Organizational planning is no walk in the park. Capacity planning especially can be quite a daunting task for organizations of any size. It is a delicate equation of balancing employee capacity, available resources, and budgets against the tireless demands of customers, clients, or other business stakeholders. We take a look at some of the key aspects of what capacity planning is, why it’s needed and what are its benefits.
So, What Is Capacity Planning?
Capacity planning is the process of determining the resources required to meet the business demand or the project requirements. Simply put, it is a question of how much work needs to be done over a specified timeframe. This process is especially crucial in the areas of resource, time, team, and project management.
An effective capacity planning process helps the organization understand if it has the production capacity required to meet demand and make sure resources are being used efficiently. A functional capacity plan helps to:
Keep track of teams and task priorities
Prepare for unprecedented tasks
Handle remote work/hybrid models
Assess the gap between actual work and planned work.
It also provides early warning about resource shortages, skill gaps, project vacancies, bench, and margins among others. Strategies can be tailored according to different needs and scenarios.
The efficient Workforce Capacity Planning & strategy focuses on ensuring the organization has the required human resources to meet demand. The company will get to know if they need to hire more, downsize, or upskill workers and make changes accordingly.
Why Do We Need Capacity Planning?
Leaders and managers have a lot on their plate, we all know that! With so many responsibilities, there are bound to be some challenges. Capacity planning is a great investment because it not only helps the organization improve team performance and streamline tasks for increased efficiency but also predicts possible roadblocks and plans ahead. When paired with a skill assessment, the business finds resource strengths and gaps. Knowing this can help them plan accordingly and thereby reduce employee burnout.
Demand and Resource Forecasting often go hand-in-hand with capacity planning. Forecasting is the process of analyzing and understanding current and past information of a business to understand future patterns in sales and revenue.
When combined with resource planning, a manager can better understand the overall workload and capacity, and thus efficiently allocate work according to deadlines, budgets, time, and cost.
Capacity planning is also a great way to avoid employee burnout! Incorporating a Work Breakdown Structure (WBS) for larger projects will help employees handle tasks effectively, promote cross-team functionality, and lead to better productivity and easier project management. It will identify a project’s critical path, and thus optimize time/resource allocation and output.
Mistakes in Capacity Planning to Avoid
Capacity planning presents several difficulties, which is not surprising. Overestimating employee availability, or overbooking their resources with work that their calendars cannot accommodate, is a common and expensive error that businesses make far too frequently.
Not knowing your bandwidth in real-time can lead directly to piling too much work on your resources' plate (to the point where it becomes more than they can handle). This is caused by the use of antiquated methods for time monitoring and resource capacity planning. in particular, spreadsheets and Excel.
To monitor everyone's allocation and stay in perfect sync with your projects and timesheets, you will need an overview of the complete resource pool to tackle the problem of constrained capacity.
You would need a more comprehensive understanding of your team's allocations, vacation time, and utilization rates in order to determine how much capacity is available shortly. Forecast's Schedule includes information on every one of these features.
Mismatches between skill sets and projects are another frequent error in capacity planning. It is imperative to bear in mind that capacity planning does not entail workload "smoothing" or resource allocation based on circumstances. Finding and assigning individuals with the appropriate abilities to the appropriate projects is the epitome of capacity planning. If not, the revenue can decline.
If you inquire about the reasons behind resources' resignations, you may find that resource management is not the best aspect of businesses because employees are sometimes assigned only based on their availability. Employee disengagement is the result of this situation on a larger scale. You might as well take seniority into account. In addition to increasing costs, assigning senior software engineers to work on projects and tasks that junior engineers could accomplish irritates the assignee.
Benefits of Capacity Planning
With a proper capacity plan in place, the organization will have a clearer vision of the future and thus make suitable day-to-day as well as long-term strategies. Listed below are some of the impacts and benefits of capacity planning:
Data-driven decisions about employees and projects.
Draft more accurate budgets
Greatly reduce employee burnout
Have a complete overview of resources, skill sets, skill gaps
Plan intelligently for upskilling, hiring, and reshuffling
Allocate resources for training, upgrades, and more
Interested In Learning More?
SkillOps helps you identify bottlenecks and draft comprehensive capacity planning models. We help HR professionals, L&D departments, Project Leads, and Product Managers among others to effectively address and scale up performance. Contact us to find out more.