Capacity planning

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The term capacity planning means different things to people in different environments. Two things are common regardless of the detailed approach:

  • Capacity is the maximum amount of work that an organisation is capable of completing in a given amount of time.

  • Capacity =  (amount of resource) x (utilisation) x (efficiency).

The key thing about capacity management in the context of P3 management is that projects and programmes are transient so flexibility in capacity is important. Many quantitative approaches to capacity management are designed for production engineering or computer systems.

In the project environment a detailed analysis of how much resource is needed and over what period, is performed via techniques such as resource limited scheduling and critical chain, but these techniques are not easily scalable to programmes and portfolios. Nor are they applicable until there has been a commitment to detailed scope management and planning. If the result of the detailed planning is “we don’t have enough resource to complete this work in an acceptable time frame” then a lot of time and money has already been wasted.

At portfolio and programme level there should be high level capacity planning before committing to any detailed scheduling.

Key questions to ask are:

  • Can the host organisation release sufficient resources from business-as-usual to complete the work?

  • Is it possible to recruit extra staff to do the work required?

  • Can external resources be procured with the relevant skills?

The answers to these questions will depend upon policy, funding and possibly the nature of specialist resources.

In the P3 environment capacity planning faces the challenge that until scope is defined and planning completed, the resources required are not accurately quantified. Programme and portfolio management teams need to avoid the sentiment that “we don’t have enough information to plan”. Everyone should agree to plan resources at whatever detail is possible with universal acceptance of the estimating funnel and the accuracy possible.

The aim is to avoid the situation where too many projects and programmes have been started and they collectively exceed the capacity of the organisation to deliver. The effect is often that all projects and programmes suffer because resources are constantly fire fighting and switching from one crisis to another with nothing being delivered.

At the level of individual projects the agile approach deals with some aspects of this problem by asking what objectives can be achieved with the time and resource available as opposed to asking how much time and resource is required to achieve the objectives. Although detailed agile techniques are not easily scaled to programme and portfolio level, the principle of capacity leading the decision on what can be achieved is fundamental to both.

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25th July 2014Link to Italian translation added

Capacity planning

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