person putting together puzzle

Capacity Planning Strategies to Maximize your Resources

Curious about capacity planning?

Here’s a scenario:

  • You have the most efficient team the world has ever seen.
  • You have some of the most cutting-edge tools on the market today.
  • You’re working for a client who’s projects you’ve aced multiple times in the past.

Chances are, you’re going to ace the next project they give you too, right? 

Well, that all comes down to one question: do you actually have the capacity to execute that particular project?

Simply diving into a project without considering your company’s capacity is sorta like jumping off a cliff only to realize you don’t have a parachute. 

The last time we checked, that’s fatal.

And that is exactly why you need capacity planning!

In this article, you’ll learn what is capacity planning, why it’s important, and how to perform the capacity planning process in 3 simple steps. 

Let’s get planning!

What Is Capacity Planning?

Capacity is the maximum work someone can do over a given period.

You can also categorize it as the volume of resources (human, financial, etc.) a business holds.   

And planning is the process of estimating the resources required for a specific project

Fuse them together and… voila!

two ninjas demonstrating capacity and planning

Capacity planning (also known as demand forecasting or demand planning) is the process of matching your resources against a project’s needs. 

The goal? 

To understand if your company is equipped to tackle the project.

A resource manager or capacity planner maps out a project’s work and determines how long it’s going to take your team to complete while taking various constraints like time, workforce, infrastructure, and budget into consideration.

For example, after performing a project’s capacity planning, if you realize you don’t have the workforce to do it, you may have to hire new people or take members from other projects. 

It essentially tells a resource manager whether they have sufficient capacity for performing a specific project

But how is a capacity plan different from a resource plan?

Let’s find out. 

Capacity Planning Vs. Resource Planning

Project success isn’t something that just falls into your lap out of nowhere.

(Although, it would be pretty convenient if it did!)

Right from a project’s planning phase, there’s a lot that goes into making it successful. 

Both capacity planning and resource planning play vital roles in paving the way for project success. 

Bonus: Resource planning templates & Resource leveling templates

And since they essentially involve “planning”, most people naturally get confused between the terms and use them interchangeably. 

However, they’re not the same.

It’d be like saying Coca-Cola and Pepsi taste the same!

Here’s a quick chart to help you understand how the capacity planning process differs from resource planning:

Capacity Planning

Resource Planning

  • Helps determine if you have sufficient capacity to meet the demand
  • Helps allocate resources to a project based on the demand 
  • Is about managing supply and demand
  • Is about efficient resource utilization
  • Answers the question: 
    what projects can we work on?
  • Answers the question:
    what projects are our resources working on?
  • Focuses on resource availability at the team level

Here’s a simple example to clarify these differences better:

Let’s say that you’re a florist, running a popular flower business. 

For you, the busiest times of the year will probably be around Valentine’s Day or Mother’s Day.

4 young men arranging flowers

After all, you need a backup gift when you inevitably forget what day of the year it is, right?

So you’d use capacity planning to figure out if your supply chain needs additional capacity by increasing your flower stock or hiring new staff before these days. 

And once that’s done, you’d use resource planning to allocate these resources according to the demand. For example, if there’s a high demand for roses and orchids, you’d allocate most of your resources for these flower arrangements.

Want to learn how to create an excellent resource plan

Here are our detailed guides on resource allocation and resource management.

Why Do You Need Capacity Planning?

Regardless of whether it’s the Agile, Scrum, or the Waterfall model, modern project managers usually have to deal with several challenges like:

If you’re interested in Agile and Scrum, check out our in-depth Agile and Scrum project management guides. 

And to solve such challenges, most managers simply guess if they’ll have the workforce to tackle a project

But do you actually want to base your project’s future solely on guesstimates?

That’ll be like relying on a Magic 8-ball! 

magic 8 ball outlook not so good


That’s why you need resource capacity planning to make better, realistic estimates.  

Adding this strategic planning activity into your project or production plan process will help a capacity planner:

  • Reduce resource costs as you’ll be able to identify the cheapest way of meeting project demands
  • Identify skill gaps and process inefficiencies early on
  • Understand your business’s limitations and strengths
  • Make informed decisions regarding scalability 
  • Ensure resource availability
  • Reduce stockouts and boost delivery capacity

This way, you’ll be able to easily meet your deadlines and stay on top of all your resources. The quickest way to go about this is to use a solid resource management or capacity planning software

Bonus: Project Planning Tools

3 Key Methods For Strategic Capacity Planning

There’s no one way to do something, right? 

And capacity planning is no exception.

This planning activity mainly depends on various factors like:

  • Project demands
  • The type of business you manage
  • Market fluctuations
  • Amount of risk you can handle

Here’s a quick look at three key resource management approaches you can use for strategic capacity planning. To keep things interesting, we’ll personify each strategy as a character from the Harry Potter universe.

1. Lead strategy

Some of Harry’s traits that we notice throughout the books and movies are:

  • He’s willing to take huge risks (like going into the Chamber of Secrets)
  • He knows what could possibly happen in the future (mainly due to Voldemort’s vision)
  • He usually takes an instinctive and aggressive stance (like in the Triwizard Tournament)  

The lead strategy (or demand forecast strategy) is pretty much like Harry, without all the magic stuff, of course. 

It takes an instinctive approach to planning, where you anticipate high demand beforehand and increase capacity accordingly. This ensures that you always have sufficient capacity to meet any demand.

The strategy is aggressive because it’s mostly used to lure customers away from a business’ competitors. As you anticipate demand and increase production capacity or stocks accordingly, you’ll be able to preempt competitors who might be planning to boost their capacity.

However, there’s a huge amount of risk involved in lead capacity planning

If the projected demand rise doesn’t happen, you’ll simply be left with excess capacity (like a large project team or unused stock).

2. Lag strategy

If you thought that the lag strategy was going to be Ron, it’s not. 

It’s the Professor Umbridge of strategic capacity planning

The reason?

In lag capacity planning, you take a conservative approach to capacity planning

You don’t increase production capacity until there’s 100% demand (true demand), or the business is running at full power. Which is sorta like how Umbridge behaves; she doesn’t accept anything until it actually happens. 

concerned woman and boy

That’ll probably be your response too, if you base your capacity decision on the lag route.  

Sure, you won’t have to deal with risks like excess capacity (like in lead planning) and you’ll also have high rates of capacity utilization as you only focus on existing resources. 

However, as you won’t have enough inventory to deal with a sudden spike in demand, taking the lag approach can lead to stock-outs or low service levels, which results in a loss of potential customers.

3. Match strategy

Both lag and lead are at the two extremes of strategic capacity planning

So that brings us to the middle ground between those two, match capacity planning

The match strategy is sorta like Hermione, who takes a realistic yet reasonable approach to anything. Neither does it anticipate high demand, nor does it wait for the demand to knock at your door. 

In this technique, a capacity planner performs strategic capacity planning regularly. You closely monitor market fluctuations, true demand, and projected demand to increase available capacity in small quantities. 

As such, the match strategy requires a lot of effort. However, it offers less risk than the lead strategy and better scalability than the lag approach, which is ideal for many organizations.

So which strategic capacity planning technique is right for you?

Most businesses would benefit from the match approach, but ultimately, it all depends on your business requirements.

For example, the lead strategy is suited to seasonal consumer products as a spike in demand is usually expected, irrespective of most other market conditions. 

Lag is more suited to businesses dealing with goods that are expensive to produce. As you only supply goods in response to true demand, you won’t have to worry about unprofitable overproduction.

The Best Way To Manage The Capacity Planning Process

You now know that capacity planning is super essential for any project or production workflow.

But where do you start? 

Simple: use a project management or capacity planning tool like ClickUp!

Wait, what’s ClickUp?

clickup devices

ClickUp is the world’s #1 project management tool. With lots of robust capacity planning and resource utilization features available, ClickUp is the ultimate answer to all your capacity management needs. 

Once you have ClickUp, just follow these 3 simple steps for effective capacity planning:

Step 1: Determine available capacity  

Unless you want to make guesstimates, your first step is to understand your available capacity, like your team’s capacity, for example. 

woman standing in room

We thought so, too.

Instead, a capacity planner could determine your team’s current capacity in two ways:

  1. Ask team members to write down what tasks they did and the time they spent on it 
  2. Use ClickUp’s Workload View, Pulse and Dashboard features 

While option A is doable, it’s going to take forever as each member will have to backtrack to that specific project, and even then, you may not get an exact idea of the workload

But with ClickUp, you don’t have to worry about that!

This capacity planning tool comes with a powerful Workload View feature to help you plan and visualize your team’s capacity regularly.

Easily measure the capacity of each member with various metrics like:

  • Hours: the amount of time they are available
  • Tasks: the number of tasks they can complete per day
  • Points: use a points system to understand capacity

This makes it incredibly easy to gauge your team’s current capacity and identify project team members who are overworked.

assigning tasks in ClickUp Workload view

But that’s not all!

With ClickUp’s Pulse feature, you get detailed reports of your team’s activity levels over any given day. This way, you’ll know exactly where time is being spent by each member automatically

ClickUp Pulse view with user details

Additionally, ClickUp gives you various accurate productivity reports that help you quickly analyze your in-house or remote team’s performance. For example, you’ll know who’s crushing their tasks and who’s falling behind and needs some support.  

This way, not only does ClickUp simplify the planning process, but it also helps you quickly understand your team’s existing capacity in terms of tasks completed, productive hours, and more!

Step 2: Analyze capacity requirements and choose a strategy

The next step is to understand your project’s capacity requirements

Simply go through the project’s scope document and identify what resources it needs. 

Want to learn what project scope is? Click here

A project’s resource requirements usually include:

  • Technical resources like software and other equipment
  • Non-technical resources like human and financial resources (you don’t want to overshoot your budget, right?) 
  • Process requirements like project-specific training 

While this will be covered in your project charter or scope documents, you need to fully understand the amount of each resource a project demands.   

Only then can you compare it against your current capacity to see if you have enough resources for your project

The quickest way to go about this?

Fire up a new document using ClickUp’s Docs feature!

With Docs, you can create project or company-related documents and store them alongside each project for easy accessibility. 

Besides helping you easily collaborate with team members, Docs also lets you:

  • Use rich text editing features
  • Embed URLs and customize their appearance
  • Categorize similar documents by nesting them 
  • Set custom access rights for project team members
  • Have Google index a Doc to show up in search results
  • Publicly share a Doc with a link
public sharing of ClickUp Docs

Expand or make notes regarding your project’s capacity requirements and check if your current resource capacity will be enough to execute it. 

Then, depending on your business requirements, choose from the capacity planning strategies we discussed before:

  • Lead strategy: add resource capacity if you anticipate high demand
  • Lag strategy: add capacity only when the organization is running at effective capacity
  • Match strategy: add resource capacity in small quantities according to market demand

Based on the capacity plan, you’ll have to scale up or down to meet changing market demands.

Step 3: Set priorities and dependencies for easy task management

Project management is sorta like a juggling act. 

There are so many things happening simultaneously that if you don’t know what to focus on, you could end up like this:

girl trying to juggle pumpkins

That’s why it’s essential to set task priorities and dependencies regardless of the capacity plan you choose. 

You need to know which tasks are super important (priorities) and what order to complete them (dependencies) as some tasks may depend on another one. 

A capacity planning software like ClickUp can help you out here with powerful features like:

  • Priorities: choose from color-coded priorities like Urgent, High, Normal, and Low
  • Dependencies: set dependencies to see which tasks are blocking or waiting on other tasks
ClickUp dependencies modal

But these aren’t all that ClickUp has in store for you!

This awesome capacity management tool also offers several features like:

  • Automation: automate 50+ repetitive project tasks to save time
  • Mind Maps: visualize task planning and organization with Mind Maps
  • Inbox: a personalized and simplified work zone just for you
  • Multiple Views: choose from views like List, Box, Board, Calendar, Gantt and more according to your project needs
  • Goals: breakdown your capacity plan goals into easier to achieve Targets
  • Custom Statuses: create customized task status based on your project requirements 
  • Mobile Apps: powerful Android and iOS apps for always staying on top of your tasks
  • Templates: Use ClickUp’s capacity planning templates to plan out your projects


A large chunk of your project’s success rides on effective capacity planning

And while it mainly depends on your business requirements, once you identify the gap between your existing capacity and the required capacity, you’re halfway there. 

For the rest of the journey, you need a powerful capacity planning software like ClickUp! 

With a wide variety of features, from Agile dashboards to task automations, this tool can handle whatever comes its way. 

Sign up for ClickUp today to make sure you’re always at the *perfect* capacity for your projects!

two children sitting on a couch

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