Improving Project Performance through Capacity Planning
What defines a project’s success?
An ideal scenario would be when the project deliverables meet the client’s expectations and are completed within time and budget. However, it is not as easy as it sounds. Project managers need to meticulously plan every nitty-gritty and track the performance at every level to come out successful.
As Thomas Edison once quoted- ‘Good fortune is what happens when opportunity meets with planning.’
The same holds good in the project management landscape as well. Starting a new project (the opportunity) is only half the battle won. It only succeeds when there is a detailed project plan with deliverables documented against each milestone. The project manager then needs to track them at every stage and take corrective action if something goes wrong
The project’s requirement spans from niche competencies to equipment, material, asset, and so on. It is crucial to assign the right human resource to the right project. After all, your workforce’s capabilities and skills do justice to each task and enable you to lead it through success.
Capacity Planning helps one predict the shortfall or excess of resources in advance. It allows the project managers to be better prepared for future projects and avoids any last-minute hiccups. With proper resource planning, the project can be successfully delivered.
Let us now take a deep dive into the concepts of capacity planning and its role in enhancing project performance.
What is Capacity Planning, and why is it important?
The comprehensive process of forecasting the capacity and demand gap and implementing the right resourcing treatments to bridge the gap is known as resource capacity planning.
It empowers data-driven decision-making by centralizing and gathering relevant information on resource availability and utilization in real-time. This creates transparency and facilitates managers to stay informed of enterprise-wide resource metrics at all times. Moreover, accurate prediction of the metrics allows them to form a full-proof action plan in time. All these benefits put together make resource capacity planning an incumbent process in the project and resource management realm.
Here is a detailed description:
What is the significance of capacity planning in project management?
Supposedly, there is a new project in the pipeline, but you fail to estimate the delivery’s resource requirement due to the sales stage’s lack of visibility. When the project begins, you realize you don’t have an adequate workforce on board, and it stalls your progress. In worse cases, it will bring the project to a halt.
Capacity planning resolves the very same issue for you. It aligns the sales and delivery process by forecasting the resource capacity and identifying the skills gap. Once the project reaches a certain probability stage of closure, the project manager can estimate the requirement and initiate the resource requisition process.
The resource manager gets enough leeway to gauge the deviation in the demand and capacity and align them in due time. Diligent planning eliminates last-minute hiring/firing costs helping you control the budget and the timeline.
Moreover, capacity planning facilitates effective bench management by providing enough lead time to train the benched resources or sell the excess capacity. Overall, capacity planning is a robust technique for building an optimized workforce and reducing project management costs in the present volatile market.
Below is the list of ways capacity planning can escalate a project’s performance,
5 Ways how capacity planning improves project performance
1. Reduces project resource costs
As already mentioned, capacity planning provides enterprise-wide visibility of the resource demand, their capacity, attributes like role, skills, costs, location, etc. Being forewarned about the project demand, managers get enough lead-time to procure the right resource at the right time and cost.
With a unified view of the workforce, they can also leverage the cost-effective global resource across matrix boundaries to maintain any project’s financial health. Simultaneously, upskilling the benched resources and planned hiring minimizes last-minute hiring cycles curbing the costs substantially. All these measures cumulatively reduce project resource costs significantly.
2. Bridges the skill gap in advance
When a project is in the pipeline, managers get an overview of the future requirement in advance. Leveraging this information, they can evaluate the existing resource pool, competencies, schedules, and availability. It will allow them to understand if there is a shortage or excess of resources. If the resources are in excess (capacity exceeds the demand), managers can bring forward additional pipeline projects, sell the excess capacity, and so on.
In case there is a resource crunch, managers can hire permanent talent, contingent workers, or contractors to bridge the gap. Or they can go ahead and train the existing resources. When an appropriate measure is implemented, managers can plug the skills gap in advance and ascertain timely delivery of projects keeping the client’s expectation in mind.
3. Ensures competent resource allocation at all times
With transparency in project tasks, their skills demand, resources’ schedules, and their profiles, managers can allocate the competent resources to the respective tasks. Using the capacity planning solution, they can take a ‘best resource, best fit’ approach instead of a ‘first visible, first fit’ approach.
After procuring the workforce to execute the project, the next step is to understand the resource schedules and their availability. If a resource is booked for another project, managers need to ensure that their allocation does not lead to overutilization. Otherwise, resources may experience burnout. At the same time, the expertise level of every employee must be considered. For instance, a low-experienced resource may take more time to accomplish a task than a highly experienced resource. Based on their proficiency, managers have to design the schedules. Capacity planning makes this process a breeze by providing an overview of resource allocation, utilization, and schedules on one single platform.
4. Streamline Pipeline and Delivery process
Given the ability to forecast future opportunities and their requirements, capacity planning brings together the pipeline and delivery process. Pipeline projects can either come from the sales team or they can be internal projects to meet the company’s strategic objectives. For instance, you have a marketing project to work on two months down the line. You require three content writers, two graphic designers, two web developers, and so on. Before bidding for the project, the sales team discusses the project viability with the delivery team.
The delivery team’s responsibility is to ensure that they have enough capacity and capability to take up this new project. It can only be guaranteed with the help of a robust resource capacity planning process to establish a go or no-go decision. It also facilitates a logical and informed decision between two organizations without any ambiguity.
Proactive planning allows the sales team to take on more projects as the delivery team formulates a working framework for the approval process. Thus, capacity planning also plays a critical role in enhancing the revenue generation activities for the firm.
5. Predicts and enhances employee productivity
One of the most important factors to consider while managing projects is the resource health index. If your resources are experiencing burnout, or if a highly-skilled resource is working on admin or mundane tasks, or an instance of mismatched skillset, it can all boil down to lowered productivity.
Capacity planning helps managers combat this challenge. It can provide actionable insights into resource utilization and availability. If a resource is working on a non-billable project or admin work, managers can mobilize them to either strategic or billable work. It allows efficient utilization of their expertise, enhancing their productivity. Similarly, if a resource is over-utilized, managers can deploy the right optimization technique (resource leveling or smoothing) to even out the workload.
After understanding the impact of capacity planning on a project’s performance, here are some final takeaway tips to help you streamline the process:
- Equip an advanced capacity planning and forecasting process to enhance efficiency.
- Stay forewarned of resource requirements of pipeline projects to fill the demand gap in advance.
- Assess the capacity vs. demand gap report diligently before implementing the resourcing treatment.
- Organize internal or external training sessions periodically for the benched employees to future-proof them.
- Leverage the matrix organizational structure to form a cross-functional team and reduce the hiring/firing cycle.
What measures do you take to optimize your workforce?