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Capacity planning – what it is, how to do it well

Last updated on 
August 17, 2020

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People rarely talk about capacity planning – perhaps because it’s seen as one of the less creative parts of project management. Nonetheless, it’s essential you get it right. Without solid capacity planning, you can’t realistically hope to deliver projects on time without compromising others or exhausting your team. Here’s how to nail capacity planning every time in just five simple steps.

What is capacity planning?

At its most basic, capacity planning means mapping out all the project work you have to do and calculating how long it’s going to take you, within the constraints of time and manpower. So, very simply: understanding the limits of your productivity and working effectively within them.

But it’s also about distributing work intelligently among your team. Assigning too much work to a select few team members is quick road to stress and burn out, which limits your productivity and limits the quality of project output. Conversely, assigning too little work to each employee is an inefficient use of resources, which will limit project profitability and disengage your employees.

Capacity planning in 5 steps

Good capacity planning essentially boils down to good knowledge sharing – keeping all team work visible, sharing insights and experience from previous projects, synching schedules and monitoring workloads once projects go live. Investing in a solid project tracking tool is a no-brainer for keeping the entire process efficient, accurate and effortless. Here are the five steps required to get there:

Step 1 – Lay out all project tasks

Firstly, you need to get an overview of how your team spends time on different tasks. There’s a long-winded and fast approach to doing this.

The long-winded one requires you to ask each team member to write down everything they did on a previous project and estimate how long each individual task took, using the formula: X hours per week to do Y task. Employees need to think carefully about all the tools they use, since administrative project tasks – like emailing clients, traveling to meetings or having a quick project catch-up – often go unreported when using this method.  

The fast approach outsources this task to an automatic project tracking tool. It will automatically capture the time each team member spends on different tasks and tag them to the right project, providing a complete account of everything that goes into your projects. As a result, it’s also far more accurate – capturing hidden project tasks that manual reporting frequently overlooks.

project activities@2x

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Step 2 – Total your estimates

Next, you need to compare all your team’s estimates to gauge all the total time required for a particular project. This process will again vary depending on whether you’re doing everything by hand or enlisting the help of a tool.

If you’re going manual, draw up all your team’s estimates in a table, grouping them by role. For each role, list individual tasks and the total time spent on them. After you’ve recorded everyone in your team, calculate the total hours spent. Compare them against the actual duration of the past project in question to see whether your total adds up.

If you’re going automatic, your project tool can do this all for you. Just head to your project’s dashboard for a full rundown of the total time you spent on it. Using automatic project timer Timely as an example, here you will be able to see an overview of project status, budget, activities, hours and reports.

Individual project tabs

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Step 3 – Prioritize your workload

In capacity planning, laying out priorities and dependencies is crucial. You need to know which order to complete tasks in, since completing one task may stand as a condition to moving onto another. A tool like Jira or Trello can make this easier by mapping out all the work that needs to go into your project. When assigning tasks, keep in mind:

  • Your total available resource for it
  • The specific expertise of certain employees
  • The frequency or quantity of work needed to be done

Step 4 – Consider a capacity strategy route

While not always appropriate for smaller projects, having a capacity planning strategy can help you quickly adapt to meet any unforeseen changes during project execution. Consider the following approaches against your you team productivity, stakeholder input and market variables:

  • Lead strategy – this means adding capacity in anticipation of increased demand, with the goal of improving service level and reducing lead time
  • Lag strategy – a more conservative approach than lead strategy, where you add capacity after only the organization is running at full demand
  • Match strategy – adding capacity in small amounts in response to changing market demand. This is more adaptable for businesses in varying markets.

Step 5 – Monitor workloads once live

Crucially, capacity planning doesn’t end once projects go live. You need to be able to monitor how work pans out against your plan, to ensure employees aren’t overloaded, keep everyone working to your priorities and ensure tasks stay on-schedule. It’s also helpful for improving future project estimates – documenting learnings from every project to help inform the next.

A good project time tracker is again your best friend here. Tools like Timely display all your team performance from one view, breaking down individual employee hours, performance against capacity, billable percentage and activity. It’s the easiest way to stay updated on how your team is doing – rebalancing workloads and providing direction where necessary.

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and capacity to keep everyone connected.
Lead happier, healthier teams.

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