Capacity Planning for Teams

Capacity planning software helps you accurately estimate projects, and is essential for running a creative agency. Without it you risk falling into the project planning trap. This is when you win work, but lose money because of bad estimates.

  • Overestimate, and your people will sit idle having finished early. You will miss out on being able to sell this capacity, since you already reserved it.
  • Underestimate, and you will miss deadlines, your people will work overtime, and any upcoming projects will be delayed.  

We created Bric to help you avoid the project planning trap. Our software is specifically for creative agencies: designers, developers, researchers, and copywriters. It helps you get the most of your team’s time and skills.

Knowing your production capacity not only helps you utilize your employee’s time and skills, but it also decreases the margin of error in your project plans, helps you stick to budget and time promises, and increase client satisfaction. Click here to calculate your potential return on investment (ROI).

Capacity planning software is different from project management software and to-do lists. It doesn’t replace software such as Basecamp and Trello, but fills a missing need. It helps make your team happy.

Project management software is focused on client satisfaction, and helps you keep track of deadlines, deliverables, and communications. For example, to-do lists are useful for breaking down complex projects into digestible pieces. Capacity planning software, on the other hand, helps you maximize the success of your creative agency by making sure you have enough work to keep each of your employees busy — while not overworking them.

Project management software and to-do lists are tactical. They help you get work done. Systems for planning capacity are strategic. They help you find opportunities to maximize profits and keep your employees happy.

The first use of the term “capacity planning” was in IT. Network administrators needed a system for estimating the number of users a network could handle to plan for new users.

As an example, network administrators for a college know that there is going to be a 10% increase due to incoming freshman. Without a plan for this increase the network will crash. They need to make sure there is enough storage, bandwidth, accounts, and processing power. To do this they use data from past network usage and apply it to predict future network usage.  

That is capacity management at it’s most basic — using current available data to be proactive about future resource planning.

It first appeared in IT, because the demands are instant, and recruiting more capacity took time. Thankfully, IT has become more flexible. However, today’s businesses rely on high skilled workers, recruiting new people takes time, and clients expect faster service.

At a modern creative agency planning capacity is crucial. While clients want projects done asap, you can’t abuse your employees. You invested a lot of money and time to recruit them, and new jobs compete for your best people. You have to be careful to monitor, protect and manage your team’s capacity.

If it works so seamlessly for IT, what about creative agencies?

You need manage your production capacity once you have multiple people working on multiple projects.

Capacity planning software is similar to a loom. It allows you to expertly weave your people and projects together. This eliminates wasted time and error. Creating a tighter weave increases your employee utilization rate — the key metric for a healthy and profitable agency.

You most likely don’t need software to create capacity plans software if:

  • Your team only works on one project at a time
  • Each person only works on one project at a time
  • If you aren’t planning to grow

Using capacity plan software today allows you to start collecting data, sets an expectation that people will plan and track time, and helps you avoid hiring too early. It prepares your agency for growth. 

Maybe you were able to get by with to-do lists and timesheets when you had just a few employees. However, as you hire more people, errors in project planning risk: your profits, your client relationships, and your employees sanity.

Without using a data-driven capacity planner, you risk overestimating your team’s ability and underestimating the time and resources needed.

Just as dangerous; you risk boredom. Fail to keep each person busy, and you risk your creative agency descending into a parody of a beige suburban office park. Your people worked hard to get hired. They don’t want to sit around. A week here or there is fine, but systematic under scheduling will suck the energy from your team. Your people want to work on projects they can be proud of. 

Capacity plan software provides you with answers — at a click — to the following critical questions:

  • Do you have enough people to take on x # of new projects?
  • Do your people have time for new projects?
  • Are you utilizing your people’s time and skills — while avoiding burn out?
  • How accurate are your project plans?
  • Is your budget for individual projects as accurate as possible?

And finally, the most important question:

  • Are you — the Owner/Managing Partner — spending your time managing time, or providing leadership, technical/creative guidance, and developing the business?

The goal is to make adopting capacity planning software easy while reducing administrative workloads.

Signs you need to implement a capacity planning system sooner than later: 

  • If you had to ask a client for a project extension more than twice in the past 6 months.
  • If you have to ask a client for more budget more than once in the past 6 months.
  • If you have employees who don’t believe tracking time has any purpose besides payroll.
  • If you have employees who are under or over worked.
  • If you have employees whose skills need expanding, but you’re not sure how to teach them.
  • If you have a series of different organizational and communication applications that you rely on for daily work, but it’s difficult to keep track of them all.
  • If you have data in storage from past projects but don’t know what to do with it.
  • If you are a creative agency owner and find yourself doing more management than creativity, and this makes you unhappy.

If one or more of these situations apply to your creative agency, it’s time for you to implement a capacity planning system.

Analyzing your Capacity

Having too much capacity will result in under-utilized resources. Having too little capacity will result in unfulfilled customers. Here are two key terms in understanding capacity:

Design Capacity: This is your team’s maximum capacity under ideal circumstances.

Effective Capacity: This is your team’s maximum capacity under normal circumstances. Taking into consideration issues with interruptions, delays, and emergencies.

Efficiency = Actual Output / Effective Capacity x 100%

Utilization = Actual Output / Design Capacity x 100%

Factors that can Impact Your Effective Capacity

Remember your effective capacity is your optimal — design capacity — minus normal operational inefficiencies. Here are some ideas for reducing inefficiencies to maximize your effective capacity!

Your Office. Do people have the equipment, space, and lack of distractions they need to get work done. If you can afford it, individual offices boost productivity and help eliminate travel with video conferencing. Just make sure your people have high-speed Internet, and a great background. It is important think about what is behind you, and not leave it up to chance.

Adopt New Tools. Most of us prefer the tools that we are most comfortable with. However, with new technology coming out everyday we need to adapt. New tools are a fun way to increase capacity. Look for tools that allow you to work at a higher level. For example, Sass applies higher-level programming concepts to CSS language for CSS.

Manage Your Clients. Left unchecked your clients can create a lot of inefficiencies. They halt momentum by not responding to requests quickly. They create rework when they sign-off without thoroughly reviewing work at each stage of the process. And they de-motivate your team when they fail to appreciate the process and the work.

Your proposal is a great tool for client management. It allows you to manage expectations up front. Most client problems are because they don’t understand the process. Explain this in your proposal. Provide a timeline detailing the process. Point out when you will need them to be involved, and the impact on the delivery of the final product if they delay.

Improve Scheduling. It probably seems that your proposals get signed all at once. Scheduling can save your team from the resulting whiplash. With a capacity planner you can smooth demand so that each person is working between 30 and 40 billable hours a week. At this rate they will be more productive than if they were working 60 hours one week, and 20 the next.

You also should pay attention to the concurrent projects people are working on. Shifting between projects can create inefficiencies. You want to allow your people to focus long enough to make meaningful progress, before moving on. Set limits on the number of concurrent projects people can work on, based on the type of work they are doing. The more uninterrupted concentration that a problem takes to solve, the more waste that will be created by shifting between projects.

Employee Motivation/Burnout. Creativity requires inspiration. Make sure that your people understand the importance of the mission. I can guarantee that they want to work on meaningful projects, and do great work. Creatives love showing off to their peers and friends. You already invest to create great proposals for your clients. Share these with your team, so they understand how what they are building will impact the client. Make sure to remove financials and any sensitive information.

Managing your Capacity Plan.

What makes planning capacity difficult is that it requires a long-term commitment of resources. Your team’s production capacity includes equipment, space, and people. Contracts, high costs, and human nature keep you from adjusting your capacity quickly.

There are two sides to your team’s capacity — your revenue capacity, and your operating expenses. Having a higher revenue capacity increases your operating expenses.

Be careful to not over-correct for short-term fluctuations in demand due to seasonal, political, or economic cycles. Make sure that you fully understand what is driving a change in demand, before expanding or contracting.

Most traditional capacity planning strategies focus only on the demand side of the business — ignoring the supply side. This framework is outdated. Technology has put a premium on skills. Technology has automated or complicated work to the point that most work can only be completed by highly skilled people. It also multiplies the impact of any additional skills beyond the barrier to entry. Don’t underestimate the cost of recruiting great people — time and money. 

Make sure to think about both the supply and the demand side. Bric’s philosophy for capacity decisions is to use data to smooth demand, and setting your total “design” capacity by the number of great people you can recruit.

Capacity Planning Strategies

The following is a synopsis of common strategies:

You use a Lead Strategy is when you add capacity in preparation for increased demand. This is an aggressive strategy designed to increase service levels, and reduce lead times. It is used for emergency services, and new product launches. 

A Lead Strategy is risky — just because you build it doesn’t mean they will come. It makes sense only if your customers are willing to pay a premium for service on demand.

If you provide emergency services you need to make sure the profits from your service are high enough to maintain the capacity. For a new product you need to think about what happens if the product doesn’t ship on time, or worse it is met with a luke warm response. Preemptively increasing capacity has killed many early stage companies.

Also, note that if you switch to a Lead Strategy your new billable utilization rate will be relatively low.

Lag Strategy is when you only add capacity once your company has ran at or beyond full capacity — typically for some time. It is a conservative strategy with the goal of eliminating waste, and avoiding reacting too quickly to temporary changes in demand. This is a strategy used by many big box retailers, and restaurants.

A lag strategy is not without risk. You could lose frustrated customers to competitors, or they could choose to not purchase. You should use a lag strategy if you run a business with low profit margins. Also, you should take in consideration your clientele: are your clients are willing to wait? If so a lag strategy might not be too risky. Also, consider your product or service: does it have close substitutes? If not, your probably won’t lose clients to competitors.

Also, note that if you switch to a Lag Strategy your new billable utilization rate will be relatively high, and your employees might feel overworked. 

A Matching Strategy is when a company adds capacity in small incremental amounts due to changes in demand. Globalization and technology have made it easier than ever to rapidly increase capacity with near on demand timing.

For example, computer servers now automatically add and reduce capacity automatically without the need for human intervention. Uber uses surge pricing to automatically scale up/down the number of available drivers based on demand.

This strategy works well if capacity increases in increments that allow you to adjust capacity, and that demand steadily increases or decreases. This strategy typically requires technology enable services. Software is ideal for decreasing the incremental unit of service, and enabling frequent up and down fluctuations.

In addition to supply, you can also manage demand. With a Demand Strategy you smooth demand to meet your current capacity. This is an excellent strategy for creative agencies, and takes into consideration both the inputs and outputs.

As a creative agency your capacity is limited by your people. Your people are highly skilled, plus you have to work well as a team. Thankfully your clients are hiring your agency because of your team and their reputation. In addition, they are hiring you to do work that is outside their day-to-day operations — otherwise they would be able to do the work in house. This situation is perfect for a demand strategy.

With a demand strategy you engage your clients in the project planning process. You work with them to map out what needs to be done, and your team’s capacity to handle that work. Capacity planning software makes this really easy. Be upfront with the cost of delays, and when you can get to the work. Your clients should not wonder when you will get to them, but should be familiar with your schedule and capacity.

It is important to note that a demand strategy doesn’t work, if you clients require services on-demand.

Steps in the Capacity Planning Process

Once you decide to implement a capacity software, the first step is searching the market to find what software works best for you.

All capacity softwares should:

  1. Collect data about project size and scope.
  2. Make it easy to apply data from past projects to plan new projects.
  3. Have user-friendly time tracking for both invoicing and data collection.
  4. Provide visually appealing project boards so everyone can view who is working on what projects.
  5. Predict how much time certain projects will take, and inform users when projects take too long or go over budget.
  6. Alert managers about employees who are ready for a new projects.

Don’t settle for softwares that skimp on one or more of these basic services. Managing capacity means managing multiple resources. If a software seems too basic, move on. And remember, softwares typically charge a monthly fee per user per month. $30 a month may not seem like a stretch now, but when your company takes on more employees, this might sting your wallet a little more.

Finding a software with a short set-up time is the most important factor in picking out a software. Developing a capacity plan is about using data to be proactive. The quicker you can start using the software, the most data the software has and the more helpful it will be. If a software has a two week set-up period, move on.

Once you picked out a software, you need to meet with your entire team and explain the importance of managing capacity to the success of the business. Too often, employees find timetracking related apps a burden. Understanding the importance of data collected by timetracking will help motivate the team to utilize the software to its full capacity.

If your team is in the middle of a lot of projects when you first implement the software, don’t set backdating as a priority. Prioritize entering employee names, skills, and project descriptions to get the most accurate data from current projects. When you have time, you can work in backdating to get the most out of the software.

The final step in setting up capacity plan software is letting go and trusting the process. This not only means trusting the software to take over project planning at every level, but also trusting your employees to manage their time based on the estimates created by the software. They still have the power to choose when and how to work, but now they have a template to plan around.

Ready to take the next step?

Consider Bric as the starting point to making smart capacity decisions. At $7 per user per month, Bric offers the key features you will need:

  • User friendly aesthetic
  • No need to backlog right away
  • Employee skill tracking tools
  • Time tracking software
  • Strategic project planning tools

And more. Start with free trial today. Contact grant@getbric.com for questions.