Capacity planning is an issue of supply and demand: one that can decide the fate of your project. Read on to learn how to plan your resources, and make sure your team members are working on the right task at the right time.
What Is Capacity Planning?
Capacity planning is a process that balances the available hours of teams against what the project needs. Capacity in this case is the most work that can be done over a certain timeframe.
It’s a bit of a juggling act that has to keep several balls in the air, such as the availability of the team, the money in the budget for those hours and what is demanded by the client, stakeholder or customer. Capacity and project planning obviously go hand-in-glove. Planning is how one schedules the hours of the team members so that the work gets done in time.
Understanding Capacity Planning
The first question to address when planning for capacity within an organization is whether or not you have the capacity, or the resources, to do the work. Do you have the capacity, do you need the capacity, and what is the gap between those two points?
Regardless of the situation, you’re going to remain in the dark unless you have a way to measure and track these resources, such as a resource management tool. Only then can you make an educated decision on capacity planning.
It’s a matter of supply and demand. Do you have the resources or do you not? Those resources can be people, which can maybe be acquired from other projects that are cancelled. If it’s skill, then there’s training to close the gap.
What’s the Difference Between Capacity and Resource Planning?
While the terms are sometimes used interchangeably, they are not the same. The process is different. To understand the differences, we’ve listed them below.
- It’s a planning process designed to help you determine if the organization has enough people resources according to skill sets.
- It looks at the availability of those resources at the skill set/team level.
- Then it facilitates the decision-making process to hire resources or defer/approve/cancel projects.
- Capacity planning is about supply and demand.
- It’s a planning process that coordinates and allocates actual resources to projects based on skills required.
- It provides a plan to project managers, which resources they can plan to use for their projects and when.
- Resource planning is people resource utilization.
Capacity Planning Checklist
Here’s a short checklist for high-level capacity planning.
- Establish Cross-Functional Team: To collaborate and communicate about resources, as you’re looking across different projects or programs, you want a cross-functional team with different levels and different functions.
- Calculate Resource Capacity: Before you can plan, you need to have an idea of what you’re working with, which is why it’s important to note the gap between what you want and what you need, and then figure out how to narrow it.
- Determine Resources Required by the Project: For each project, look at the scope and what resources are required to do the task for the project.
- Prioritize Projects: Which projects are most important, and which can be put aside for the time being? You can’t do everything at once.
- Allocate Resources Based on Project Priority: Now allocate those prioritized projects and make sure that they are aligned with the goals of the organization.
Tips for Capacity Planning
The following are three tips for when you’re capacity planning.
- Keep the lines of communications open between executives, project management leaders and stakeholders.
- Document known risks (such as union strikes, weather, government regulations) that stop a project or create new ones unexpectedly.
- Plan for how to handle too much capacity (where is it and how to resolve it, such as reassigning) or not enough capacity (again, where/how.)
Capacity Requirements Planning
Related to capacity planning is capacity requirements planning, which is when an organization decides how much it needs to produce and whether it is capable of doing so. Therefore, capacity requirements planning allows companies to meet supply and demand.
This applies to IT, too, as they must access the demand for their service and determine their ability to meet that demand with whatever supply they have, be that people or technology. In order to do this successfully, any enterprise must look at internal and external forces and how they impact the business.
Capacity requirements planning is the macro to capacity planning’s micro. That is, capacity requirements planning is the big picture that takes in the whole business landscape to see where the company’s production fits. While capacity planning is for the specific projects the company engages in.
Capacity Planning Tools
Capacity planning is linked to resource management. ProjectManager.com has a resource management tool that gives you control over planning, scheduling and sourcing. You can balance workload and reassign tasks to keep team members from being idle.
Our resource management tools allows managers to see what their teams are doing, when they’re doing it and how much it costs to do it. You can also track your resources and see your progress, which allows managers to make better decisions.
To get a full picture of the costs involved, you can add hourly rates for your teams and contractors across your project or portfolio. As team members log their hours, their actual costs are automatically calculated and can be compared to the costs that were planned, so you can adjust capacity as needed.
You can also plan against holidays and working days for your team, whether they’re local or international. These off days are blocked on your calendar, so you can better manage your resources. Now you know your capacity and can plan to use your resources more wisely to accomplish your project goals.
Capacity Planning and ProjectManager.com
Capacity planning requires the right tools to give managers insight into their workforce and how it aligns with their budget. ProjectManager.com is a cloud-based project management software that gives them real-time data to make real-smart business decisions.
Our resource management tool provides a window into your team’s resources and helps you plan better on our online Gantt charts. To see how we can help you manage your next project better, try ProjectManager.com free for 30-days with this trial.
More About Capacity Planning
Want to learn more about capacity planning? Watch the video below from Jennifer Bridges, PMP. Although her video focuses on IT teams, the lessons can be applied to any industry.
Here’s a screenshot for your reference!
Thanks for watching!
(This post was updated November 2019)
Today, we’re talking about three capacity planning tips for IT teams, where over the years, in doing capacity planning for IT organizations, there was always this one question we were asking, “Do we have the capacity to do this work?”
So basically, we were looking at capacity according to resources, people resources in this case. We have this capacity and we need this capacity to do the projects.
So basically, we’re looking at a supply and demand situation. We wanna look at what is the gap. We wanna determine do we have too many resources in the organization or do we not have enough?
Well, sometimes, when we look at people resources, we could look at maybe we’ve had, you know, several canceled projects for some reason. Maybe we wanna keep a binge of certain resources on our projects for when we need them.
But also if we don’t have enough people resources, it could be that maybe there’s a skill gap. We need to do some training or we need to do some sourcing.
And maybe, there are just too many projects going on at one time, therefore, we don’t have enough people. So, we want to measure and track this so we can get good insights to make good decisions.
So, one question always comes up and it’s, “What’s the difference between capacity planning and resource planning?”
So again, we’re talking about people resources in this, but capacity planning is looking at the organizational level. It’s a planning process to help you determine if the organization has enough people resources according to skill sets.
And it also helps you determine the availability of resources at the skill set and team level, and helps facilitate decisions to hire resources, maybe even defer, approve, or even cancel some projects. Again, we’re looking at supply and demand.
But when we talk about people resource planning, it also is a planning process, but it helps to coordinate and allocate actual people resources, the people on the project according to the skills required for that project.
It also provides a plan for the project managers to let them know what resources are available and when they’re available to assign to the projects. So again, it’s people resource utilization.
So, I found helpful to have this checklist, and this is a high level, so you can actually break this down as far as you need to. But these are five steps on the checklist that I found helpful.
So first of all, you wanna establish a cross functional team where different levels, different functions, so that you can, you know, collaborate and communicate about resources because you’re looking at across different projects and even programs for an organization.
You also want to calculate the resource capacity.
You wanna determine what resources are required by project. So, for every project, you’re looking at what is the scope and what resources are required to do the task for those projects.
Then, you want to prioritize your projects for the organization and allocate the resources based on the priorities for your organization and how they align to the goals.
But here are the tips. So, I found there are more, but these are the top three that I think have helped me the most.
So first of all, you wanna open the lines of communication between the executives, the project leaders for all of those projects, as well as the stakeholders because each of these are working different parts of different projects and you wanna keep those lines of communications open about priorities and decisions that are required.
You also want to document known risks that can impact the projects and they could be, for instance, some industries have projects that maybe have union labor, and every so many years, the union contracts come up, and it could impact whether those resources are available.
Sometimes, the weather, you know, if bad weather or a big event occurs, the weather could impact your project and even government regulations. Sometimes, government regulations, your company has to respond to something and it may spawn off an unexpected project.
And then, you can plan for how to handle too many or not enough resources, so if you have too many resources, you need to determine where and how to reassign those resources.
And then, if you don’t have enough, you’ve got to determine when and how to source them. So, the big bonus here is to use the tool because, as you can see, according to different projects in their organization, this can become very complex and a tool can really help.
So, if you need a tool to help you with your capacity planning, then sign up for our software now at ProjectManger.com.