Capacity Planning

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.

Resource capacity planning in an agency

Resource capacity planning is matching the hours you can actually sell against the work you have committed to, far enough ahead to do something about a gap. In an agency it usually means four numbers per person: hours available, hours already committed to signed work, hours provisionally held for work in the pipeline, and the resulting gap.

A worked example. Six delivery people at 30 sellable hours a week is 180 hours of capacity. Signed work for next month consumes 140. Two proposals out at 60% confidence would add another 50. Sold capacity is 78% and weighted demand is 106%, which is the moment to decide something, and it is six weeks earlier than the moment a timesheet would have told you.

Capacity planning strategies

Standard operations-management texts describe three, and they are choices about timing rather than about size. Lead adds capacity before demand arrives, which wins work you could not otherwise take and carries the cost of paying people who are not yet busy. Lag adds it only once demand is proven, which protects cash and risks turning work away or delivering it badly. Match adds in smaller increments as demand builds, which is the common compromise and the one that needs the most attention to actually execute.

The three have no traceable originator. They appear in standard textbooks without attribution, so treat them as received practice rather than as somebody's framework.

Is capacity requirement planning the same thing

No, and the difference is worth knowing before you buy software described that way. Capacity requirements planning, or CRP, is a specific technique from manufacturing planning, indexed separately in the APICS body of knowledge. It sits downstream of material requirements planning on a short horizon, roughly ten weeks with daily replanning, and converts a production schedule into required machine and labour hours work centre by work centre.

Agency capacity planning is the level above that in the same hierarchy: resource planning, which asks whether to hire, and rough-cut capacity planning, which asks whether the next quarter fits. If a vendor uses CRP to describe scheduling designers, they have borrowed the acronym.