides a reality check on the efficiency of operations.  Metrics such as man hours or square footage completed per day reveal how well your team  is performing. Analyzing these figures helps identify bottlenecks and areas for  improvement, guiding future decisions on process optimization and workforce training. 

2. Quality 

Quality is a non-negotiable and its measurement often comes after project completion.  Tracking rework rates, defect counts, and customer satisfaction scores provides insight into  how well the company meets client expectations. High-quality work not only fosters client  trust but also reduces costly rework, contributing to profitability. 

3. Profitability 

Profitability is the ultimate lagging indicator, reflecting the culmination of all efforts.  Analyzing profit margins, cost overruns, and financial performance against budgeted targets  allows us to assess financial health. This retrospective view helps refine bidding strategies,  cost controls, and resource management for future projects. 

Taking Action: Forecasting for the Year Ahead 

Investing in the data and creating scoreboards will enhance forecasting accuracy. To harness the  power of these indicators, start with regular review cycles – review weekly, plan by the quarter, and  evaluate both leading and lagging indicators to inform decision-making.  Forecasting isn’t about predicting the future with certainty; it’s about preparing for it with  intelligence and agility. By balancing leading indicators with lagging indicators companies can  navigate the uncertainties of the year ahead with confidence. 

About the Author 

Executive Vice President Dave Williamson holds over 20 years of experience in the construction  industry. He provides leadership and operational oversight to Kent Companies’ Midwest operations.

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