Capacity Planning
Agency glossary · Updated July 2026
Definition
Capacity planning is the practice of matching an agency’s available billable hours to its committed and forecast work, so the team is neither overloaded nor idle. It uses each person’s available hours and target utilization to decide when to hire, hold, or take on more clients.
Why it matters
Good capacity planning prevents the two expensive failure modes: burning out the team on too much work, and paying for idle capacity that is not billing. It is the operational side of utilization.
How it works
Start from available hours per person after holidays and PTO, apply a target utilization, and compare the resulting capacity to committed retainer and project hours plus weighted pipeline.
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