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Imagine that you are a highly skilled project manager. Your project sponsor approaches you with a capacity planning query. Although you are familiar with resource planning or identifying the skills required to support a project’s success, you aren’t sure what this request is.
Capacity planning is the process of assessing how much time each team member has available to meet customer needs and then making decisions about how to fill those gaps. Participation in capacity planning, even if project managers don’t have the decision-making authority to make decisions, is another way we can have a positive effect on our teams as well as the business.
This article will explain the basics of capacity planning and provide examples and tools. Let’s get started to learn more about capacity planning in project management.
What is Capacity Planning in Project Management?
What are the Benefits of Capacity Planning?
Strategies for Capacity Planning
The Capacity Planning Process
How to do capacity planning in agile
Capacity Planning Tools
What is Capacity Planning in Project Management?
If project resource management involves gathering the team members, equipment, or other materials required to execute a project successfully then capacity planning is the goal. It is the ability to predict whether your current supply of resources will suffice to achieve project objectives.
You’ll also need to assess the availability of resources as part of your assessment. You will also need to assess whether the team members have the skills necessary to complete the work. You may have someone who has 40 hours per week to devote to your design project. However, if they lack the design expertise or are not interested in it, this is less of a benefit.
Once you have your production capacity, you can compare it with your expected demand and create a plan to balance them.
What are the Benefits of Capacity Planning?
Capacity planning benefits all project stakeholders, the business, the project team, and you, as the project manager.
It’s important to accurately forecast demand and rightsize your supply in real time to meet it. This keeps all stakeholders happy and helps you avoid losing out on new business opportunities.
Team members are working together on projects that align with both their career interests and skill sets. They have just enough work to do, like Goldilocks. A more engaged workforce is less likely to burnout.
Capacity planning can help identify bottlenecks in existing team processes. The data can be used by project managers to respond to stakeholder requests that are not within their scope. They can also justify more easily requests for additional headcount.
Strategies for Capacity Planning
What are your options to address gaps once you have calculated the expected supply and demand? There are three types of capacity planning strategies that project managers can use:
Lag strategy: Only maintain enough resources to meet the real-time demand. To meet the demands of a new project, you borrow, borrow, or hire. The time it takes for a resource to be found can slow down production capacity.
Lead strategy: Maintaining excess capacity to meet anticipated demand. This is what we call having a bench in consulting. This strategy allows you to respond quickly to new stakeholder demands, but if you don’t realize your forecasted demand, it can negatively impact profitability and the bottom line.
Match strategy: A hybrid approach where you regularly revise demand forecasts to meet new capacity needs. Then, you hire incrementally to meet anticipated demand.
My hot take? Although matching is a great strategy for managing capacity, it’s not always feasible. The boom/bust cycle of hiring tends to be followed by the demand for workers. It’s better to take advantage of this situation.