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What is Capacity Planning? Plus How to Do It Well

Published By Team AdaptiveWork

What is Capacity Planning?

What is Capacity Planning

Capacity planning is, at its most basic level, a means of measuring how many employee hours are available compared to the needs of current projects. A team or organization’s capacity for work can then be simply measured on an hours per week basis. Let’s take a look at an example:

  • The marketing department at Exemplar Industries has 100 employees
  • Each employee works a standard 40 hours a week
  • The marketing department’s total capacity is thus: 40 x 100 = 4,000 hours/week
  • If planned work for the next week equals 1,200 hours, then current capacity = 70%
  • If planned work for the next week is 5,200 hours, then current capacity = -30%

If you are in a situation where you either have too much or too little capacity, then you are either not making the best use of resources or the lack of resources are holding you back. This is why understanding capacity management and how it works is essential for maximizing resource usage and always being in a situation of optimum capacity.

There are different strategies that organizations use to try and stay at an ideal capacity level:

  • Lag: This means adding capacity only when actually under-resourced. It reduces waste and the risk of over-expanding too quickly, but it can also lead to an inability to keep pace with orders or being able to exploit opportunities.
  • Adjustment: This strategy seeks to constantly monitor requirements and to make slight adjustments to increase or decrease capacity where necessary. Issues with the strategy are that the monitoring itself can be very resource intensive, and making constant resource adjustments can also be disruptive.
  • Lead: This refers to altering resources in advance of increases or decreases in requirements (generally increases). It requires accurate prediction of demand and can be highly successful for taking advantage of growth opportunities and overwhelming competitors. However, it is seen as quite risky, as it can involve initial waste through having excess capacity and depends on growth in demand to make the move worth it.

How to make the most of capacity planning

If you’re still wondering what capacity planning is useful for and how to make the most out of it, here are some tips for doing it well.

Match up teams with multiple competencies

Of course, not every hour of each employee is worth the same, and some resources may be in excess demand while others are underutilized. Capacity management should drill deeper into a team’s individual capacity to make sure bottlenecks don’t occur. For example, if one editor can oversee the work of five content writers, then having eight writers on a team will exceed its capacity and lead to delays and missed deadlines.

Maintain alignment with objectives

Capacity management provides greater clarity about where resources are being used. One of the great benefits of this is that it creates the opportunity to question why certain things are being done. If too many creative resources are being used to maintain projects, rather than driving new growth, you can see exactly how to move the appropriate team members to the right tasks.

Improve effectiveness

Though an employee’s capacity might be 40 hours, this doesn’t mean that they are actually contributing towards projects for all of those hours. For example, it would be quite understandable for employees to be engaged with other tasks, such as administration, reporting or training for at least five hours a week. This means that their effective capacity is only actually 87.5%. Improving this ratio can be done by automating processes, eliminating wastage and bundling tasks.

Increase your business agility with Planview AdaptiveWork’s project management software

Capacity planning and tracking has been hugely simplified with the development of project management software. With Planview AdaptiveWork’s reporting dashboards it is quick and easy to identify exactly how resources are being used and what capacity is available. To find out how Planview AdaptiveWork can improve your capacity management and ensure you are maximizing your resources, you can check out one of our demos here.

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Written by Team AdaptiveWork