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Understanding capacity planning

Strategic and operational planning, rough and fine planning and the three-step approach – the conceptual framework behind capacity planning.

Capacity planning is the process by which a company allocates its available resources – staff, budget, materials, rooms – to the demand it expects. The aim is to make the best possible use of the available capacity and so generate the greatest possible return over the planned period. This article provides the conceptual framework; how you put the planning into practice in teamspace is covered in Create and set up a capacity and Maintain the resource schedule.

Strategic or operational

What capacity planning looks like depends on the time horizon.

  • Operational capacity planning (short term). The available capacity is fixed: there is a given number of employees that cannot be changed at short notice. The task is to allocate the existing resources to the tasks at hand. The time horizon ranges, depending on the company, from a few days to several months. This is exactly what the resource schedule in teamspace is built for.
  • Strategic capacity planning (long term). Over the long term you can hire new employees, procure equipment or train existing staff. The focus is not on allocating resources but on shaping the available capacity. Here the global reports (see Analyse capacities) help you spot bottlenecks early.

Rough and fine planning

You plan at whatever level of detail you need – and you can refine it at any time.

  • Rough planning: for a task you first schedule a team, without yet deciding who exactly takes which day. That is enough to check feasibility.
  • Fine planning: later you break the planning down to individual team members and days.

You are also flexible in time: plan for the whole month, a week or to the day. For day-to-day business, weekly planning is often enough – it gives you a realistic picture of team availability at any moment.

What you organise by

Capacities can be assigned to an employee, a project or a team. Which form fits best you decide per undertaking. Three organising logics are common:

  • By department – schedule team members by their specialist department, e.g. sales, marketing or engineering.
  • By customer – when customers are looked after by fixed teams, you organise the employees accordingly.
  • By skill – when a task needs a special qualification, you find the team member who has it.

A three-step approach

By way of example, for a service company planning the deployment of its staff for upcoming customer projects:

  1. Project overview. Get an overview of all tasks in the planning period – usually the work packages from the customer projects. Estimate their effort up front as precisely as you can: the better you manage this, the less you have to adjust the planning later.
  2. Available capacity. Take the contractual working time as the maximum – for a full-time employee typically 35 to 40 hours per week, correspondingly less for part-time. Deduct holidays, absences and the unplannable day-to-day business. As a rule of thumb, a deduction of about 20% of working time for administration and day-to-day business is advisable.
  3. Scheduling. Assign the tasks to the employees. Start with the work for which you have the least room for manoeuvre – fixed deadlines or special qualifications. Distribute the rest as evenly as possible afterwards; overtime should remain the exception. Build in a buffer for unplanned sick days.

💡 Rule of thumb. Never schedule the full contractual time for projects. Holidays, sick leave and day-to-day business eat up a considerable share – anyone who plans right to the edge falls behind at the first absence.

Why it pays off

Capacity planning helps you handle customer orders efficiently. For project-heavy businesses in particular, it makes scheduling staff easier:

  • A comprehensive, up-to-date overview of available capacity and tasks.
  • Integrated planning that takes holidays, sick leave and the like into account.
  • Optimisation of employee utilisation and avoidance of resource conflicts.

Without capacity planning the risks rise: projects cannot be completed on time when resources are missing; coordination effort and costs go up; and sales opportunities fizzle out when capacity with the necessary qualification is lacking.

The big advantage of software like teamspace: all the relevant data is already there – working times, sick days, holidays and employee qualifications, as well as work packages and the time and budget targets of the projects. You save yourself the manual collation and can respond dynamically as soon as an estimate changes or someone is off. Via the integrated time tracking you also reconcile planned and actual times and recognise in good time when a task is getting out of hand.

Notes