5 pitfalls of capacity planning
We describe long-term capacity planning as:
“… the high-level balancing act between capacity supply and demand. It requires strategic thinking and identifies and analyzes the gap between capacity demand for the planned strategic portfolio, and the realistically expected available capacity.”Thomas Bothuyne, Product Owner Capacity Planning & Resource Management
Your organization’s strategy should enable you to make clear, fundamental choices based upon this evaluation. But before doing this, every organization should be aware of the following potential pitfalls:
- Budget cycles versus the long-term time horizon: budget cycle exercises are made on yearly basis, while a strategic overview of key resources requires a focus on the long-term
- Focus approach: limit scope creep due to the expectations of stakeholders. Keep focus on the long-term capacity exercise (strategy focus, long term approach up to 5-10 years), which is not the same as ‘resource management’ (mid-term approach up to 1 year, anticipating and prioritizing resource allocations, …)
- Credibility of the exercise: accept the model. The capacity exercise is based on a generic model which brings us high level insights. The model provides types which are linked with the projects in scope. Setting up project types delivers a certain flexibility over your portfolio
- Human factor: there should be a clear need for this exercise. Executive support is essential to manage change resistance from stakeholders, C-level,…. Dare to take (important) decisions. The selection of ‘which initiatives and projects’, should have a higher priority. The corresponding access to resources is a strategic choice that must be made at C-level.
- Capacity planning is not the same as resource management: While Long-Term capacity planning is defining high-level resources on strategic level, Mid-Term and Short-Term resource management is assigning resources and resolves issues at a functional level, respectively named resources. However, in case resource issues cannot be resolved at these levels, leading to structural resources issues, the feedback loop goes back to the strategic level to reduce or adjust the strategic plan as needed (reduce demand or increase supply
Benefits of setting-up a capacity planning with the Strategy Realization Office
Finding a balance between resource demand and supply is a key portfolio management issue. If not addressed properly, it results in various unreached strategic objectives. Many organizations are facing this problem right now and are therefore increasingly setting-up a Strategy Realization Office (SRO), to respond to this challenge. An SRO is slightly related to a Project Management Office (or PMO) but has a strong focus on strategic portfolio management. Consequently, it is in close relation to the organization’s management. In order to support the capacity planning exercise, an SRO acts as facilitator of the process and guides the organization through the estimation of critical project resources in a simple and efficient way. This way, C-level understands the current project portfolio and receives essential input to execute strategic decisions (e.g. cut or shift the project portfolio roadmap, identify the strategic workforce,… etc.) How an SRO does this?
- It provides insights into the current availability of required resources
- It creates simulations or scenarios to guarantee a realistic and feasible portfolio, based upon strategic priorities
- It identifies under- or overallocations of (critical) resources