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What Is Capacity Planning?

Learn about capacity planning types, planning strategies, and how to implement capacity planning in four easy steps.

Motion Blog
at Motion
Jun 9, 2023
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Clients never want to hear that a project will miss its deadline. Employees never want to be responsible for a project missing a deadline. But sometimes it happens, no matter how hard a team is working. Team members can be overscheduled. Another higher priority can suddenly come up that needs attention.

Capacity planning, which involves making sure the resources needed to complete a project are available when needed, can help with this.

In this article, we will talk about capacity planning, three types of capacity planning, and three strategies. Finally, we will learn how to do capacity planning and the benefits it brings.

What is capacity planning?

The capacity planning process involves determining what a project needs to be completed successfully. It's not just ensuring team members have enough hours to complete a project. The team members need to be available at the time they are required.

In addition to making sure team members have enough hours at the right time, the team members need to be set up for success with the right tools and training to succeed.

Some people confuse capacity planning with resource planning. Let's take a look at the difference between the two.

Capacity planning v. resource planning

Resource planning involves assigning resources to projects. The skills of specific people are matched to the appropriate project.

For example, an IT team has an upcoming website development project and a backend file processing project.

The team hired a new developer with a lot of experience with website development from college courses and two internships completed during their college career. They have not yet done anything with backend file processing.

The team also has a more experienced team member with website and backend development experience.

When assigning resources to a project based on skill set, it wouldn't be wise to immediately assign the new developer to the backend file processing project. They would likely need training first. In this example, the new developer would be the better fit for the website development project. Our experienced developer should take on the backend file processing project.

Capacity planning involves making sure that your team can take on new assignments. Using our example, if the new team member does not have any projects assigned to them, they'd likely have time to take on the website development project. The manager should also check the experienced developer's schedule to ensure they have enough time to complete the backend file processing project on time.

A task being moved from a task list onto a calendar

‎After some training, the manager might decide the new team member has enough skills to take on a backend file processing development. The manager should consider that it would likely take this team member longer to complete their first project. Additionally, the manager would want to make sure a more experienced team member had the capacity to mentor the new developer on this project.

What are the three types of capacity planning?

Workforce capacity planning

Workforce capacity planning means making sure you have enough employees and working hours to complete projects. The Pulse of the Profession 2021 Report reported that in 2021 only 55% of projects were completed on time. Better planning can help teams figure out what they are capable of accomplishing.

An example would be ensuring you have enough business analysts, developers, testers, and documentation specialists available for a software update.

Workforce capacity planning example

Each team member would need to have enough hours available when it is time for them to work. For example, the business analyst would need to be most available at the beginning of the project when they are defining requirements. They may need some availability to answer questions from developers, testers, and the documentation team later on, but not nearly as much as they would need to be available initially. They would likely be available to take on another analysis project when the project is past the analysis stage.

Tool capacity planning

Tool capacity planning means ensuring you have the tools needed to complete work. Tools are anything that might be necessary to complete the job.

An example is an IT team needing enough computer equipment to do their jobs. This could include laptops, software, and server space.

Product capacity planning

Product capacity planning means ensuring the team has the products needed to complete a job. It is more commonly used in manufacturing and e-commerce.

In manufacturing, this means ensuring the team has the supplies they need to make their product.

In e-commerce, this means making sure you have enough products to meet customer demand. For example, a hardware store might stock a lot of snow shovels, snow blowers, and salt during the winter. During the spring, lawnmowers and gardening supplies would replace snow removal products.

Capacity Planning Strategies

Lead Strategy

Lead strategy is a capacity planning process that involves increasing production capacity when a greater demand is expected.

An example would be hiring additional employees before an expected growth in work. Ahead of the holidays, a retail store would hire seasonal employees. Another example could be an engineering team hiring new employees before an expected growth of new clients.

Lag Strategy

Lag strategy involves having a company work to its maximum capacity before investing in more resources.

Capacity planning strategy table

‎An example would be having more emergency room medical personnel on call during a busier period of time, such as cold and flu season, to account for the potential for an increased number of patients.

Match Strategy

Match strategy involves combining the lead and lag strategies. It involves slowing the rate of increasing capacity to meet current demands.

An example would be to monitor staff workloads and hire new employees when they are nearing capacity for further work rather than hiring them before expected growth.

How to do capacity planning in 4 easy steps

Determine current capacity needs

The first step of effective capacity planning is to determine your current capacity based on actual demand for products or services. A manager should evaluate resource capacity. Are there areas of your team that are short-staffed? Are there team members with extra time in their schedules?

Additionally, do all team members have the necessary tools to complete their job? Can technology be added to a team to make them more efficient? For example, if a QA testing team spends a lot of time gathering feedback for developers on the steps they take to recreate an issue, is there a tool that would help? Purchasing screen capture software might make sharing feedback more efficient.

When running a retail business that sells products to customers, the availability of products for consumers should be evaluated for capacity needs. Are there enough products in stock? Are some products not selling at all? Are other products running out?

Project future needs

After evaluating current capacity requirements, the future capacity demands should be considered.

Are there additional upcoming projects expected that will need additional resources? For example, is one of our clients experiencing a lot of growth and asking to complete more projects for them? Is our sales department making a lot more sales?

Is there a time of year that is always busier? For example, an accounting firm may get more active closer to tax time.

Determine where the needed additional capacity will come from

If team members are currently overworked, this requires more capacity to be added. Potential work growth or a busy season also requires the team to plan for additional capacity.

It makes sense to start by evaluating any changes that can be made to your current staff. Are there team members with excess capacity in their schedule to take on work from overscheduled employees? Would training help employees work in new areas? Or would training help employees become more efficient at their current jobs? Do more people need to be hired?

Another question is whether team members could benefit from additional tools to help them complete their job. Should a company replace older computers with newer, more efficient ones? A calendar tool like Motion can help team members spend less time planning their work, increasing the capacity they have to do actual work.

If a team uses items supplied by other companies to complete their jobs, is the supplier meeting the demands needed? For example, if a retail store sells out of sunscreen in the summer, does an additional sunscreen supplier need to be added to keep up with demand?

What risks does the plan have?

Every capacity plan will have risks that need to be evaluated.

What will the profit loss be if your team fails to meet demands due to insufficient capacity? If this loss is estimated to cost more than it would to add additional capacity, it makes sense to evaluate what steps your team wants to make to add capacity.

If it is clear our employees are overworked, will they burn out and leave the company? A good employee leaving costs the company in many ways.

A vacant position means other employees will need to take on that work until the position is filled. This will lead to other overworked employees being pushed to burn out.

Posting job openings, interviewing candidates, and extending offers cost time and money. There is no telling how long it will take to find a candidate to fill the open position.

Once the position is filled, there will still be training to get the new employee up to speed. Even if the new team member is skilled, they must learn your company's processes and best practices. This will take time away from existing employees who need to train the new person.

Once risks have been evaluated and a plan is implemented, your team will start experiencing the benefits of capacity planning.

Benefits of capacity planning

When capacity management is in place, a team is more proactive than reactive.

Teams are better prepared for upcoming scenarios, such as a busy season.

Team bandwidth is optimized. Work is fairly divided among all members, and they have the tools they need to succeed.

Making sure a team is working to capacity cuts unnecessary costs. When team members are all working to capacity and have the tools they need, it can eliminate the need to hire additional team members.

Teams can be better prepared for future growth. When it's clear a team is near working to capacity, they can plan to hire additional resources if future growth is expected. Planning these hires allows the team to onboard and train before the team is too swamped to help new members get up to speed.

Capacity management helps to avoid employee burnout. According to a study conducted in 2022 by FlexJobs, experiencing burnout accounted for why 42% of people who quit their jobs left. Lower turnover helps the team succeed better.

Use Motion to help with capacity planning

When a team implements capacity planning, they can be confident about meeting deadlines.

Motion can help a team manage its capacity. Having tasks entered in Motion allows users to see how busy their schedule is. A schedule gap can show a user can take on additional tasks. If a schedule is overloaded with work, it is time for the team manager to do some planning to see what can be done to help the team member's capacity. Can some tasks be assigned to another team member with more available bandwidth? Or does the team need to hire more resources?

If you are not already using Motion, access a free trial today.

Motion Blog
Written by Motion Blog