Bryozoans have played a significant ecological role in many shallow marine benthic communities since the Ordovician and are important contributors to carbonate sediment production in many modern cool-water marine environments. Correlation between bryozoan colonial growth forms and environments in which the organisms lived allows for the application of growth forms as paleoenvironmental indicators. This can be done as either (1) a characterization of regional environmental or distributional data within a comprehensive study; or (2) as a predictive tool applied in an unknown setting using limited data. A number of workers have demonstrated this potential in biological, paleontological, and sedimentological studies. Growth-form distributions established independently from, and later compared to, environmental factors provide for the greatest predictive utility. Problems encountered in methodology need to be addressed before bryozoan colonial growth forms can achieve their full potential as paleoenvironmental indicators. Methodological problems include those associated with specimen abundance versus species richness, numeric versus volumetric frequency, relative versus absolute abundance, and changes within growth forms among localities versus changes among growth forms within localities (facies). A procedure is proposed that combines species richness and specimen abundance, as well as information about distributions within growth forms and within localities, into a single, comparable data set. An example is provided using bryozoans from the cool-water Lacepede Shelf of southern Australia.