The steps of capacity planning depend on the time horizon you’re working with. We distinguish between the following components:
Portfolio Capacity Management (Operative Capacity Planning)
In portfolio capacity management, organizations look at the projects they have planned and the resources/skills they already have on hand. Based on this, they draft a plan for the next months and set priorities for their projects without assigning anyone to specific projects.
During this process, portfolio coordinators typically ask themselves:
- What capacities and skills do we currently have?
- Which projects could be implemented when?
- Which capacities and skills do these projects need, and can they be bundled?
- How should we schedule these projects so they can be completed feasibly?
- Are there any dependencies or other overlaps that need to be considered?
Ideally, the portfolio coordinator uses a PPM (Project Portfolio Management) tool, in which employees, resource managers and project managers record current capacities, effort estimates and other relevant data, to get the information they need for portfolio capacity management. They should only schedule the planned projects if they can be realistically completed with the resources currently available.
If there is a discrepancy between the supply of employee capacities and the demand from projects, projects must be reprioritized in the short term. If this discrepancy persists, it may be time to take a look at strategic workforce planning.
Strategic Workforce Planning (Strategic Capacity Planning)
Strategic workforce planning is an important task mainly undertaken by the Human Resources (HR) department and upper management. Using information about capacity demand from project and portfolio management, they make strategic decisions about how to maintain or improve capacity supply in the long term.
There are three key things they consider in their decision-making:
- Market and Order Development: How do we expect the market to develop? How do we anticipate this will affect demand for our product?
- Departures: Will we need to compensate for any expected departures from the company?
- Research, production and new markets: Do we plan to increase our research or production capacities? Enter new markets?
- Bottleneck avoidance: Do we keep dealing with the same bottlenecks over and over?
After answering these questions precisely, stakeholders can take measures to improve the position of the organization. Measures could include recruiting new employees with specific skills or adjusting the planned portfolio timeline to be in line with actual capacities. Operative capacity planning looks at meeting demand in the short term, whereas strategic capacity planning seeks solutions to improve capacity and output in the long term.