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by Martijn van der Hoeden on June 12, 2021
Updated on January 21, 2025
Resource management is an integral part of holistic project management, encompassing capacity planning to ensure resources are available when needed.
If we take a look back at the most complete definition of project management, we see that resource management, and by extension, capacity planning, helps cover many bases to help you stay in control of your projects.
Specifically, resource management will play into the following parts of MOTIQ:
Money- Resource management helps you keep track of where your money is going each month, as it relates to your resources (aka your people).
Organization- Your people are your organization, and resource management will empower you to make decisions based on the workload your team members can handle week to week and month to month.
Time- A good resource management tool will give you an accurate representation of the amount of time you can expect from your people toward each project, and who and where time is being used most efficiently.
This brings us to capacity planning. Capacity planning within resource management will help ensure the right people are working on the right tasks at the right time.
Capacity planning is not the same as project planning, but rather an integral part of it. You can leverage capacity planning to increase accurate forecasting with a resource management platform.
Proper capacity planning helps project managers encourage successful project delivery by optimizing schedules, budgets, and overall project performance.
When using a resource management tool to help you facilitate your projects and your people, you have three options for capacity planning:
- Task-based capacity planning
- Hours-based capacity planning
- A combination of the two
We’ll detail the pros and cons of each so you can see which path is the right choice for your organization.
What is capacity planning?
Without getting too into the weeds, capacity planning is simply the way you figure out how many hours or tasks your team can handle related to how many hours/tasks are needed to complete the project.
By capacity, we’re referring to the most amount of work that can be completed within a window of time by an individual.
For example, if someone on your team can work 40 hours per week, that is their capacity.
Because capacity planning is a great way to make sure your projects are delivered on time, it’s important to use a tool that fits the needs of your business.
The benefits of capacity planning for project success
- Prevent burnout - When you know everyone’s capacity, you can help prevent resource overallocation which can lead to burnout and unhappy teams.
- Higher quality deliverables - Balanced workloads keep morale high and ultimately, contribute to better deliverables because team members aren’t overloaded or underutilized.
- Better scheduling - Capacity planning gives you a super-clear understanding of the availability of your resources against the timeline required for the project at hand. You can create more realistic timelines and prevent delays from resource bottlenecks.
- Increased profitability - Leveraging a capacity planning tool will help you better manage project budgets and give you more accurate resource utilization analysis.
- Better forecasting - Project managers can better anticipate future resource needs by dialing-in on their capacity planning, proactively addressing potential shortages.
The 3 Types of Capacity Planning
When you’re getting ready to start your capacity planning on a project, you’ll have three ways of going about it:
1) Task capacity planning
Task-based capacity planning will give you a feel for what your team can handle on a task basis. Tools that help you with task capacity aren’t going to be as concerned with actual hours, but with the tasks that are needed to get the project done.
Straightforward projects with small teams and businesses that leverage a value-based project management model are excellent candidates for planning capacity on a task basis.
With task capacity planning, you’ll get a beneficial overview of what everyone can handle based on their roles. It’s a great option for small businesses and uncomplicated projects because you don’t have to get super granular.
To get started with task-based capacity planning, simply set up your resources and input their task capacity on a weekly or monthly basis, depending on how long the project will take.
PROS of task capacity planning
- You don’t need a lot of information to get started
- The fastest option to set up
- A great option for smaller teams
CONS of task capacity planning
- Less accurate than hours-based capacity planning
- You’re really just getting an indication of the workload versus seeing the full picture
Bottom line- Task capacity planning is a great option for smaller businesses that want to get a jump on resource planning for their projects. With smaller teams, project managers have a better idea of how long each person takes to complete a task, so less knowledge is required.
However, you can't budget time for a task, you can only schedule hours when you use the project’s workload sheet. You essentially have to have a very good idea of about how long the individual tasks will take.
This makes task-based capacity planning less attractive for larger teams, as it won’t be feasible to know how long each person will take on tasks.
2. Hours capacity planning
Hours-based capacity planning is your next step-up in accuracy from planning with task capacity. Rather than just measuring tasks, hours capacity planning will help you calculate the time it will take for each project item (contract line) per month, per role, and per resource.
If it’s important for you to know capacity down to the nearest hour, this is the option for you. Larger teams and bigger project budgets usually necessitate hours capacity planning, as do projects with longer timeframes.
PROS of hours capacity planning
- Increased accuracy
- More insight into actual workload
- You can compare your actuals with what’s scheduled (with the right resource management tool)
- Compare Actuals with Planned Hours
CONS of hours capacity planning
- Requires more time to set up
- Requires more discipline
Bottom line- Hours-based capacity planning is the more popular option for project managers that need an accurate representation of time. Smaller teams in fields like content production probably won’t need to put in the time and energy it requires, while larger teams in industries like software development will want to leverage hours capacity to stay on top of their budget.
3. Use both!
Not all projects will necessitate getting this in-depth into capacity, and certainly not all teams will require such a detailed capacity planning. That said, to be able to forecast the most accurately, a combination of both task capacity planning and hours capacity planning is the surefire way to go.
Larger organizations with complex, long-term projects and team members around the world are good candidates for this combo of precision planning.
If you want to leverage both hours and task capacity planning, you’ll need a robust resource management tool. Not all the platforms out there have this kind of functionality, so make sure to do your research.
PROS of using both task capacity and hours capacity planning
- Insane accuracy
- Ultimate control
- You check not only actuals spent time but also what is achieved
CONS of using both task capacity and hours capacity planning
- Requires significantly more time and knowledge to set up
- Unnecessary for many projects and teams
Bottom line- Using both task and hours capacity planning provides the ultimate in accuracy and control, but smaller businesses definitely don’t need to put in the time and effort the combo requires.
Capacity planning software and tools
To leverage the three different types of capacity planning will require software tools that can actively update utilization, so you can always see where resources stand workwise compared to what they potentially can handle.
A resource management software solution or a more all-in-one project management tool should provide some form of capacity planning, but many will only allow for the hours-based option.
Finally, is there a resource management tool that offers all three?
Yes! PSOhub’s all-in-one project management software now gives you all three options in the new Resource Management feature. No matter which you choose, you’ll get capacity planning that’s fully integrated with all the other moving parts of your projects. That means your utilization rates, budgets versus actuals, and more all are updated in real time. A true game changer.
