Capacity Planning & Resource Management - The Key to Efficient Organizations?
By: Jonathan Davies
Tags: Capacity Planning, Project Management, Efficiency, Resource Management, Resource Scheduling

Let’s start this article with a riddle:

What is the most valuable asset of a company?

People

What is often forgotten in project management?

People

There is one point most organizations agree on: People, the resources, are the most valuable asset of a company. They attract customers, they come with business developing ideas, they get the job done and obviously, they are the ones that get the money flowing.

However, these resources are limited and too many organizations fail in addressing the matter of maximizing their use.

The main cause is linked to the evolution of the current economic situation and the way these organizations are dealing with it.

This article explains how maximizing the use of resources is a challenge that often turns into a problem and how an effective capacity planning, coupled with resource management, are part of the solution.

Understanding the Challenge of Most Organizations

Before we dig into resource management and capacity planning, let’s review a basic concept at the foundation of every company’s resource problems.

It is an organization’s best friend and worst enemy at the same time:

You may have guessed it: Demand

More precisely, the excessive demand. When it gets out of control and the organization fails to handle it with its limited amount of resources and time.

Demand can take many forms, such as:

major or small strategic initiatives

support work

meetings

…

In short, demand represents all the work that require resources (the people).

Organizations evolve in a highly competitive economy, where demand and pressure to reduce costs keep increasing.

And in order to stay competitive, many organizations’ reaction is to cut in the resources and welcome all demand with open arms. Most of the time without being sure they have the resources available to take on new projects.

Rapidly, demand gets uncontrollable, projects pile up, resources are overwhelmed, delays appear and unhappy customers start to elevate the voice.

That’s the challenge.

Then, if demand is increasing and resources are decreasing, how to deal with that problem?

Your best bet: by controlling the size of that demand.

And that’s where capacity planning and resource management enter the game.

Difference Between Capacity Planning and Resource Management

These two concepts seem to be a foggy area for many people.

What’s the difference?

Aren’t they the same?

Well no, they are not the same.

And if an organization wants to make the best use of its resources, it’s fundamental to understand how these two concepts differ and where they meet.

Resource management and capacity planning are two separate things that are dealt with by two different constituents, at two different levels within the organization.

Capacity Planning

Capacity planning is done at a longer-range strategic level, by those who select the work.

Its role is to make sure the organization has the required resources available for a project, at a specific time. This means considering the availability of resources when deciding in which demand (from a demand portfolio) to invest in and when.

To do so, the ones in charge of capacity planning are going to take into consideration elements such as working hours, skills, competency and the average throughput of work.

It is still quite an impersonal stage where capacity is assessed by the required role and type rather than by the exact name of a resource.

When done correctly, managers shouldn’t get bad surprises of missing skills and roles when the project starts.

Resource Management

Resource management is done at an executive level, by those in charge of maximizing the use of those resources.

It is the selection and assignment of resources (internal and external) to planned and unplanned activities, as well as the maintenance of the resource data (skills, role, cost, dates, hourly rate,…).

The resources assignment typically follows 3 stages to make sure the required, named resources are finally allocated to the project:

Stage 1:

The first stage happens at a long-range early level, when project managers request resources by role or skill for a future project. Unlike capacity planning, the process goes one step further here as the resources are being officially requested instead of only assessed. This is the requirements step.

Stage 2:

When the date of the project is getting close, department managers can know with more accuracy if a specific person (matching the skill and role requested before) will be available for this project and thereby they can name a probable resource. This is called a soft booking, or a reservation.

Stage 3:

A few weeks before the project starts, when the availability of the named resource is certain, the project manager can finally confirm the reservation of that resource. This last step is the hard booking, or the allocation.

The Importance of These Two Tasks for an Organization

The definitions of capacity planning and resource management are pretty much self-explanatory.

An effective management of these two tasks and a good cross-level communication between managers will allow the organization to control the size of the demand shark and limit its impact (on the resources and the clients).

Which, ultimately, should lead to:

Balanced demand portfolio

Better productivity

Better utilization of resources (no overwork, skills matching the work)

Better value delivery

Happy workforce (through better resources utilization)

Happy customers (through better value and respected deadlines)

Here is a recap table:

Welcome to the World of Capacity Planning and Resource Management

Consider this article as an introduction to these two concepts. It gives you the necessary context to understand where many organizations fail when dealing with demand and limited resources.

And it also gives you a path on how to avoid falling in the same trap: Through a successful capacity planning and resource management approach.

But all this is theory, which means it describes an ideal situation.

As usual, reality is quite different.

It’s not rare that companies totally overlook capacity planning and schedule projects without being sure they have the necessary resources available. Often, this is due to a lack of data and visibility on resources availability.

Department managers also tend to underestimate or forget the amount time resources needed to complete “secondary” activities that are not being assessed during capacity planning, such as administrative tasks or staff meetings.

When they sum up, these activities can easily start eating on the time calculated for bigger projects.

It is also important to understand that capacity planning and resource management must be working hand in hand. Project and department managers must communicate if they want to avoid chaos (non respected deadlines, overloaded workers, unhappy clients…) within the organization.

That’s a point that many companies still fail to understand or implement.

And let’s not forget that managers are working with a limited amount of shared resources. Which means these managers can actually be in competition when it comes to decide whose project gets priority to use the shared resources.

As you see, there are a lot of moving parts, uncertainties and what if in capacity planning and resource management. The concepts are simple, but their successful execution is yet another challenge for organizations.

Fortunately, many tips, best practices and tools exist to lead the path.

But that’s a topic for another article.

We can give you a good place to start though. If you’re still keeping track of resources and projects on some spreadsheets, it’s time to let them go.

Tools like Teambook will definitely make your life easier when it comes to resource management.