Resource capacity planning is the umbrella of methods business leaders use to quantify their team’s bandwidth for projects. It’s a simple idea that comes with a labyrinth of execution problems, even with a top resource management software option.
For example, take 100 consultants who can dedicate a quarter of their available time to a new project. A project manager can take the total number of people and multiply it by their time available to determine their full-time equivalents (FTEs).
In this case: 100 x 25% = 25 FTEs. Capacity: understood. Time to start scheduling, right?
If you’ve ever tackled capacity planning before, you know it’s more complicated than one simple formula—and 2019 is welcoming a host of factors affecting resource capacity planning that is novel to this decade at an unprecedented scale.
Before getting to 2019 capacity planning trends, let’s review the three historical biggest problems resource managers have faced since “capacity planning” formalized into a specific framework.
Three classic factors that continue to affect capacity planning
Unfortunately, that simple math already has many project managers second-guessing.
1. Wishful thinking
If we stick with the example above, a project manager might think “we can add in overtime!” and schedule the project for just 20 FTEs, or “we should use all of our consultants!” and schedule for just that, assuming the project will finish more expediently.
That kind of thinking has left behind a graveyard of firms that tried to do too much, scaled too quickly, and spent their way into destitution.
Solution: Trust the math
The only way to effectively start capacity planning is to have a reliable understanding of which resources are available. The worst thing a PM can do is engage in pushy scheduling without regard for the backbone equation of capacity planning.
2. Individuals have different roles within a company
Calculating an FTE can dramatically help a manager understand a project’s requirements, but it does not add in all the factors affecting capacity planning. Most firms tend to need a diversity of skill sets, like administrators, programmers, consultants, designers, and analysts, to complete any given project. That’s why most resource managers break their capacity planning framework down to a second level: FTEs by skillset. For example, a design agency might get commissioned for a new website, which would require 2 FTEs: .65 designers, .5 front-end developers, .25 QAs, .25 UX managers, .2 project managers and .15 account managers.
Sure, two full-time people could theoretically do the work, but they likely don’t have all the needed skills to complete the website, let alone complete it efficiently or with quality.
Some individuals may be able to fulfill more than one skill; for example, a UX manager could be interchangeable with a front-end developer on some projects.
The impulse that many managers have is to list both skill sets when capacity planning to increase visibility into who can do what work. Unfortunately, doing so muddies the data, often leading to accidental duplication (one person filling two skills slots and getting assigned to too many projects) or a lack of optimization for that resource’s talents and productivity potential.
Solution: Trust the math
Choose the skill that best reflects that resource’s abilities or the skill set most often needed and only use that skill set for planning purposes.
There may be a situation in which a few resources have a particular skill set that’s difficult to replace. For example: only John knows how to read through antiquated code documentation which needs an occasional reference; otherwise, he’s a senior programmer. In this situation, work with John’s schedule on a project-specific basis; otherwise, keep capacity planning at a high level or book time for John to train another resource in this “skill.”
3. Change isn’t accounted for
Today’s consumers and customers both want the same thing: speed with quality. They want their free two-day shipping, their commercial-free TV on demand, and your product yesterday. The ability to change and adapt for speed has always been a competitive advantage, and keeping up is in itself a victory.
Unfortunately, the workforce doesn’t like change. For example, a 2016 Forbes article highlights that senior management is far more open to change than “frontline professionals” (otherwise known as “the majority of the office”).
Top level executives, VPs, directors, managers, and project managers all tend to underestimate the effect of change on capacity. If a business is working at 100% capacity, then all parties are working hard and efficiently. Any disruption to that process will necessarily affect the latter because the workflow has changed.
Solution: Trust the math
Whether a company is transforming through an acquisition, introducing Agile for the first time, or just starting out with a new leave management system, the time and effort needed to plan and deploy a change initiative must come from somewhere. That time must be taken from regularly scheduled work in capacity planning.
Assuming the change manager knows the overview of how resources currently distribute their workload, they have the ability to assess the scope and impact of the change (we found this document from Canada’s Government of Northwest Territories to be helpful), and can effectively communicate with stakeholders, consider these strategies to account for change in the workplace:
- Avoid the change altogether
- Push work to a third party or hire more people
- Slow down other projects and/or change initiatives
- Reallocate your resources’ time
- Stop projects of lesser importance
These are hard but important decisions that can determine that future of a business; make a proactive choice.
Three more factors affecting resource capacity planning in 2019
The workplace today is changing rapidly; according to Google Trends, searches for “open office” in the United States peaked all the way back in 2009 and BYOD (bring your own device) reached its apex in 2014.
Stay on top of extra considerations for capacity planning with adherence to the three trends below with our suggestions so everyone can get back to what matters most in the workplace: wise use of their time.
4. Low unemployment means skyrocketing hiring difficulties
The United States unemployment rate is at 3.7%—the lowest it’s been since 1969. The job market is so tight that candidates are hardly putting in effort for their job searches; The Wall Street Journal reports, “Recruiters report they are stood up, kept waiting for appointments and regularly ridiculed online.”
That’s a big problem for capacity and resource planners; there’s no worse feeling than knowing your company should hire more people because there’s so much incoming work, that your company could afford to do so, and that your company cannot because of a tight labor market—and thus should turn down that extra income.
Solution: Take advantage of the freelance economy
While there are numerous benefits to hiring full-time staff (they tend to understand the product better, are better at building relationships, and are far more invested in their employer’s long-term success), 2019 is all about the gig economy. For resource planners, that means working with freelancers.
The trick to adding freelancers to a capacity plan is all about using the right software—while a spreadsheet might work for a firm that needs fewer than five contractors, choose a tool that allows for customized tagging, like for skills (“Python”) and location (“remote” or “London,”), and visibility settings to allow freelancers to provide feedback to their clients.
(Naturally, we think Resource Guru is an excellent tool for freelance management. Check us out if managing freelancers is getting unwieldy.)
5. Companies without mentorship programs are failing
There’s little debate over whether or not workplace mentorship programs are worth the investment; in a summary of 30 years of mentorship research, SAP concludes that mentorships improve employee engagement, career outcomes, retention, and inclusion, and that mentors themselves benefit from greater job satisfaction and career success rates.
What’s new in 2019 is the demand for mentorship programs. One study of 5,000 Gen Zers about to enter the workforce found that this generation values mentorship as a company perk after healthcare—that’s right, above vacations and remote work.
The demand for mentorship programs impacts capacity planning. Consider the implications:
- Mentorship programs require dedicated time
- They have long-term skill benefits
- They are often ad-hoc
- They are not billable
How should capacity planners prepare for this workforce demand?
Solution: Establish a formal mentorship program
Mentorship programs often succumb to the same problem as change management: that time isn’t accounted for. The best way to address this problem is with a formalized mentorship program; when a project is in the books, it’s easier to allot the right amount of time to it.
Mentorship programs, as opposed to ad-hoc mentorship, with a time-bound component also help set expectations. Coaching a colleague can easily become unwieldy—or easy to ignore. Many mentors and mentees may welcome parameters to guide them toward the right amount of time to spend on each other—and they’ll appreciate the allocated time to do so.
6. Business agility means resource complexity
“Agile,” a popular formal project management method, is skyrocketing in popularity for startups and the enterprise alike. Harvard Business Review featured the framework on its May 2018 magazine cover. Later in the year, Duke Corporate Education featured agility as a signifier of company productivity and long-term success. Interest in the Scaled Agile Framework, one of the dominant methods of deploying enterprise agility, is still increasing exponentially in online searches.
Agile employs an iterative approach to projects. Teams break up work into two-week “sprints” to allocate time for continuous improvement for the product and/or service over time.
In the era of digital transformation, with many companies migrating to a digital workplace, Agile is a perfect fit for organizations looking to transform how they manage projects and operate as a whole. Agile can help ensure company-wide process and methodological alignment.
The greatest value Agile brings to any organization is flexibility. Unfortunately, that’s a big problem for capacity planning. How can project managers properly assess the big picture if resource needs change every other week?
Solution: Try Agile capacity planning
Agile practitioners already have a formula for capacity planning—and I’d argue it’s better than the original math shared in this article’s introduction. The formula is as follows:
The number of team members multiplied by days in the sprint multiplied by productive hours in the day.
In other words, it’s the same formula as the one used in traditional capacity planning with an added understanding of what Avienaash Shiralige calls “Focus Factor.” He explains over at Agile Buddha:
Traditionally, project managers used 6-6.5 hours as planned hours in a day for project execution. Focus factor is teams ability to remain focussed on the sprint goals without any other distractions. After multiplying total capacity with focus factor you get real capacity against which you can make sprint commitments or forecasting. This is the effective hours you can expect from the team.
Shiralige then concludes that Focus Factor should range from .6 to .8 in the Agile capacity planning formula, with .6 for less productive teams (that might be starting a new project) and .8 for more productive teams (fulfilling a familiar client request).
While formal capacity planning would change sprint-to-sprint, this formula would be able to account for longer periods of time as Focus Factor introduces an adherence to potential sources of friction.
Additionally, businesses investing in business agility will need to dedicate more time to resource planning, especially when transitioning to cross-functional teams or resource planning at the capability.
Agile is inherently messy, and formalizing resource management—as anti-Agile as that may be—brings sanity to what’s often a confusing method of work allocation. Using a software like Resource Guru can substantially offset that cost as it can reduce the need for additional hires with automation.
2019 is just the beginning
Resource capacity planning is changing—as is the entire way we work. Evaluating the answer to who should work on what when and how hard is consistently facing complications, from widespread remote work to Gen Z’s entrance to the office to shifting project management paradigms.
There is consistency though: time. Keeping track of where all that effort goes is as old as the sunrise, and its importance stays consistent. Capacity planning is a huge part of maximizing where that time at work goes. While it’s not easy, capacity planning is a gift; it prevents workers from facing burnout and keeps businesses apprised of when they should grow. While these factors affecting capacity planning are unique to 2019, the process’s benefits are holding steady and will continue to do so so long as time remains important.
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