What’s the ultimate goal of project managers? Delivering their projects successfully. PMs themselves admit that this doesn’t happen very often: according to the latest Pulse of the Profession survey, less than 60% of projects are completed either on time or within their original budget.
What will you get from this article:
Role of the resource management software in resource capacity planning processes
The goal of resource capacity planning
Knowledge about the difference between resource planning and capacity planning
What to do to bring closer an effective capacity planning
Effectively managing resource capacity can help companies increase these numbers. In this article, you’ll learn more about resource capacity planning in project management, but we’ll also touch on the advantages of company-level capacity management. Let’s start with some necessary definitions.
Skills-based searching and assigning people to tasks [Screen from resource planning software]
Without making an unnecessary introduction, capacity refers to the ability to achieve, perform, or produce. If we use the company’s perspective, it means the ability to achieve or produce within a specific dose of time. But, if we dig deeper and use an operational point of view, we’ll find out capacity is understood as an amount of the input resources available to produce relative output over a period of time – we can read on managementstudyguide.com. This is often referred to as production capacity, which encompasses the level of resource capacity required to meet customer demand, including raw materials, equipment, and workforce.
But it’s not the only meaning related to the topic of this chapter. Let’s compare a few other understandings of capacity planning.
On Projectmanager.com we read capacity planning is a process that stabilizes the available resources to meet requests or the task’s capacity necessities. Which can be comprehended as some kind of being between someone who has the access to sufficient resources and demands from projects and its expectations related to resources.
It seems Saviom – our competitors in the resource capacity planning software market – also shares the same view: Resource capacity planning is forecasting the gap between the capacity and the demand for resources. From Mavenlink’s perspective, resource capacity planning assumes 3 aspects of this process. First, defining how much work resources are able to do. Second, identification and an indication of what kind of work can those resources do. The third one – matching from this group those resources with currently used resources to meet project expectations and demands.
As we can read on Wrike’s blog: Capacity planning is the process of anticipating the future business requirements of an organization or client. Capacity planning also aims to ensure resources with the necessary skill sets are made available to address evolving client and business demands From this perspective – which also represents our approach – resources don’t mean equipment, software, laptops, construction materials, rooms, budget, and so on. When you look for capacity planning in project management you see the individual, the team member, and the employee. You see the individuals with a particular set of skills. Somebody with the relevant skills necessary to meet the requirements of a project.
Effective capacity planning is about ensuring resources with an appropriate, particular set of skills
At a project level, capacity planning is all about determining whether you have enough resources to complete a given project. Its role is to make sure the company (or association) has the expected resources required for a project or task, expected at a predicted time, that are able to finish the project with the expected requirements at the expected point of time.
To say more, the resource capacity planner has to be able to give a clear overview of how many resources are needed to achieve an indicated goal (a subtask, a task, a project).
In other words, resource capacity planning is about predicting the interval between the capacity and the demand for resources. So, the ones in control of capacity planning are going to take into account factors such as working hours, mastery, skills, and the average throughout of work. In order to calculate your team’s capacity, you need to know their availability and their current workload.
One of the steps from the resource capacity planning process [Screen from Teamdeck]
To say it straightforwardly: if comparing capacity and resource planning to resource management, the first one can be reduced to “anticipating future business requirements and making sure we have required resources to start a project“. While resource planning is “choosing and assigning specific resources for and during a project or task”.
Can be also said, that capacity planning is the doing of inspecting whether the team members, roles, and mastery needed are undoubtedly available to do the incoming work before actually scheduling the work comes. While resource planning is choosing, assigning, and scheduling from this selection box. Lead strategy involves creating excess capacity to meet forecasted demand, ensuring that resources are available to accommodate rising demand and future projects.
The comparison of capacity planning, resource planning, and resource scheduling. [Source: www.kelloo.com]
Resource planning is more about coordinating the workforce in real-time: you’re assigning people to projects while monitoring resource utilization. As we see, resource planning means the management, leadership, and coordination of the resources needed to complete a task or project.
What do you usually do when you are assigned to manage a new project? How do you put together a team and make sure your team members’ availability is enough to complete all of the tasks? Project managers trying to ensure they have sufficient resources at their disposal should complete the following steps:
Gather project requirements and estimates. You need to understand what has to be done to deliver the project successfully. What is the technical scope? Which roles are necessary for the project team? What are the time estimates for this project?
Identify available resources. Analyze resource availability and determine which people who fit your project’s criteria can join your project team.
Align capacity with project needs. Decide who will be assigned to the project and how many hours they should be booked for. Ideally, you should reserve these resources, even if your project doesn’t start yet. Consider using a lag strategy, which involves meeting actual demand rather than forecasted demand.
For a capacity planning example, consider a food manufacturer that needs to increase production during peak seasons. They plan their workforce and resources to meet the increased demand. Similarly, an IT agency might allocate additional developers to a project to ensure timely delivery.
Note: in some companies, the resource manager will be responsible for the bulk of the capacity planning process. The project manager is asked to request specific roles or skills, and the resource manager will analyze resource capacity.
Project managers should be able to assess the requirements of their projects, but analyzing resource availability could be more challenging without visibility into the employee pool. Fortunately, organizations often have a resource capacity planner at their disposal, which can streamline the whole project resource management process, effectively work on multiple projects and prepare long-term capacity planning strategies.
Tool capacity planning is crucial for securing and allocating tools and equipment needed for future work. It involves forecasting resource needs, understanding what new tools might be required, and ensuring the tools are being used correctly and are worth the investment.
Resource capacity planners, such as Teamdeck, provide you with a single resource pool with information about everyone’s availability and workload (read about workload management). As a project manager, you can filter out the roles necessary to meet your project’s demands and check when these people are available.
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A company-wide resource calendar is a key tool for successful capacity planning.
In order to avoid resource conflicts, you can book selected team members in advance. If your project is not yet 100% confirmed, you can add tentative bookings. Other project managers will see that these people are likely to be assigned to your project if it ends up happening. Once you get a green light, you’ll have a group of people ready to start working on the project plus a schedule visible to other managers in your company’s resource management app.
Add tentative bookings to plan your project’s schedule well in advance.
Resource management software** makes it easier to assess resource capacity. Not only can you see whether people have already been assigned to other projects, but you can also take their vacations or bank holidays in your account. You will be able to calculate your team’s actual capacity and decide whether you’re ready to deliver the project in a proposed time frame.**
You’ll also have a chance to take finances into account. Some resource management apps (including Teamdeck) allow you to store information about your team’s rates. Use Teamdeck’s reports to calculate how much money you need to allocate in the budget to secure the staff you want to book for your project. Before you commit to this team, make sure you can afford them with your current project budget. Cross-checking resource capacity with estimated costs is yet another way to ensure your project’s success.
Both teams have sufficient capacity to deliver a given project. The estimated costs, however, differ significantly. Fortunately, you can assess multiple scenarios with Teamdeck.
Capacity planning should help you avoid overworking and underutilizing your team. It’s still useful, however, to regularly monitor resource utilization as the project kicks off. Check out our guide to measuring team utilization. Or – if you’re curious about aspects of project management – read the capacity planning tools and techniques article.
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Aligning project demand with your team’s capacity is an essential part of project management efforts, but a capacity planning strategy benefits the whole organization, not just the production teams. Managing a broad portfolio of projects, you shouldn’t forget about capacity management. It will allow you to make better resource allocation decisions but also support other parts of your company:
Workforce capacity planning is crucial in ensuring that there is a sufficient number of staff with the right skills and in the right job roles to meet demand. It also helps in identifying staffing needs, considering downsizing, or redeploying employees to achieve organizational objectives and prevent workplace burnout.
HR teams have a clear overview of recruitment needs and get enough time to hire or train new employees. Capacity planning helps to avoid resource bottlenecks in the future.
Sales teams get more visibility into the production pipeline, so they know whether there’s room for more projects in a given period.
Finance specialists can calculate profit forecasts based on the planned capacity and actual projects assigned to the staff.
Think: Does your company have established procedures for too much or too little team capacity? If not, raise this issue during your next project management team meeting. Perhaps you can figure out solutions like R&D initiatives for when you have available employees and no projects to work on? After all, underutilization is not great for employee morale.
Capacity planning is appreciated by the employees, too. Such a strategic approach to resource management means that team members are not expected to work over their capacity. On top of that, employees know that their availability is visible and respected by the managers. They’re not likely to get assigned to an urgent project in the middle of their summer vacation.
Additionally, incorporating excess capacity into your planning can help cover increased demand and prevent scope creep, ensuring that resource requirements predicted by demand forecasting are met.
Finally, if your company uses a resource management app, your employees know what’s coming in their schedule: what’s the next project they will be working on, how long it will take, etc.
We hope that this article convinced you that capacity planning is both manageable and necessary. Forget about checking how much capacity your team has, and your project is at risk: you’re not likely to deliver it on time without having enough qualified people. At the same time, you may exceed your budget if you end up outsourcing an extra workforce. Luckily, both scenarios can be avoided when you compare capacity with demand. Remember about leveraging project resource management software to make the whole process more robust.
Want to see how simple capacity planning is with Teamdeck? Schedule a call with Aniela, one of our customer success experts. She’ll show you how you can make better strategic decisions thanks to effective project resource management.
Effective capacity planning is not an isolated activity; it must be integrated into the broader strategic framework of the organization. By aligning capacity planning with overall business objectives, organizations can ensure that their project management efforts contribute to long-term success. Here’s how to strategically integrate capacity planning into your organization:
Align with Strategic Goals: Capacity planning should support the organization’s strategic goals. This involves understanding how resource allocation aligns with the broader business objectives, such as market expansion, product development, or operational efficiency. Ensure that the projects being planned are in line with these strategic goals, and adjust resource allocation accordingly.
Foster Cross-Department Collaboration: Effective capacity planning requires collaboration across various departments. For instance, the finance team needs to align budget forecasts with resource allocation, while HR must coordinate recruitment and training efforts. Encourage regular communication and collaboration between departments to ensure that resource planning is comprehensive and aligned with overall business needs.
Implement Agile Practices: Integrating agile practices into capacity planning can enhance flexibility and responsiveness. Agile methodologies emphasize iterative planning and adaptability, allowing teams to adjust resources as project requirements evolve. This approach helps manage uncertainty and improves the ability to respond to changing project demands.
Leverage Data Analytics: Utilize data analytics to inform capacity planning decisions. Historical project data, resource utilization metrics, and performance analytics can provide valuable insights into resource needs and trends. Advanced analytics tools can help predict future capacity requirements and optimize resource allocation based on data-driven insights.
Develop a Capacity Planning Framework: Establish a formal capacity planning framework that outlines processes, responsibilities, and tools. This framework should include guidelines for forecasting, resource allocation, and monitoring. A structured approach ensures consistency and efficiency in capacity planning efforts across the organization.
Despite its importance, capacity planning often presents several challenges. Addressing these challenges effectively can significantly improve planning outcomes:
Unpredictable Demand: One of the biggest challenges in capacity planning is managing unpredictable demand. To mitigate this, build flexibility into your capacity planning processes. Use scenario planning to prepare for various demand scenarios and develop contingency plans to address potential fluctuations in project requirements.
Resource Constraints: Limited resources can constrain your ability to meet project demands. Prioritize projects based on strategic importance and allocate resources accordingly. Consider cross-training employees to increase resource versatility and reduce dependency on specific skill sets.
Data Accuracy: Accurate data is crucial for effective capacity planning. Ensure that the data used for planning is current and reliable. Implement processes for regular data updates and validation to maintain the accuracy of resource availability and workload information.
Communication Gaps: Communication gaps between project managers and other stakeholders can lead to misaligned resource allocation. Establish clear communication channels and regular check-ins to ensure that all stakeholders are informed about resource needs and project requirements.
Integration with Existing Systems: Integrating capacity planning with existing project management and resource management systems can be challenging. Ensure that your capacity planning tools are compatible with other systems and that data flows seamlessly between them to avoid duplication and errors.
As technology and project management practices evolve, several trends are shaping the future of resource capacity planning:
Artificial Intelligence and Machine Learning: AI and machine learning are increasingly being used to enhance capacity planning. These technologies can analyze vast amounts of data to predict resource needs, optimize allocation, and identify potential issues before they arise. AI-driven tools can offer more accurate forecasts and recommendations based on historical data and patterns.
Integrated Resource Management Platforms: The trend towards integrated resource management platforms is growing. These platforms combine project management, resource planning, and financial management into a single solution. This integration improves visibility, streamlines processes, and enhances decision-making by providing a comprehensive view of resource capacity and project demands.
Remote and Hybrid Work Models: The rise of remote and hybrid work models introduces new considerations for resource capacity planning. Organizations need to adapt their planning processes to account for remote team members, varying time zones, and flexible work arrangements. Tools and strategies that support virtual collaboration and resource management will become increasingly important.
Enhanced Focus on Employee Well-being: There is a growing emphasis on employee well-being in capacity planning. Organizations are recognizing the importance of work-life balance and are incorporating these considerations into their resource planning processes. This trend includes monitoring workload to prevent burnout and ensuring that resource allocation supports a healthy work environment.
Real-Time Resource Tracking: Real-time resource tracking is becoming more prevalent, allowing organizations to monitor resource utilization and availability continuously. This capability enables more dynamic and responsive capacity planning, as managers can make adjustments based on real-time data and emerging needs.
Resource capacity planning is a vital component of successful project management, and its importance extends beyond individual projects to impact the entire organization. By strategically integrating capacity planning into broader business practices, addressing common challenges, and staying abreast of future trends, organizations can enhance their ability to deliver projects on time and within budget. Leveraging advanced tools and technologies, fostering cross-department collaboration, and focusing on employee well-being are key to achieving effective resource capacity planning. Embracing these practices will lead to more successful projects, optimized resource utilization, and a stronger overall organizational performance.
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