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GovCon Expert Kim Koster: From Guesswork to Growth—Why Your GovCon Needs Forecasting

By Kim Koster, VP of Industry Marketing at Unanet

When federal spending increases, government contracting companies will naturally want to capitalize on it. But the main question you’ll need to ask yourself is this: How well positioned are we internally to identify and secure contract opportunities when they arise?

Being able to answer that call hinges on a firm’s ability to forecast effectively. This is crucial for areas like indirect rates, projects, resources and pipeline. Accurate forecasting shapes critical planning and strategy, boosting project performance and growth potential.

It enables firms to navigate uncertainty and risk, run projects more efficiently and consistently deliver positive outcomes. Additionally, it helps attract and retain talent, and secure the most attractive business opportunities for the company.

But when it comes to forecasting, not every GovCon is created equal. Some are more sophisticated in their forecasting ability than others — even though it’s a crucial piece that drives business development success.

The state of forecasting in government contracting

Unanet’s 2023 GAUGE Report surveyed some of the top GovCons in the industry. The research found that forecasting is an area where many GovCons could stand to improve.

The survey, which involved key decision-makers from top government contracting companies, reported that these GovCons are concerned about pipeline forecasting accuracy. Only 18 percent rated their forecasting as “very accurate,” yet that forecast was deemed as “very important. “ Additionally, about 70 percent of firms are using spreadsheets for resource forecasting. Alarmingly, 47 percent of firms either lack formal forecasting policies or are in the process of developing them. Just 20 percent of companies have established forecasting policies that are rigorously followed. Forecasting continues to rank among the top three project-management hurdles as identified by survey respondents.

This may seem daunting, but it actually represents an opportunity: GovCons who can level up their forecasting capabilities will gain a serious advantage over those who don’t.

To become elite at forecasting, GovCons need several fundamentals in place alongside the right enterprise resource planning, or ERP, and customer relationship management, or CRM, systems.

The fundamentals of effective forecasting

To start, a GovCon’s people, processes, and technology must be aligned across the organization. This begins with the project and finance teams and is enabled by having a single, fully integrated digital workspace where ERP and CRM systems are aligned and share the same pipeline, backlog, and capacity information

Establishing this kind of digital environment allows people across the organization to collaborate more effectively, using a single source of that is updated constantly.

Quality forecasting requires accurate, up-to-the-minute data that the organization can share between departments and teams. Without it, your entire team will have trouble coordinating your efforts.

Leveraging forecasting tools for success

After you’ve established the fundamentals, you can look to specific tools to help bolster your forecasting. Focus on these key areas:

Indirect rate forecasting

The effectiveness of a firm’s indirect rate forecasting significantly influences its success in securing government contracts and the profitability of those projects. To achieve the best results, you’ll want to have tools that provide clear insights into projected sales, project expenses, overhead and general and administrative, or G&A, costs.

These tools should support various rate methodologies and contract structures while offering projections across multiple time frames. Considering the numerous teams and individuals typically involved in developing indirect rates, having tools that facilitate seamless collaboration around a single, reliable data source is crucial.

Project cost forecasting

Accurately forecasting project costs, revenue and cash flow is invaluable for a firm’s resource allocation. It enables the setting of realistic financial targets as well as informed decision-making about investments, expenses and pricing strategies.

Using tools that allow projects to be grouped by categories such as program, customer, product, or business unit streamlines the forecasting process, particularly for longer-term projections. This approach facilitates an aggregate view of forecasts, providing better insights into customer demand, firm capacity and potential growth opportunities. Since resource forecasting is integral to the overall project forecast, companies need a clear understanding of resource availability, skill sets, labor demand and other critical factors. This knowledge helps firms make informed resource allocation decisions, avoiding shortages or surpluses that could cause delays, cost overruns and quality issues.

Pipeline forecasting

To capitalize on the numerous federal contracting opportunities anticipated in 2024 and beyond, advanced pipeline forecasting tools are essential. Being able to visualize your opportunity pipeline through an effective CRM is a difference-maker. Intelligent, algorithm-driven solutions can steer your GovCon’s decisions by delivering insights drawn from historical data, current market trends, and predictive analytics. By aligning sales, marketing and delivery efforts, these tools ensure that the entire organization is unified in its mission to secure more high-value contracts.

An increase in federal spending represents a golden opportunity for government contracting firms, but capitalizing on this opportunity requires robust and accurate forecasting capabilities. By aligning your GovCon’s people, processes and technology while leveraging advanced forecasting tools, you can position yourself for sustained success and growth.

GovCons that prioritize forecasting will find themselves better prepared to meet the challenges of tomorrow and seize the opportunities that lie ahead.

For further insights and detailed analysis on improving your firm’s forecasting capabilities, download Unanet’s 2023 GAUGE benchmarking report for free.

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