Resource Capacity Planning

Learn why capacity planning is essential to effective resource management.

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A new opportunity is in the pipeline. Everyone is hyped.

Then comes the reality check: Can you really afford to take on additional workload?

Are you headed for a breakthrough? Or a breakdown?

Resource capacity planning compels managers to ask the simple but tough question: Do we have the available resources to match the project requirements?

About Resource Capacity Planning

When we say resources, we think of all the factors needed to get the work done. Resource requirements include people, equipment, facilities, funds, time, specialized skills, and any other provisions needed to successfully execute and deliver a project.

Capacity planning goes beyond the plain equation of supply and demand. To be sustainable, capacity planning should be high level and strategic -- designed to withstand a dynamic, competitive, and constantly changing work environment.

As a resource management process, capacity planning helps an organization to determine if they have the adequate resources – now and in the future – to deliver projects on time, on budget, and on track, with optimized resource utilization, as well as the ability to tackle changes and overcome possible gridlocks along the way.

Where should they focus their time, energy, and attention? And why?

Are the returns going to be commensurate to the actual amount of work to be done?

Which initiatives or activities are aligned with the company’s objectives and provide the most value to their business?

Why is resource capacity planning important to project success?

Resource capacity planning is vital to successful project portfolio management as it sieves through infinite resource demands with the realistic constraints of resource supply, minimizing the risk of accepting more work than you can handle or trying to do more with less.

In a highly competitive business environment, the mad rush for taking on exciting new projects is a temptation few can resist, especially if they also promise to be lucrative.

However, failure to seriously consider resource capacity as a critical factor in the project planning process can result in a high probability of team burnout, budget overruns, missed schedules, and unnecessary waste of resources.

Do you have adequate workforce in terms of skill and capacity? Can they handle more work or do you need to bring additional people on board?

Will your available resources and schedules allow you to engage in this project now or do you need to defer?

Is it possible to re-allocate resources from lower priority projects?

Can you realistically deliver within the deadline, budget, and scope required by the client?

In a nutshell, good capacity planning enables key decision makers to make smarter choices in managing demands against available resources, now and into the future.

How do you manage capacity planning more effectively?

Successful capacity planning should in some way guarantee efficiency and profitability.

Some factors to consider in effective capacity planning include:
  • Resource Allocation – Often defined as assigning “the right people working on the right projects at the right time,” strategic resource allocation is crucial in making sure that the project is on time, on budget, and on track. It also reduces unnecessary waste in time, money, and manpower throughout the different levels of project management.
  • Resource Demand – A high level of visibility is crucial for project managers to monitor resource demand in real-time and obtain a holistic view of the opportunities (or threats) that surround a project. Without this ability to see the big picture, resources are prone to be either overloaded or underutilized – neither of which adds value to your portfolio.
  • Resource Utilization – You cannot maximize resource efficiency without having a clear idea of exactly where and how your different resources are being used. This is especially important when your organization is working on multiple projects simultaneously and you are compelled to make the most of available resources.
  • Project Prioritization – Sound project portfolio management demands that resources are assigned to projects in order of their priority. Based on accurate project data and requirements, resource managers need to analyze and decide which projects to give precedence to. These decisions are usually influenced by factors such as urgency, cost-effectiveness, and overall sustainability.

To reduce project failure and increase performance, a growing number of service organizations make use of project management software to plan, organize, manage, and successfully deliver the projects to which they have committed.

Why invest in a good capacity planning tool?

Simply put, there are two ways to do capacity planning – the easy way or the hard way.

Certainly, there are mathematical formulas for estimating capacity that are pretty straightforward and can be done by anyone who knows how to use a spreadsheet. But at best, it can only really tell you how much work can be accomplished by the project team within a particular period of time.

These days, effective resource planning requires much more than simply dividing the project into tasks, allocating resources, and tracking utilization – especially when you are working on multiple projects at a time.

For professional services organizations that are on their way to the top, struggling with spreadsheets is probably not the most sustainable way to move forward and win bigger projects.

However, not all resource management software is created equal. Depending on your business needs, you also have to check your choice of a capacity planning tool against important considerations, such as:
  • How time and resource-intensive is it to use?
  • How precise are the results?
  • Can it make accurate forecasts and predict potential risks?
  • Can it identify potential bottlenecks and offer valuable solutions?
  • Is it automated? Or does it require manual data entry?
  • Can it track multiple parameters?
  • Does it have the scalability to adapt to changing needs or increased demands?
  • Can it analyze the collected project data and translate into useful business insights?

With the wide assortment of options at hand, investing in a reliable, hardworking resource capacity planning tool is not only ideal but imperative. Studies have shown that the use of spreadsheets has dropped dramatically over the last three years and that approximately 80% of high-performing projects use project management software.

Not only is a good capacity planning tool essential for keeping track of current and historical data, it provides priceless information and insights that can be used for improving future performance. It also becomes a hub where everyone on the project team can communicate and collaborate with each other.

Additionally, accurate reports take out most of the guesswork so that project and resource managers can make data-driven decisions in real time.

As today’s resource management software becomes increasingly powerful, robust, and intuitive, there is no reason why any organization – big or small – should waste more of their resources due to poor project performance.

Intelligent resource capacity planning made easy with Mavenlink

No matter the size of your organization, Mavenlink’s award-winning resource planning software and tools empowers you to deliver more work with accurate planning.

With Mavenlink’s Full Cycle Resource Management, you can see and schedule every resource, across every project, at every stage of the project cycle, organization-wide, all in one place.

Moreover, you get increased visibility and control over your direct billable resources, enabling you to allocate and manage resources towards more productive and profitable outcomes.

Ranked among the 10 Best Resource Management Tools for 2020, Mavenlink has been cited for "ticking off all the boxes" when it comes to RM features: "The resource management module offers real-time utilization and margins at the project and even the task level. Some key features include resource forecasting, capacity management, skills management, scenario planning, and role-based planning."

With its ability to run various scenarios, Mavenlink improves portfolio management by enabling organizations to forecast potential outcomes, improve resource allocation, and level up overall planning capabilities.

"We used a hodgepodge of free or freemium tools, none of which could be integrated to provide a holistic view of our portfolio management processes. We couldn't use them for resource utilization, planning and project tracking in any kind of coordinated manner — it all had to be run offline," said Tom Hobbs, Managing Director at Myers Media Group.

"As a project manager, that for me was an area of opportunity ripe for improvement, and a potential quick-win in support of our planned expansion."

Since implementing Mavenlink, Myers Media Group has improved their accuracy of forecasting by 50%, improved team productivity by 50%, and has seen a 75% increase in utilization. It is also now much easier for the company to run status reports for internal use, as well as for their clients.

In addition, Hobbs observed that despite its flexibility, Mavenlink is easy to use and also intuitive when it comes to training others and getting them up to speed without sacrificing productivity. "Oftentimes you find solutions that are flexible, but also complicated. Mavenlink is not. It’s easy to train people, and it’s also easy to customize," he pointed out.

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