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Resource capacity planning is the process of mapping out your upcoming work, determining what resources are available to you, and deciding the best way to allocate them to ensure you hit key business priorities and objectives.
It sounds deceptively simple, but for teams that are constantly responding to shifting client needs, it’s no small feat. Effective resource capacity planning requires a deep understanding of hard-to-pin-down factors, like exactly how many hours your team has available at any given time; how long it takes them to carry out certain types of work; who has the right skill sets for the right jobs; and how all work is tracking across your business (so you know which projects are flexible and which ones are mission-critical).
Want to learn the ins and outs of resource capacity planning and why it’s so fundamental for client-focused businesses? In this post, we cover:
What is an example of resource capacity planning?
A prime example of resource capacity planning is trying to figure out whether you have the necessary resources to take on a new client. Let’s take a closer look.
Without resource capacity planning, you rely on guesswork and assumptions about which team members are available when, what needs to get done, and how this new project will fit in with the other work in your roster. You’re iffy on the details, but you say yes to the new client anyway (because who doesn’t love more clients?).
But when it’s time to kick off your first project together, things start to go wrong: your team is already stretched with urgent deadlines for another client, so you’re not able to dedicate time to the new client. As a result, deadlines get missed, work isn’t up to your business’s high standards, your team feels burnt out, and your new client has a poor experience that impacts—or even ends—your relationship. Plus, your other existing clients are also negatively affected, because you’re borrowing team members and time from their projects to make up the deficit.
Resource capacity planning helps you avoid all these problems. Instead of the nightmare scenario outlined above, resource capacity planning lets you:
Accurately forecast how long each project takes you based on real data about previous work
Assess your team’s current utilization to know who has capacity to take on this project or whether you need to bring on additional headcount
Identify bottlenecks, like planned absences or necessary skill sets that are in limited supply, that could put the project timeline at risk
Reassign tasks across team members to create a balanced workload that avoids burning them out
Deliver excellent experiences to all clients and meet their high expectations
With the right resource capacity planning tools and strategies, you can ensure you always work at optimal utilization for maximum profitability.
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4 types of resource capacity planning strategies
Depending on your business needs and goals, there are a few different resource capacity planning strategies you can adopt. Here are four popular strategies.
Lag strategy
Lag strategy focuses on actual demand and waits until resources are needed before adding them. This strategy is reactive: for example, waiting until after you sign a deal with a new client before bringing on the additional headcount required to fulfill the project.
This is a conservative strategy that minimizes costs, but can slow down your growth. Responding to needs in real time—or realistically, at a slight delay (hence the name “lag”)—leaves you at risk of talent shortages and longer project cycles as you seek out and onboard the resources you need.
Lead strategy
Lead strategy is a proactive resource capacity planning strategy in which you increase resources before they’re needed, based on anticipated demand. For example, if your records show that Q4 is your busiest time of year, you would bring on more resources in Q3 so you’re prepared to meet these requirements.
Lead strategy can give you a competitive advantage, as it maximizes the amount of work you can accept, reduces lead time, and enables you to provide better client experiences in busy periods. On the other hand, if your forecasts are incorrect, you can end up with additional unused resources, which costs money and eats into your profitability.
Match strategy
Match strategy is a capacity planning approach that uses forecasting and real-time trends to dynamically respond to resource needs. It combines elements of lag strategy and lead strategy to identify required resources just in time, helping you avoid the cost pitfalls of being over capacity and the workflow pitfalls of being under capacity.
Match strategy is an ideal sweet spot for most businesses, but it can be hard to get it exactly right. It relies on more frequent capacity planning to flexibly respond to shifts, as well as accurate data to make informed decisions.
Adjustment strategy
Adjustment strategy involves making adjustments to existing systems or processes to meet resource requirements. It’s similar to match strategy in that they both respond to real demand, but adjustment strategy is often used to bridge short-term gaps (for example, adding overtime or hiring freelancers), while match strategy makes incremental changes that support long-term business growth.
The resource capacity planning process explained
Want to start improving your resource capacity planning but not sure where to begin? Start with these tips and best practices.
1. Use the right tool
There are lots of ways to manage the resource capacity planning process, from tracking everything manually on spreadsheets to using a dedicated resource management system.
A comprehensive resource management platform unlocks additional insights by centralizing all of your key resource management data, like estimated vs. actual time spent on tasks, billable vs. non-billable hours, and logged time per user.
An all-in-one resource management, client management, and project management platform like Teamwork.com goes even further, giving you complete visibility and streamlining your team’s workflow to win back more time for the work that matters.
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2. Assess current workloads and utilization
Take a comprehensive look at your existing resources and utilization. How many billable hours are available every week, and how are these hours currently being spent? Who is overutilized and who is underutilized—and why? (For example, are there in-demand skill sets that are in short supply across the business?)
Understanding exactly where your team’s time is going is the first step to improving your resource capacity planning. Based on what you find, you can:
Identify projects that are taking more time than planned and veering out of scope
See which team members are struggling and may need additional training or upskilling
Uncover resource or skill gaps that are causing bottlenecks or burnout
Find time-consuming processes that can be automated or optimized to improve efficiency
Know when it’s time to hire or sell work to stay profitable
💡 Pro tip: The ideal agency utilization rate is 70%. If you’re below this, dig into your resource management tool to find out why.
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H3. 3. Forecast future project demands
Outline your known upcoming client work (for example, any retainers) and break it down into tasks and subtasks. Then, calculate how much time you need for each one and start to estimate the resources you need to deliver them.
Two powerful ways to forecast future project demands:
Use time tracking to measure exactly how long different task types take. Get real data to create benchmarks that accurately reflect how long it takes your team to complete work.
Use Teamwork.com’s Resource Scheduler to map out tentative projects at a high level. Scenario plan, adjust resource allocations, and de-risk projects in advance to set your team up for success and ensure you’re at peak utilization.
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4. Balance team availability with business priorities
Allocate work across all team members and client projects, and readjust as necessary. Reassign tasks to keep everyone working efficiently, spot and fix blockers, and devote more resources to high-impact projects or priority clients.
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5. Optimize your processes to enhance efficiency
As you calculate your utilization rate and explore where your team spends their time, look for recurring non-billable tasks that you can take off their plate to free them up for more impactful work.
For example, if you spot that you’re losing hours every week to manual project setups, use project templates to quickly spin up projects based on your best practices.
Some other impactful ways to improve efficiency:
Use integrations to connect the tools you use every day and create streamlined workflows without needing to switch between apps
Leverage automations to take care of manual, repetitive work while keeping your project organized, on track, and up to date
Centralize all project communications in one workspace to remove siloes and time spent searching through email threads to find what you need. Bonus: when you assign new resources to your project, everything they need to get up to speed quickly is right there—no need for time-consuming handovers.
6. Monitor your resource capacity planning to continuously improve
As your project progresses, keep an eye on your team’s utilization and individual workloads to keep everything on track. If you spot blockers on the horizon or face unexpected problems (like a sick team member), use your resource management tool to make quick, informed adjustments so you can still hit your goals.
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Resource capacity planning by industry
Resource capacity planning varies by industry: the way a retail store manages resource capacity planning is different to how a manufacturing business does it, and so on. In many industries, “resources” also includes machinery, materials, or inventory, as well as factors like warehouse space, all of which have their own capacity limitations that need to be taken into consideration when planning.
Across all industries, resource capacity planning is directly linked to profitability. Your available resources dictate how much work you can take on, which in turn is linked to your revenue and growth.
But for client-focused businesses—such as agencies, consultancies, and professional services firms across a range of industries like marketing, IT services, design, and architecture—poor resource capacity planning is especially dangerous, because it results in negative client experiences.
To meet higher-than-ever client expectations and build strong long-term relationships, you need to deliver work clients love, when you say you will—and you can’t do either without the right resource management.
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What does a resource capacity planning tool do?
A resource capacity planning tool helps businesses optimize their resource management by providing data-driven insights about utilization and workloads, improving forecasting, and empowering teams to allocate resources more efficiently. It shows you exactly who’s working on what, when, so you can make better resourcing and planning decisions and flexibly respond to change.
Here’s how a resource capacity planning tool helps client-centric businesses:
Forecast resource needs: Understand how your current resources are being used and assess whether you can take on new clients or projects
Optimize workloads: See how all work is distributed across your team. Identify who’s over- or under-capacity and re-allocate tasks for optimal utilization (and profitability).
Get granular insights: Measure how long tasks actually take, track your utilization rate, and unlock valuable data about project health that you can use to improve current and future resource planning
Enhance operational efficiency: Prevent bottlenecks, prepare for upcoming work, and deliver projects on time, in scope, and within budget to delight your clients
Why use Teamwork.com for resource capacity planning?
Teamwork.com is a powerful all-in-one platform for client projects. It streamlines resource capacity planning and combines it with granular project and client management capabilities to create a central hub for client work. This enables you to manage every part of your client project from one place, optimizing the way you resource, plan, execute, and deliver work to clients from beginning to end.
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Teamwork.com has a range of features to help you understand, monitor, and optimize resource capacity planning.
Use the Workload Planner to see your team’s assigned work vs. their available time. View in-depth task details (like time logs, attached files, and comments) for more context, and quickly assign or reassign work to address capacity issues.
Unavailable time lets you work around your team’s schedules for more accurate capacity planning, while Roles lets you assign the right work to the right people based on their skill set or position.
Stay one step ahead of future projects with Resource Scheduler. Map out potential work at a high level to plan what additional resources you’ll need, and spot capacity issues before they become problems.
Native time tracking makes it easy for your team to log their hours, so you can calculate your utilization rate and discover where your business’s time is spent. Combine this data with in-depth reporting on utilization, project health, and profitability to get deep resource management insights that help you work more efficiently and generate more revenue.
Teamwork.com also gives you:
Robust project management to break work down into projects, milestones, tasks, and subtasks for absolute clarity over the work to be done (as well as how long each part takes)
User rates to track the the cost rate and billable rate of each team member and monitor profitability as part of your resource management
Automations and project templates to enhance team efficiency and reduce time spent on non-billable work
Get more from your resources with Teamwork.com
With the right tool, you can not only manage your existing resources—you can enhance them. Leverage time-saving automations, templates, and integrations to win back more time for billable work, and ensure you always have visibility over your resources across every project. With Teamwork.com, you can balance workloads, get real-time utilization and financial insights, and proactively manage resources across your entire business to deliver better results for your clients, your team, and your bottom line.
Resource capacity planning FAQs:
What is the resource capacity planning process?
The resource capacity planning process is the process of outlining all upcoming work, estimating how long it will take based on historical data, and then mapping this to your existing available resources. In the process, you may discover that you need to acquire more resources to meet demand or adapt to circumstances.
What is an example of resource capacity?
An example of resource capacity is the amount of time an employee works per week. For example, if an employee works 40 hours per week, and your team has five employees, you have 200 available hours in which to allocate work per week. If 150 of those hours are currently already allocated, and a new client approaches you with a project that will take 70 hours, you’ll know that you don’t have the resource capacity to take on that project, as you only have 50 hours remaining. In this case, if you want to take on the new project you need to either reassign the existing work, reschedule one of the projects, or bring on additional resources to meet the increased demand.
What are the 4 types of resource capacity planning strategies?
The four types of resource capacity planning strategies are lag strategy, lead strategy, match strategy, and adjustment strategy.
Lag strategy is reactive and waits for demand to increase before allocating or adding more resources
Lead strategy is proactive and increases resources in anticipation of predicted spikes in demand
Match strategy aims to add or remove resources based on actual demand as needed to stay just ahead of the curve
Adjustment strategy makes short-term adjustments to systems or processes in order to meet increased or reduced demand
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