What is capacity planning and should you use it?

Capacity planning sounds pretty straightforward, right?

Planning the capacity of a project — simple.

We wish it were that easy. Effective capacity planning is no simple feat.

Truth be told, making a capacity plan is a bit of a juggling act. Whether it’s organizing budgets, managing stakeholder expectations, or figuring out how much work your team can actually do, there’s a lot to cover if you want to do it right.

So let’s not waste any more time. In this article, we’re going to dive into the world of capacity planning, providing you with a breakdown of what it is, how to use it, and whether you should even use it all.

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What is capacity planning?

To put it simply, capacity planning is the process of figuring out whether your team has sufficient capacity to complete a project.

It’s also used to help businesses identify a potential bottleneck in the project, mitigate risks, and figure out if and when they need to scale their team to get work done.

Capacity management goes hand in hand with project planning, too. After all, it’d be hard to know how much capacity you need for a project if you don’t know the plan.

There are two main elements of capacity planning:

#1 Workforce

Workforce capacity planning involves making sure your team has the time required to complete tasks in the project. If they don’t, you’ll need to hire more employees or reconsider the proposed deadline.

#2 Resources

Resource planning ensures that you have enough resources to complete the necessary tasks. This could be anything from how many people you have on your team, to the budget you’ve got, the time you’ve been allocated, the machinery you need, and so on.

What is the value of capacity planning?

Why do we bother with capacity planning?

Well, there are a number of benefits that come from using it.

Here are a few examples:

• Time projection: Capacity planning allows you to accurately estimate the duration of your project. You should be able to figure out exactly how long each task will take based on the capacity of your team.
• Accurate budgeting: Got a set budget you have to stick to? With capacity planning, you’ll have much better oversight of where you need to spend your money to get the project done.

• Manage resources: Reviewing the capacity of a project allows you to allocate resources where they’re most needed. You’ll be able to hone in on what resources you have so that you can determine how to use them efficiently. A shocking 60% of businesses struggle with poor resource management. But if you can get the ball rolling with capacity planning you won’t be a part of that statistic.

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What are the steps for capacity planning?

To keep it simple, we’ve broken the capacity planning process down into 4 steps. No need to thank us. (Unless you really want to!)

#1 What are the deliverables?

Before you get started with capacity planning, you’ll need a thorough understanding of the deliverables involved.

For example:

• What is the expected outcome?
• Will there be milestones you need to hit along the way?
• Is there a date for completion?

Make sure you spend some time getting a thorough understanding of the project itself. Speak to stakeholders and senior members of your team to find out as much as possible.

The more information you have, the more accurate your capacity planning will be.

#2 How long will each task take?

To effectively figure out if your team has enough capacity for the project, you need to know how long each task will take. Not the most exciting thing to do, we know — but important nonetheless.

So how do you estimate how long each task will take?

There are different ways you can estimate the duration of tasks, which we talk about in our blog: A no-nonsense guide to critical paths.

A good place to start is by using previous projects as your baseline. Review tasks from a past project that are similar to the tasks you currently face. You can use that information to estimate how long your current tasks should take.

You’ve now got a pretty good idea of how long your tasks — and the entire project — should take. This is also a good way to identify what resources you might need, which leads us nicely onto our next point.

#3 What resources do you have, and what resources do you need?

The resource planning process involves figuring out what you already have, and identifying what else you might need to get the project done.

Here are some questions that will help get your resource capacity planning:

• What’s your budget?
• Do you need any physical resources?
• Do you have the equipment or machinery you need?
• How many people will be working on your team?
• How many hours do those people work?

When it comes to members of your team, a common resource capacity error is assuming that, because someone works an 8-hour day, they have 8 hours of capacity.

This is simply not true. Unless you know someone who sits at their desk for 8 hours non-stop, with no bathroom breaks, no coffee breaks, no meetings, and no other interruptions.

100% availability for any resource — whether that encompasses people, tools, machines, or anything else — is unsustainable and unrealistic.

Keep this in mind when analyzing your capacity.

#4 Time to analyze your capacity

You now have everything you need to fully analyze your team’s capacity.

Excited?

First things first, you can start to identify your priority tasks and figure out how to allocate those tasks based on the team’s capacity.

A good way to start is by figuring out which tasks are high priority and what their dependencies are (you might even want to consider using the critical path). Once you’ve nailed this, you can start to think about allocating tasks accordingly.

As we mentioned above, now is the time to be realistic. It’s always better to underestimate available capacity than to assume that someone has more time than they actually do.

It’s also a good idea to get some good old cross-functional collaboration going. This will help you clarify how much capacity your team actually has, and whether you have excess capacity.

Using a project management platform is a great way to do that. Communication is all in one place, notes can be added to tasks, and everyone can see what’s going on in the project.

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What are the tools of capacity planning?

Using a capacity planning tool — such as project management software — allows a project manager or resource manager to see what their teams are doing, and when they’re doing it.

According to Capterra, workload visibility improves when using project management software — which is definitely a benefit when it comes to capacity planning.

But how exactly does capacity planning software make the process more efficient?

Let’s use monday.com as an example. We have a variety of functions and features that streamline the process of capacity planning.

Some of these include:

• Workload view: Our workload view gives users a clear overview of how your team’s work is divided. With one quick look, you can see who is over capacity and assign tasks accordingly. Pretty handy when you’re trying to figure out what everyone’s current capacity looks like.

• Automations: monday.com’s automations are a great way to save time and make workflows more efficient. They allow team members to spend less time doing the fiddly bits, and more time getting work done. When it comes to capacity planning, if you know that the software you’re using is intuitive and automated, you know that your team can get work done more efficiently.

• Time tracking: If you decide to look back on previous tasks to try estimating how long your current tasks will take, time tracking is vital. With this feature, you can look at previous tasks, see exactly how long they took to finish, and estimate how long your current task will take.

• Task progression: With monday.com’s task progression column, users can easily update how their tasks are moving along. This allows project managers to easily see if the project is progressing on schedule, and whether more capacity is needed to get tasks finished on time.

Should you be using capacity planning?

To put it simply, yes, you should. Capacity planning is the perfect way to figure out how much work your project will involve, and whether your team has the capacity to do it.

Making capacity decisions will save you a lot of time in the long run, and you’ll be making far more accurate time and budget estimations. It’s a win-win.

As we’ve already mentioned, we’re pretty sold on the fact that work management software makes understanding capacity requirements a lot easier. If you want to give it a go, we’d recommend starting with one of our pre-made templates to get the ball rolling.

Try our resource allocation template!