Understanding Capacity Planning
Capacity planning is the process of using the maximum amount of what you have available in order to meet your current—and future—demands. At its core, capacity planning is a basic supply-and-demand concept. It allows you to consider your team’s availability to determine what projects you can work on: What tasks can you complete, and in how many hours?
Since not all tasks are created equal, it is important to make sure that you’re balancing the availability of your resources, especially people, against the needs of your projects in a given time frame. This is where capacity planning comes in.
Short-term capacity looks at daily, weekly, or even quarterly time frames, while medium-term capacity represents a timeframe of one to three years. Long-term capacity planning requires forecasting, which means first paying careful attention to your short-term and medium-term capacity.
So why is capacity planning worth it, and how can a capacity planning tool help you optimize performance and reduce guesswork?
Planning for Success
Without a crystal ball, capacity planning is the closest you can come to knowing your potential for success. By using a capacity planning software, you can optimize capacity planning by easily seeing the relationship between key elements of your project.
- Timeline: Before you can measure capacity fully, you need to know your timeline—and not just your projected date of completion. What holidays do you need to build into the schedule? Are Fridays and Mondays flex days for employees, and will that reduce capacity on those days? Build in known factors to your planning for a more accurate sense of your capacity.
- Document Risks: Not everything is preventable, but nearly everything is predictable. Is weather going to be a factor during the timeline of the project? Is flu season likely to lead to increased sick days? Does bright, summery weather translate to more afternoons off?
- Resource Management: Look at the scope of each project to determine which resources need to be used, and at what stage of the timeline. Keep in mind which resources see surges at which point of the timeline, like increased IT requests when a new group of contractors is brought on board.
- Budget: Although budget may seem like a larger-scale project management concern, it requires attention too. Too little use of one team may result in overtime for another, resulting in a budget overage. Even if the overall labor capacity remains the same, the way that capacity is met may not cost the same in each scenario.
- Demand: Remember, we said capacity planning was a basic supply-and-demand issue — being able to satisfy demand in the most profitable and successful way possible. Capacity planning helps you make sure that you’re ready when demand peaks and not over-utilizing resources when it’s slow.
- Workforce Management: Who are your people, and what are they great at? Workforce management is more than just timecards and evaluations. You need to know where your people excel, which teams excel even more together, and how to apply the unique strengths of your workforce. You can also honestly reflect on what gaps in your workforce need to be closed, either through training or additional hiring, and whether or not those gaps need to be addressed on a project-by-project basis or permanently.
Let’s say your organization has earned a three-year development project for a corporate training curriculum. The phases of the project are planning, writing, implementation, and revising. Each phase has a critical timeline, and the budget has been set.
The capacity needs for the first stage, planning, are minimal and require only higher-level staffing, such as the director of the project who communicates with the client and team leads for each arm of the project. This team will work remotely, reducing overhead and optimizing the budget.
The second phase, writing the full training curriculum, means bringing in teams of writers to create what was developed in the first phase. This will increase staffing needs and overhead costs overall since your organization hosts quarterly retreats to maximize team-building, morale, and productivity.
The third phase requires only a skeleton crew to receive feedback as the training curriculum is implemented by the client. However, your organization must consider the risk of losing trained writers against the cost of under-utilizing writers as you wait to see how much revision is needed during the final phase.
By using a capacity planning software to consider the key elements of the project, you can not only adjust as needed to account for peak demand in the timeline but also predict future capacity needs for the same or a similar project. When plans change, or resources change, a strong capacity planning tool allows you to both see what is possible with current capacity and resolve needs as quickly as possible using the resources available.
Difference Between Capacity and Resource Planning
Speaking of resources, what is the difference between capacity planning and resource planning? Both capacity and resource planning are, as you would imagine, planning processes.
- Determines if your organization has sufficient resources to execute current (and future… think about growth!) projects
- Helps you determine the availability of your resources and prioritize projects
- Provides insight needed to make decisions about resources and projects
- Focuses on supply versus demand
- Typically takes a long-term view
- Allows you to coordinate and allocate the resources needed for projects
- Gives project managers guidance on their available resources in order to maximize efficiency
- Typically takes a medium-term view
- Reports on under- and over-utilization of resources
- Helps you know which resources should be allocated priority projects
Finding Your Just-Right Capacity Planning Strategy
Capacity planning software is used to support three major types of planning strategies: lag, lead, and match. Each strategy coms with its own benefits and risks, and your business model and personality will determine what works best for you.
- Lag Strategy: As the most conservative capacity planning strategy, lag strategy is planning to have enough resources to meet true demand at any given time. The benefit to this strategy is being able to keep costs and waste as low as possible, while the risk is running out of product or services if demand peaks unexpectedly.
- Lead Strategy: The risker lead strategy applies projected demand to the capacity supply, which means that surges in demand are met faster and in a more streamlined way than other providers might be able to. Unfortunately, it also means if demand does not increase as projected, there is a chance that you will have to pay employees to sit idle.
- Match Strategy: Sitting squarely between the low-risk lag and high-risk lead strategy is the match strategy. This method employs more frequent capacity planning in order to more closely monitor demand and trends, resulting in a greater ability to scale up to meet demand as needed without the high risk of the lead strategy’s dependence on long-term projection. A strong capacity planning software is a crucial step toward success when applying match strategy.
Journyx PX for Capacity Planning
As a powerful enterprise software, Journyx PX offers streamlined solutions for common problems that prevent organizations from good capacity planning. By bringing in a capacity planning software to your business model, you can avoid the pitfalls of human error, limited communication and flexibility, the time consumption of manual entry, and restrictive reporting capabilities.
With Journyx PX as your capacity planning tool, you can schedule and monitor your projects based on availability while predicting your project costs. You can use Journyx PX’s robust financial, staffing, and project reports for your current and future capacity planning in order to meet demand and minimize risk — and even expand your organization’s capacity when you are ready.