How does capacity planning increase your profitability?

Project capacity planning is the process of examining whether an organization has the people and resources needed to complete a project. Unlike resource planning, the focus here is on the deployment of staff. This means answering the following questions:

• Are there enough people available?
• How much time do they have for the project?
• Do they have the required skills?

By doing this in advance, you can anticipate and adapt if necessary: change work schedules, adjust vacations or bring in additional staff.

Once you have completed this capacity planning phase, you can begin to plan resources: define deliverables for each task and assign them to people, based on their skills and the time available.

Good capacity planning allows you to correctly estimate the duration of a project, to forecast your budget and to know exactly which people and resources you need. This avoids bottlenecks, wasted time, resources and money, as well as delays or shortages for your customers.

Balancing your employees' workloads and assigning people with the right skills to the right tasks also results in satisfied and productive employees. They will be less likely to quit due to illness or burnout. They also won't be left behind unnecessarily in an unprofitable manner.

This management process can be roughly divided into four stages:

• Step 1: Review the project backlog - What are the upcoming projects? And how many FTEs do you need to complete them?
• Step 2: Determine Available Capacity - Review your current capacity at the company level, by the team and by the employee. Is it sufficient for all planned projects? Will you need to hire staff or freelancers in the coming months?
• Step 3: Determine subtasks, task order and priorities - What is your goal? What are your milestones and subtasks for each project? What steps are a priority? What do you need to address first, before you can move on to the next task?
• Step 4: Assign tasks to teams and employees - How do you allocate tasks to your teams? Who is responsible for each subtask? Set deadlines for each step and assign them to your employees.

From conversations with our clients, it is apparent that when planning capacity, they often face the following issues:

• Projects that are not completed on budget or on time;
• People being sidelined, which reduces profitability;
• Overworked team members;
• Senior (more expensive) profiles have to step in to save a project, causing the company to lose revenue.

Without tools, capacity planning is a very complex puzzle. That's why companies working on larger, long-term projects often use capacity management software, such as Teamleader Orbit. This helps to clarify planning, subtasks and milestones, making it easier to identify bottlenecks and take timely action.

• Determine the net capacity of your organization over a given period;
• Determine the capacity of a project. Do you have enough people? Do they have the right skills? Can they do what you planned or do you need to make adjustments? Are there problems with certain tasks or steps?
• Change your schedule smoothly. You can assign different people to your projects, intervene when the workload becomes too heavy for some employees, and thus adapt the feasibility of your processes;
• See where there are shortages and make hiring decisions. What will be the workload of your development team in the next three months? Will your employees have to put in extra effort? Would it be better to bring in freelancers to get things done?