Find out in this guide how capacity planning can help you keep projects on track while optimizing your team’s time.
Anticipating requirements in order to harmonize your available resources with what is needed for the successful emergence of your project is called capacity planning. It serves as your shield for keeping your project on time and on budget.
Imagine you’re faced with a set of specifications from a prestigious customer for the design of a new application. Under the pressure of a demanding deadline, you’re assessing the accessibility of your team before throwing yourself wholeheartedly into the project.
You quickly realize that deciphering your team’s current operational capacity is almost unthinkable. With several team members working on different projects at the same time, it’s hard to know who’s up to the extra work. So you’re forced to rely on uncertain predictions, hoping that everything will take its course.
« For many teams, forecasting represents a widespread method of capacity planning. According to the State of Resource Management Report 2022, 75% of those surveyed admit the need to develop better capacity planning processes. If you want to consistently deliver your projects on time, maintain a balanced workload and manage satisfied teams, capacity planning should never be left to chance.
Through this article, you’ll learn how to design data-driven capability plans and find the right people to take on high-impact tasks and initiatives.
What is capacity planning?
Capacity planning covers the processes and methods used to assess team availability, predict resource demand, and make the right decisions to balance resource supply and demand.
The aim is to avoid unequal use of resources and ensure that relevant projects are given priority and an adequate team.
Project and resource managers who have mastered capacity planning have a thorough understanding of their team’s real potential. They understand that capacity planning is a collaborative effort, and involve team members in the process. This enables them to prioritize projects effectively and assign the right people to high-impact tasks and initiatives.
What are the different types of capacity planning?
Capacity planning can be long-term, medium-term or short-term. As a general rule, organizations use a combination of these three types.
- Long-term planning: this is based on your organization’s growth and expansion prospects. For example, your organization’s ambition is to increase its customer base from 50 to 500 within one to two years. So you may also need to expand your workforce and recruit new skills.
- Medium-term planning: this focuses on upcoming projects and ongoing initiatives. For example, you may have two new projects due to start in the next quarter and a backlog of three projects. You’ll need to plan the allocation of resources between the different projects.
- Short-term planning: this is the day-to-day planning required for projects to run smoothly.
What is the fundamental difference between capacity management and resource management?
Capacity management is a long-term process focused on balancing a company’s resources and requirements. It includes the strategic manipulation of resources to achieve corporate objectives. In contrast, resource management is a much more specific and tactical process. It focuses on the optimal distribution and organization of resources for individual projects, ensuring that they are carried out under the best possible conditions.
Lead, Lag and Match: the three major tactics in capacity planning
Institutions implement the following tactics to optimize the capacity of their resources: ;
1. Proactive capacity-building tactics
The increase strategy, also known as Lead, is based on preventive capacity improvement in anticipation of rising demand. This type of policy will push you to fill your project pipeline at full speed.
Inherent in this proactive tactic is a certain boldness. It implies that you will manage a volume of projects surpassing the present (or past), prompting you to recruit additional staff to cope with a growing workload.
Imagine, for example, hiring a large contingent of waiters for your restaurant during the festive season;
✅ The major advantage of this approach lies in its ability to provide you with a team on the warpath, ready to react to work requirements as they arise.
⛔️ The dark spot in this idyllic picture? If these hypothetical projects never come to fruition, your structure finds itself immobilized by a heavy investment in superfluous resources that find no use.
2. The Tactic of Shifting
The Shift Tactic is a more conservative approach. Capacity is increased only when demand exceeds available supply. For example, a company that hires additional staff only when the existing team is already overloaded is adopting an offset policy.
✅ This offset presents a relatively safe method of capacity planning, reducing the risk of committing unnecessary resources.
⛔️ However, this tactic can also mean increased pressure on your staff, high burn-out rates and delayed project delivery.
3. Correspondence tactics
Matching tactics take into account your team’s current capacity, while at the same time anticipating future needs. It takes stock of your capabilities and resource utilization, while providing an opportunity to increase your potential where resource limitations exist.
Imagine, for example, that your team is operating at 80% of its optimum utilization rate. This might indicate that they’re managing to accomplish their tasks without being overwhelmed by work. However, when this rate climbs to 90%, your company may need to recruit freelancers to avoid overloading the existing team, and to ensure that service is maintained without impacting on your customers.
What does this mean in terms of finding outside contractors or making new, more sustainable hires? The principle of fit means that you won’t take on new talent if you don’t feel the need.
✅ It also helps your organization grow. If the workload is substantial, you have the option of accepting it while being reassured that your team has the means to carry it out.
✅ Organize your projects in advance by creating preliminary projects in Teambook. You can sketch out a project with clear phases, predefined milestones and assigned resources and see what’s needed and available at the desired time, enabling you to make sound decisions.
Why is capacity planning so important?
Planning your team’s capacities is essential to bring projects to completion on time, while avoiding disappointing your customers’ expectations and overworking your team members.
1. For early preparation
Proactive capacity management gives you the opportunity to plan ahead for changes in your team’s workload. At any given time, you can adjust resources to take account of fluctuations in volume and projected demand.
2. An effective way to avoid burn-out
According to a study conducted by Gallup in 2021, among the workers surveyed, 41% admit to working up to 44 hours a week, and sometimes even much more.
It’s not uncommon for overworked employees to resign themselves to extending their working hours in order to cope with the mountain of tasks ahead. The direct consequence: an exponential increase in day-to-day stress. By planning your team’s resources appropriately, you can ensure that everyone has responsibilities commensurate with their workload. This ensures that everyone has the time they need, once the job is done, to recuperate and relax.
3. Facilitates the implementation of realistic schedules
Just imagine: two-thirds of companies regularly fail to meet their deadlines. Ah, the suspense of missed deadlines! Often, the source of these overruns? Simply unrealistic schedules, drawn up in the early stages of a project. This kind of situation arises when the ability to deliver is relegated to second place, and deadlines are set arbitrarily, driven by the nagging hope that team members will get the job done on time.
Capacity-based planning provides an authentic foundation for the construction of professional schedules, thereby increasing the likelihood of projects being completed on schedule.
4. Optimizing recruitment decisions
In the dynamic world of business, and particularly for agencies, the challenge often lies in having the right resources available to ensure that work is carried out to the highest possible standard, on time and with minimum stress.
Imagine, for example, that your agency already has a full agenda for the next six months. With resource planning, you can easily determine whether you have enough available hands with the right skills to manage projects successfully.
Equipped with this clear and early vision, you have the crucial time to recruit additional staff or call in freelancers to make up for any skills shortages.
The complexities of capacity planning
Capacity planning is all about accurately forecasting your team’s availability at a specific time, highlighting business requirements and making insightful decisions for optimal resource allocation. However, this process can be confusing and complex, particularly when using spreadsheets or non-homogeneous tools.
Lack of visibility on potential future resources
A recurring challenge for project managers is the uncertainty surrounding their team’s future potential.
When elements such as planned vacations or projects in progress for the next quarter remain unknown, making predictions proves an arduous task. This obscurity is usually the result of a decentralized organization and a disjointed plan, where competency data is scattered among various sources.
The challenge of spreadsheet-based capacity management
Are you planning to manage your capacity using Excel spreadsheets? Forget it! The main obstacle can be compared to trying to push a huge boulder to the top of a mountain. Suffice to say, it’s a cumbersome, tedious and inefficient task. Digital spreadsheets, by their very structure, are ill-suited to cope with the instability inherent in project management. With their constantly shifting schedules and deadlines, the slow and often erroneous manual updating process is an obstacle to reliable information.
What’s more, these famous spreadsheets tend to become isolated islands, detached from the other tools essential to good project organization and management. They are generally not associated with calendars or resource management software. The disconnection of these different tools jeopardizes the integration needed to stay on course. The absence of up-to-date information about resource capacity or specific project needs, coupled with a lack of integration, makes it difficult to make informed decisions or allocate resources effectively.
Misrepresentations of productivity
The notion of productivity is often misunderstood. Whether you’re in a company with a typical 40-hour working week or not, it’s natural to project this measure in terms of working hours available to each team member. In practice, however, individuals do not devote all of this time to carrying out the projected tasks.
It’s crucial to take into account the various factors that can eat into everyone’s working time, including personal vacations, appointments and meetings, administrative obligations and any internal company activities. Such obligations can significantly erode the amount of time each employee can allocate to the project. Unforeseen events, such as sick leave or personal emergencies, can also encroach on their availability.
If resource managers neglect such factors, their productivity calculations inevitably become flawed. This leads to biased planning and unrealistic expectations.
The volatility of projects and work environments
Many business sectors are characterized by unpredictable demand. Imagine, for example, being the head of an agency, subject to the vagaries of fluctuating demand. Empty periods, when contracts are scarce, alternate with periods of effervescence, when your team is overwhelmed by the weight of customer requests, to the point of having to refuse new collaborations due to an inability to absorb them.
And what about atypical projects that no one has ever experienced before? These delicate challenges often require us to hastily recruit unprecedented skills, in response to the unexpected specifics of the project in question. In such cases, the absence of safeguards, of tangible benchmarks in terms of anticipated demand, makes capacity planning and management highly perilous.
Setting up a 5-step capacity management plan
To orchestrate your team skills with serenity, refer to the following steps:
- Consideration of current and future projects;
- Estimation of current and prospective capacities of available resources ;
- Gap analysis between existing demand and available resources ;
- Reflecting on the best approach to close this gap;
- Consideration of your employees’ individual constraints.
1. Review current initiatives and anticipate future ones
What is the nature of the workload your team is currently managing? What challenges do they face over the next week, month or even year? Acknowledging your team’s present and future work flow is crucial to getting a clear picture of their current commitments and future obligations. Don’t neglect this assessment.
How do you gather this essential data? You can investigate on two levels. Firstly, take the direct route by asking your team members about their current and impending activities. Secondly, delve into your project management software to discern current missions and their chronology. In massive organizations, where getting in touch with every team member can be a headache, raid managers and department heads to gather information on missions currently underway.
Once you’ve mapped out a clear picture of current and future responsibilities, the next step is to gather information about possible projects or assignments that may interfere with your team’s work schedule in the future.
In an agency or service company environment, ask the sales department or account managers for information on pending contracts. If your business environment is a product-oriented company, ask the product team for information about planned launches.
In addition, don’t forget to take into account tasks that have been put off until later, as they could resurface as future responsibilities. Also take into account tasks planned as part of ongoing projects for execution at a later date; they too deserve to be included in your capacity planning.
Ultimately, consider your company’s growth and expansion trajectory. Identify whether there are strategies to expand customer acquisition, develop new features or enter a new market segment. Such ambitious projects could place heavy demands on your team’s time in the near future.
2. Assess the current and future capacity of available resources
This is a crucial step: make it your mission to assess not only your team’s ability to be present, but also the type of tasks they are capable of accomplishing.
By analyzing limiting factors such as time and skills, you can optimize the distribution of work in line with your team’s capabilities. It’s imperative to avoid tricky situations where your team members may be present but lack the skills required to complete the assigned task, or vice versa.
It’s fruitful to study your resource pool to unequivocally identify your team’s roles, skills and areas of expertise. For example, if you use Teambook, you can sort team members by tags, such as department or assigned roles.
The next step would be to scrutinize your project schedule to assess the time allocated to each member of your team to complete tasks. How many hours are devoted to projects? How committed is everyone? Is anyone overloaded? Are there people waiting for work to be assigned to them? Who’s planning to take time off soon?
Teambook’s visual planning gives you a complete visualization of this information, giving you an overview of your team’s availability. You can also select specific durations for current and future capacity.
When analyzing the time available to your team, it’s a good idea to take into account both project and non-project work.
Daily tasks such as meetings, lunch breaks, e-mail and Slack exchanges, as well as administrative tasks can prove to be real time eaters.
Factors such as scope dilation, project delays, team dynamics and deadline pressure should also be taken into account, as they can influence the duration of ongoing projects, thereby reducing your team’s availability.
This evaluation process should be a joint one with the team. If you’re managing a small or medium-sized team, you can solicit their feedback through individual interviews or asynchronous discussions about their availability. For larger teams, it would be wiser to consult department heads and managers to get an overall view of the team’s capacity.
4. Development of an effective strategy to close the existing gap
Inevitably, your analysis is likely to reveal a significant discrepancy between the resources available and your organization’s requirements.
Faced with a work overload that drowns your staff, adopting prioritization strategies such as weighting high-impact projects and allocating resources wisely can be a crucial necessity.
For example, a situation where a new project is on the horizon, but your team is already swamped with tasks. In such a context, here’s how to establish project pre-eminence by asking yourself a number of questions:
- How urgent is this task?
- Is there a substantial budget available for the project?
- Does the project concern a customer with whom we absolutely must restore a damaged relationship?
- Is it related to a new collaboration opportunity with a customer we’ve been eyeing for some time?
- What is the relative importance of this work?
- Can delivery times be adjusted?
If the project is to continue, take the next step by defining the team members best suited to the job requirements, while negotiating deadlines for projects currently underway.
Imagine finding yourself in a situation where your team is faced with resource restrictions, and the demands placed on it are beyond its capacity. One of the alternatives to consider in such cases is to work with freelancers to reduce the workload and meet deadlines.
Conversely, if your team is under-utilized, there’s the option of assigning more responsibility to ensure optimum use of its time and productivity.
5. Take your employees’ expectations into account
The human factor is essential when planning your capacity. It’s important to remember that your workforce isn’t just a headcount, but rather individuals with distinct expectations and aspirations. You need to assess factors such as individual working methods, communication preferences, time differences, private commitments such as family, as well as prospects for career advancement and development.
What justifies the need for specialized tools for capacity planning within teams?
Capacity forecasting can be complex, as it involves assessing team capacity, forecasting demand and making decisions to align supply and demand. When relying on a multitude of dashboards, things can quickly get confusing, as it becomes more complicated to understand who is in charge of what, and who is available for new projects. This is where resource management software comes in.
Teambook gives you a graphical view of capacity, allowing you to quickly see team member availability, overload situations and utilization rates. This allows you to easily visualize your team’s capacity for a specific period, making forecasting more efficient.
Teambook also gives you an up-to-date view of the availability of your team’s resources, integrating scheduled meetings, planned tasks, breaks and customized work schedules into the calendar, enabling you to accurately assess their real capacity.
With Teambook , it’s possible to integrate public holidays and customize them to suit your leave policies. This makes it easier for your team to request time off, while taking into account their planned work and vacation balances. Teambook lets you manage leave validations directly from the planning interface.
Teambook’s reporting function provides a global view of your team’s available hours (capacity) compared with planned hours (assigned tasks), enabling you to make resource allocation decisions based on accurate data.
If you’re ready to optimize your team’s capacity planning, give Teambook a try – it’s free!
