Top 5 factors affecting resource capacity planning in 2023

resource capacity planning

From the Great Resignation and the increase in remote work to changing project management practices, large-scale obstacles are trickling down to project managers’ resource capacity planning.

It’s undoubtedly frustrating when factors you have no control over impact your ability to effectively staff projects. But you can control how you account for these factors in your planning process.

To seamlessly overcome these hurdles like a true Olympic-level project manager, you need to develop a deeper understanding of these new business trends. Armed with this knowledge, you can get ahead of related issues that’ll make it difficult to best optimize your team’s time and talent.

1. Global full-time labor shortages

The fewer available resources you have, the trickier resource capacity planning becomes—and the COVID-19 pandemic kicked off massive waves of resignations around the globe. The Organization for Economic Cooperation and Development found that, by 2021, there were 14 million more international unemployed workers who weren’t seeking a new job compared to before the pandemic. And in the United States, at least 4 million workers resigned each month from March 2021 through April 2022, with no signs of slowing down.

With fewer people working, it’s easy to see why capacity planning suffers from clashes between resource demand and resource availability. To account for fewer staff, PMs typically have to choose between loading up their full-time team members with extra work and overtime (which can quickly lead to burnout and further turnover) and turning down projects (which means less revenue for the business).

Solution: Look for freelance talent amid the booming gig economy

In a less-competitive job market, your company would most likely focus on hiring full-time workers who could fully immerse themselves in your team and organizational culture. In 2022, though, the most practical way to tackle resource shortages is to invest in freelance talent.

According to UpWork’s 2021 Freelance Forward Economist Report, freelancing reached its “highest share of the labor force” in the United States (36%) since the annual study launched in 2013. This is largely due to the scheduling and location flexibility that freelancing offers compared to traditional 9-5 jobs. In fact, freelance perks are so enticing that 56% of surveyed non-freelancers said they’re considering freelance work.

To show your C-suite which type of freelancers will add the most value to your business, review project data to determine which assignments have the highest profitability and which ones happen most often. For example, between a project with 7 days of billable hours and one with only 5, suggest hiring freelancers for the 7-day project.

Resource Guru project report

From there, look at how well the skills and availability of your full-time staff support those high-priority, high-value projects. Recurring gaps will signal areas where your team could objectively benefit from some freelance talent, from a new engineer to a new writer.

2. Demand for internal learning and development opportunities

Employees are leveraging the widespread recruiting and retention struggle caused by the Great Resignation to get companies to meet their needs. One key area of employee demand is upskilling.

A joint study by Gallup and Amazon found that 65% of surveyed employees ranked the ability to upskill as “very important” when evaluating prospective jobs, and nearly 50% admitted that they’d be willing to quit for a different company if it offered learning and development opportunities. This is especially true of millennial workers, who now make up more than 35% of the U.S. workforce.

On-the-job training and mentoring activities improve job satisfaction and retention, but they can quickly throw a wrench in resource forecasting if they aren’t accounted for. Say you book your developer Emily for a two-week project. The day before the kickoff call, she suddenly DMs you that she’s been approved to start informally shadowing a solutions architect twice a week for the next month. Great for Emily, but not-so-great for you and your project that now needs additional coverage.

Solution: Temporarily reduce individual capacity to reap long-term benefits

The sooner you find out about employees taking on non-billable training, the sooner you can build that time into your capacity planning. Consistently check in with team managers and individuals to stay updated on all things L&D, and use this knowledge to appropriately scale back your employees’ available capacity as needed.

Resource Guru’s capacity planning tool lets you easily adjust employee workloads with the click of a button.

While it might feel counterintuitive to decrease the amount of time that employees can spend working on billable projects, it’s paramount to keep them engaged in the long run. If you try to force employees to work at their usual capacity while handling extra training, their work quality and productivity will likely suffer. They’re also likely to get resentful that they can’t truly focus on their area of interest and might consider leaving.

Give them the temporary bandwidth they need to grow professionally without being under pressure to produce at their usual level. This will benefit the individual and your capacity planning. The more skills an employee cultivates, the greater variety of billable tasks they can handle. Everyone wins!


3. Varying work schedules and locations

Post-pandemic, remote work continues to hold strong. June 2022 data from WFH Research shows that approximately 45% of surveyed employees reported working remotely at least some of the time. For a lot of PMs, this means having to keep track of a greater variety of time zones and employee availability in their project scheduling. Depending on how global your team is, you may also have to account for paid time off differences, like the EU Labor Law PTO mandate. That’s a lot of brain work.

Solution: Use a project management tool with calendar integrations

Resource management software that syncs up with personal calendars like Google Calendar and Outlook is a game changer for resource capacity planning. These integrations give you real-time visibility into your project team’s schedules, locations, and bandwidth—so you can avoid overbooking and stop scrambling to reallocate resources at the last minute.

Team schedule overview

An integrated calendar ensures you can factor all relevant events, including PTO, into your capacity planning.

Additionally, a master calendar housed in one dashboard makes your resource capacity planning much easier than toggling between spreadsheets or different apps—both of which may have outdated information that can throw off your project plans.

4. Misalignment of employees’ skill sets and project needs

To account for the variety of tasks a team needs to handle on a project, a lot of PMs will break their resource capacity planning down by skill set. So, if a design agency was commissioned for a new website, the breakdown might look like 0.65 design, 0.5 front-end development, 0.25 QA, 0.25 UX management, 0.2 project management, and 0.15 account management—adding up to a total of 2 full-time employees.

While it makes sense to figure out what project areas will need the most time, using it to determine how many people should staff the project in total is problematic. In this case, the math would suggest that you’d only need two people to cover the workload duration—but are those two employees actually skilled in every area that needs to be addressed?

This approach is further complicated by the increase in fully-remote and hybrid work settings. It’s easy to miss Slack announcements or emails about the latest talent changes, from turnover to new hires and promotions. If you don’t have clear insight into skills shortages or surpluses, you can’t make the most optimal staffing decisions.

Solution: Use an up-to-date skills matrix

Skip the hassle of figuring out who’s capable of what task during capacity planning by using a skills log. This resource will make it much easier to identify who’s the best fit for projects based on their schedule and experience.

Resource scheduling software makes it simple to see both. Team members can tag their own capabilities, and you can filter based on those capabilities when capacity planning. This means you can make more resource allocations that align with your team members’ existing strengths and skills they want to further develop, which will keep them invested in their role.

Resource management tool skill filters

If you don’t have a resource management tool, a workaround is tracking skills in a Google sheet or other document. This method does require an upfront investment of time and clear processes to ensure it remains accurate and up to date, but it’ll still save you time in the long run. Collaborate with Human Resources and team managers to get the directory together. It’ll be a beneficial resource for them, too, giving them clear data to identify hiring and L&D initiatives.

5. A shift to the Agile method

While agile project management is nothing new, COVID-19’s volatile impact on businesses prompted more PMs to apply this flexible, iterative approach across projects. As Purdue University’s Rachel Lamb notes, uncertain economic conditions remain, but companies want to continue harnessing the Agile method to “adapt in a structured way.”

However, continuously shifting sprints can make traditional resource capacity planning more complicated—you’d have to try to calculate capacity for each sprint instead of each project. That’s a recipe for a headache and human error.

Solution: Try agile capacity planning

Agile capacity planning involves some math, but it’ll keep your projects on track in the long run. In comparison to traditional capacity planning, which may use a set resource utilization target across the board (say, 80%), agile planning uses fluctuating rates based on how complex the project is.

If you had a team fulfilling a familiar client request, you would expect them to be more productive in a sprint than a team working on a totally new project. So for capacity planning, you would use a higher rate (representing productive hours) for the straightforward project and a lower one for the complex project.

Let’s break it down:

  • Multiply your total number of team members x total days in the sprint x available work hours per day
    • 10 x 5 x 8 = 400
  • Multiply that total by the expected productive hours based on past project data
    • Straightforward project: 400 x .6 = 240 hours to work with
    • Complex project: 400 x .5 = 200 hours to work with

While formal capacity planning changes sprint-to-sprint, this formula accounts for longer periods of time with a buffer built in for potential sources of friction. From that total, you can break things down into effective, reasonable sprint lengths.

Stay on top of resource capacity in 2022 and beyond with comprehensive planning software

If you’re basing your resource capacity planning process on information scattered across Excel spreadsheets and other digital tools, there’s a good chance that something will fall through the cracks. And when it comes to your team’s availability, the smallest oversight can quickly throw a project off track.

With capacity planning software that gives you clear, real-time insight into the current and future availability of individuals and teams, you can be confident that your projects are built on solid foundations.

Check out how Resource Guru will help you optimize your capacity with our free 30-day trial.

 

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