5 Capacity Planning Steps to Avoid Project Management Mistakes

What Capacity Planning Is and Why You Need It?

Simply put, capacity planning is a part of project planning that focuses on matching the necessary work with the available resources. This principle applies to any project from any industry. There are tangible and intangible resources, as well as people. If project managers want to ensure proper capacity planning, they should take into account all these kinds of resources.

Project Success

The success of any project depends on the ability to deliver the expected results on time, based on the defined budget, within the defined scope. The most important factor for meeting project deliverables is the contributions from stakeholders.

Even if a project has a good, proven strategy, it will be impossible to execute without the necessary resources. If you’re not sure that you have sufficient resources, it means that your team risks money and is likely to waste energy and time.

Poor Capacity Planning

Poor capacity planning is one of the most common reasons for project management failures. Obviously, the first consequence of ineffective capacity planning is exhausted resources. It applies to both money and human resources because over-scheduling quickly leads to employee burnout, stress, and lack of concentration. When employees are exhausted, their morale declines. They don’t trust project managers, and their productivity also declines, as they stick with a minimal effort so that they just can keep their job.

Another thing that depends on capacity planning is the quality of deliverables. When a project works with minimal resources, customers are more likely to reject the deliverables, which leads to rework and so requires your team to waste more resources. Rework always results in additional costs, which not necessarily are fully justified.

Poor capacity planning ultimately results in an ineffective working process and increases the probability of missing the project goals. Fortunately, such a sad scenario is easy to avoid. All you need to do is just focus on capacity planning and follow some simple rules of effective planning.

Avoid Project Management Mistakes: Tips on Capacity Planning

The quality of capacity planning can make a big difference in the success of the project. Poor planning results in losses. Any company needs to assign the right tasks to the talent with the right skills. Otherwise, the effectiveness of efforts will decrease catastrophically, undermining the main goals of the project. This all happens when you start project management.

1. Define the state of your organization

Before you start capacity planning, it’s important to evaluate the overall state of the organization and to determine the existing barriers. The preparation stage should include the analysis of the company structure, culture, and, of course, available resources. Another factor that impacts project readiness is leadership support.

2. Build rational utilization formulas to connect costs and human resources

Even the most skilled and experienced teams cannot finish one project and immediately start to work on another project with the same efficiency and productivity. Your employees need some time to adjust to the new goals and specifics. In addition, when team members who work on multiple projects switch to a new project, this transition can be quite costly.

You need proper utilization percentages to build realistic plans, understanding the real gaps and constraints. Even though creating a resource plan based on the financial capacity seems to be an obvious solution, many companies don’t do it because of the lack of visibility.

3. Determine the available resources

Analyzing every employee individually would be effective but such an approach requires too much effort. Nevertheless, you need a sufficient level of detail, which can be achieved by consolidation at the skill level. The simplest way to do it is to form teams based on skills. Another important issue to address is that your capacity plan should be easy to understand. Thus, the optimal solution is to make your capacity plan as general as possible, and as detailed as necessary.

4. Determine how each project relates to the company objectives

Any project shouldn’t be started or must be stopped immediately if it doesn’t align with the company goals. Quite often, companies decide to proceed with projects that don’t serve any strategic functions, just because such projects are already in progress, with certain resources allocated. It’s always better to stop such a project than to keep investing in it while risking more important projects.

5. Consider the project from the enterprise perspective

If you perform all the steps above for only one department or service, there still will be a chance of losing money.

“You need to connect real costs to each of these steps, going from the top down. If you don’t, there will be hidden costs, and one part of the organization won’t know what another part does,” explains Susan Alexander, a project manager at Masterra.

In addition, there is a so-called “opportunity cost,” which means that some valuable resources may be underutilized or used for a non-business project, while strategically important projects lack resources.

Conclusion

Capacity planning is crucially important for project management because managers need to match tasks and resources. Poor capacity planning leads to exhausted resources, employee burnout, a decrease in the morale of teams, and poor quality of deliverables. All part of project management failures.

The main stages of capacity planning are matching tasks with the right staff, analyzing the available capacities, and prioritizing projects based on the main goals of the company. We recommend that you don’t forget about the importance of capacity planning. The proper planning will allow you to deliver results of the right quality at the right time, without wasting money, time, and energy.

About the Author
Berta Melder is a talented brand manager and passionate content strategist. Cooperates with different education courses covering a broad range of digital topics as a guest lecturer.

Follow her on Twitter @truesuccess_