A Champion’s Manual on Resource Capacity Planning

A well-said quote goes like,

Any successful business needs planning to hold it up high.  

First, you ignite the idea, determine the goal, and finally, carve out an effective plan to reify the same. 

Now, what leaps your mind when we say, ‘You need planning to accomplish?’

The most common thought is, ‘Strategizing just once, and you are done.’

But stop that thought right there. That’s not all. 

An organization requires planning at every stage, team, and level. 

Don’t worry. We won’t bombard you with tons of information about every aspect of planning. 

Why?

Well, let’s face it!

It’s because it is a vast domain and has multitudinous aspects. 

Today, we will cover just one form of planning in this blog called ‘Resource Capacity Planning.’

A product manager is vested with myriad responsibilities. One of such vital responsibilities is to ensure that the resource availability and the team’s capacity align with the organizational goals and market demands. 

Here, resource capacity planning comes into action.

What Is Resource Capacity Planning?

First things first! 

Let’s start with the definition. 

Resource capacity planning is preparing the available resources to meet organizational goals. 

This process is an essential aspect of a company’s performance. You can achieve it by examining their existing resources and staff to determine what they can accomplish.

In other words, resource capacity planning is the process of estimating the amount of time it takes to complete a project. 

You can do this by analyzing various available resources, including time, talent, skill level, and equipment needed to complete the project. 

The process may also include calculating the amount of money necessary to complete the project.

Resource capacity planning can be challenging because most projects have more unknown variables. These variables can make it difficult to estimate how long it will take to complete the project. 

A product manager must handle these unknowns and make necessary adjustments for resource capacity planning to work.

Want to Know the History of Resource Capacity Planning? 

Resource capacity planning has been around for decades. 

From the 1960s to the 1980s, large companies like General Electric used it. 

These large companies mainly used resource capacity planning because they had sizable budgets and contracted out their projects to outside contractors. 

Nowadays, small businesses, as well as large companies, use resource capacity planning. Smaller businesses often have a tighter budget, so they can’t contract out their projects.

The first step in resource capacity planning is to take inventory of all existing assets and people. It includes time, skills, access to materials, and a complete understanding of the organization’s goals. 

Next, the organization should examine its current status by assessing the work to be completed. This process manages the capacity of resources needed to produce goods and services. It means that you can’t just buy machines without considering the costs of operating them. 

Let us consider a capacity planning example when a machine breaks down. 

In this case, you need to determine which type of machine it is by checking the serial number. 

Then, you need to figure out what resources you need, such as parts, labor hours, contractor hours, or sub-contractor hours — to get it running again.

What Are Resource Capacity Planning Tools?

A resource capacity planning tool can help companies plan for the future. These tools help companies allocate resources and predict demand for various resources. 

You can also use the tools to estimate how many resources will be needed and when needed to meet demand.

The best way to find one of these tools is by searching online. 

They are not as complicated as they sound, and it doesn’t take long to figure out which one you need. 

There are several lists of the best tools available that you can use for research purposes if you are unsure where to start.

Points to Remember While Researching the Tools

• A resource capacity planning tool should be sophisticated software that helps businesses plan their resources and capacity usage. 

• The tool has to calculate the load on the system and predict when it may become overloaded.

• The software also needs to find ways to unload some of the load from one area to another. 

• A resource capacity planning tool also needs to manage existing resources to maximize their usage.

You can obtain such a tool through a software provider that offers an enterprise-level solution for this type of service. 

This type of tool would typically have modules to handle the following:

• Capacity planning
• Resource forecasting
• Demand management
• Planning and scheduling
• Workforce management
• Production capacity planning

Some best resource capacity planning tools are:

• Chisel
• Total Plan
• Monday
• ClickUp
• Teamup Shared Calendar
• Resource Guru
• Mavenlink
• Trello
• Savior
• Smartsheet
• Float
• Forecast

How To Do Resource Capacity Planning?

Now let’s understand how to carry out the resource capacity planning properly.

Resource Duration

The first step you need to take is defining the duration of the resource. 

It will involve answering a few questions: What is the job duration, including the number of hours or days? Do you expect resource availability to fluctuate, or will it be constant?

Resource Availability

The second step involves determining the availability of the resource. 

It involves answering specific questions: Will there be any restrictions on allocating their time (e.g., time-bound projects)? Are they only available on certain days?

How to Prioritize Your Tasks By Their Importance?

Prioritization involves three steps:

Step 1

First, decide which task needs immediate attention.

It will make it easier to determine what resources to use and when.

Step 2

Assign deadlines to each task so that you’re able to plan your resources according to the time frame. 

Step 3

Lastly, keep track of your progress by using a spreadsheet or other tools.

Planning

Once you identify the needs, develop a plan and implement it to ensure sufficient resources meet the demands. The absence of proper planning can result in excessive waiting time and production delays.

Understanding Customer Needs

To meet the ever-increasing customer demands while maintaining profitability, we need to create a process for managing our resource capacity.

Time Calculation

Accurately calculate the time it takes to complete a project by adding all necessary tasks. Then, divide this by the number of people available for each action item. 

Next, you must estimate the cost of each task, ensuring that you can afford to hire all necessary staff.

Understand Resource Capability

Resource capacity planning is the process of understanding your resources and their capabilities. When you know what your resources can do, you can better allocate those resources to tasks that will maximize their potential. 

It is not pleasant to be in a situation where you have an employee doing work that they are not qualified for or where they are being stretched too thin. You want to effectively assign tasks to the right people to get the job done efficiently.

What Are the Resource Capacity Planning Best Practices?

We have specific tips that you can follow during resource capacity planning:

• Determine how much work the company has to complete and whether you can do it in time without overloading any employees.

• Ensure that the company appropriately separates tasks by urgency levels and the most urgent task takes precedence over others.

• Make sure that everyone working for the company is aware of their day-to-day role. It helps them understand when they have to balance production with other responsibilities.

• Perform a capacity planning analysis to forecast system requirements.

• Guide how to determine the appropriate system size.

• Evaluate and address capacity requirements for servers, storage, network, and applications.

• Evaluate the impact of resource utilization on the environment.

• The challenge for organizations with many resources is to balance resource capacity with demand. Resource capacity planning helps align your available resources to meet the needs of the organization’s strategic plan over time.

A long-term approach forecasts demand over a more extended period and accordingly plans for future resource requirements.

What Is Resource Profile Capacity Planning?

Definition: Resource profile capacity planning is a process to create a projection of future resource needs based on past patterns and trends. 

Resource profile capacity planning requires extensive information about resources, inputs, and outputs.

Few Points to Remember:

• This process is conducted at an organizational level to establish how many resources you require over a specified time frame and what type of resources you will need.

• Once you establish that information, create a plan to ensure that you can meet the number of resources needed.

• It’s essential to understand what resources are. Resources are vital to any business, as they allow you to have the ability to complete tasks. They can be anything from employees to materials or other physical items you need to perform your duties. Remember that resources are limited, and it is necessary to establish a system for managing those you have.

• The basic idea behind resource profile capacity planning is that you should only allocate your resources as far as your current needs require. In other words, if you don’t need to use a resource right now, don’t allocate it.

• The resource profile capacity planning produces a set of numbers showing how much additional work you can do. Moreover, it also determines the maximum sustainable load on any resource at a given point.

What Are the Benefits of Resource Capacity Planning?

Following are some of the benefits of resource capacity planning:

Prevents Financial Crisis

Too much capacity can lead to overspending leading to a financial crisis because of a lack of cash flow. That’s why resource capacity planning is essential, and it aims to find the optimum capacity needed to meet the demand.

Forecasting

The capacity planning process gives you accurate results and forecasts.

Resource capacity planning starts by forecasting future demand and predicting the utilization rate for each resource type. 

This process involves quantifying the current capacity and forecasting the future demand for each resource type. Capacity is the number of units produced or delivered per unit time. On the other hand, the utilization rate is the proportion of resources available.

You can forecast by combining demand analysis with the organization’s capacity analysis.

Resource Allocation

Resource capacity planning helps optimize the allocation of resources to align with the goals and the company’s objectives. 

It proactively ensures the company has enough resources, in the right places, at the right time, without any disruptions or delays.

This process is quantifiable, and hence you can easily rely on it. 

Some additional perks for RCP are: 

• By using RCP, an organization can better respond to external changes in demand for its products or services and internal changes in capacity.

• Resource capacity planning is an essential part of any company that needs to scale up or down quickly. 

• To maintain profitability, you must appropriately manage resources like bandwidth, production time, and customer acquisition channels.

• By using resource capacity planning software, companies can stay on top of their resource requirements and adjust them to remain successful.

Let’s take some time and break up the often interchangeably used terms, ‘Capacity planning’ and ‘Resource planning.’

Capacity Planning vs. Resource Planning?

The difference between capacity planning and resource planning are as follows:

A capacity plan is a quantitative prediction of the future use of resources. It determines the demand and supply of resources. 

A resource plan is a document that breaks down the scope of an activity or project, including time, budget, and resources needed.

As the name suggests, capacity planning only considers the planning aspect. Its purpose is to determine an overview of the resources available and the team’s capacity. 

Whereas, the purpose of a resource plan is more specific. It provides a breakdown for an activity or project with time, budget, and other necessary resources.

Capacity planning is a general term for figuring out how much of a product or service your business can produce.

Resource planning is the more specific term used to determine how many people you need to produce that product or service.

Resource planning is essential because it helps you understand the limits of what you can do with what you have.

Capacity planning will help you grow your business, while resource planning will help you maximize efficiency.

Capacity planning is the process of predicting future needs and determining how to meet those needs. It usually refers to equipment, but it can also apply to human resources. 

On the contrary, resource planning is scheduling that allocates resources to projects and tasks.

Both capacity planning and resource planning are two strategic planning tools.

On the one hand, capacity planning is a long-term decision-making process used to estimate the maximum utilization of an organization’s resources.

On the other hand, resource planning is a short-term decision-making process. This planning considers the current supply of an organization’s resources, desired demand help, and estimates on when those resources will be available.

You can use capacity planning to forecast and manage an organization’s resources years into the future. In contrast, you can use resource planning to predict and manage an organization’s resources through next week or next year.

Conclusion

As mentioned right at the beginning of this blog, planning is essential for success.

Resource capacity planning helps a product manager adroitly assimilate ideas and demands, weigh them against the available resources and team’s capacity and then plan accordingly. 

This blog’s purpose was to clear any doubt regarding resource capacity planning. We have covered almost all of the essential aspects of it. 

If you read it entirely, it will surely help you plan your resource capacity more skillfully.