Capacity planning vs. To-do planning
Which method of planning fits best?
Companies sometimes report to us with the remark that they want to start planning. If we keep asking questions, it becomes clear what they actually mean by that. Some are looking for a tool for capacity planning to plan the working day of their employees. Others just want a tool to manage a to-do list. They want to be able to attach a deadline and project information to those to-dos. The time the employee performs the task is not certain, he or she decides that. The most important thing is that the to-do is ready before the deadline.
So there are two ways of planning, planning capacity and planning to-dos. We explicitly use the term to-do, because the term ‘task’ or task planning is also often associated with capacity planning. For most people, a to-do gives the association of ‘something that still needs to be done’, but is not further specified. In this blog we look at both methods, we discuss the advantages and disadvantages and we determine when you can best use which method.
But what is capacity planning? In short, capacity planning is the method that you use to fill the available working hours of an employee with activities. From the planning you determine for the employee which activity he or she will work on and when. With capacity planning you try to shape the utilization of an employee in such a way that he or she can work as many productive or billable hours as possible for the organization.
The advantages of capacity planning
Capacity planning is often an interesting method for larger companies. Capacity planning has three advantages:
1. Optimising capacity
The first advantage of capacity planning is that you can optimise the deployment of employees. This is possible because you know in detail when an employee is working. This way you know exactly whether an employee is still available for a new project. With capacity planning you can distribute and monitor the workload equally among all employees in the organization. This is especially useful when you have specialist employees in your organization. Is there a risk that the availability of a specific speciality will be compromised based on the figures? Then with capacity planning you have a good foundation for the timely recruitment of more employees with similar knowledge and experience.
2. Measuring performance
With capacity planning you know exactly when someone is scheduled on a project. Projects are always based on budgeted hours. This allows you to compare the budgeted hours with the planned hours to analyse the planning performance. You can then easily see if you have planned enough hours or perhaps too many. If your employees also keep track of the hours actually spent with a timesheet, you can also compare the actual hours with the planned hours. In addition, if your employees also report on the progress of projects, the planner or project manager is completely in control. You can then measure the performance even more accurately.
Another advantage is that capacity planning not only allows you to look at the past, but also to look into the future. For example, a planner books all upcoming projects in a planning board. This way you know what the future workload is. If there are still gaps in the planning, then your account managers can start filling in the gaps by bringing in new projects.
This information also helps you make decisions to grow or shrink your workforce. If all your employees are structurally full for the coming period, then it’s time to start recruiting. If there are gaps in the planning and you cannot get them full, then it is time to let some colleagues go. Does your company have seasonal pressures? Then working with flex workers or temporary workers might be a good idea.
The disadvantages of capacity planning
Capacity planning requires a professional approach and therefore certainly does not fit into every organization. This type of project planning has the following disadvantages.
1. It takes more time
First, capacity planning takes more time than to-do planning. There is simply much more to it. When a new project arrives, it must be determined which employee is suitable for the assignment and when he or she is available. Making a schedule often requires such a structural effort that a separate planning position can be created just for this. This of course depends on the size of the organization and luckily nowadays you have many different planning tools that can speed up and simplify project planning.
Another disadvantage of capacity planning is that a culture of discipline must be introduced into the organization. Project managers and planners must consider updating the schedule as a standard part of their tasks. It is important that the planning takes place structurally and that the planning is kept up to date. If this does not happen, then you will notice that very soon everyone abandons the planning and starts sorting it out themselves.
3. Tighter rules and procedures
The final disadvantage is that capacity planning takes a lot of flexibility out of your organization. To be able to use the full power of this method of project planning, the organization must adhere to the established rules and procedures. Have you agreed that project managers do not schedule employees themselves, but can only submit requests to a central planner? Then this agreement must be monitored. This can then be experienced as counterproductive for project managers, because they want to deploy the best person to their project as quickly as possible.
When is capacity planning useful?
In the blog “4 stages of resource planning” we describe, as the title suggests, the four stages that resource planning can be in. Capacity planning is suitable for larger organizations that are in stages three and four, but it comes into play when your company is in phase two.
Capacity planning is suitable for organizations where a central approach is to match the demand from projects with the supply of resources. This is, for example, when there is a planner who handles resource requests from project managers. Capacity planning can certainly be considered when your organization works with specialized employees and the duration of activities can be estimated well in advance. Capacity planning is particularly applicable in situations with permanent employees. After all, you want to fill in their workable hours as optimally as possible. If you work with freelancers that work on the basis of a fixed price, then optimizing their workable hours will not be interesting at all.
What is to-do planning? To-do planning differs considerably from capacity planning in several areas. With this method you set up a task and set a deadline. The time the employee performs the task, he or she decides for themselves. The ultimate goal is that the task is performed before the deadline has passed.
The advantages of to-do planning
To-do planning is often easily accessible and has the following three advantages.
1. Organizing projects easily
Unlike with capacity planning, projects with to-do planning are easy and quick to organize. A customer comes with a new project. A deadline is set together with an employee. The project is transferred to a colleague and it is ready to be implemented. There is no central management by a planner. The employee decides which activities must be carried out in the project and ensures that it is ready before the deadline.
2. Low costs
To-do planning also entails fewer costs than capacity planning. You do not need a planner who centrally manages the planning of all employees. In addition, the need for extensive software is also smaller. A simple program such as Trello is sufficient for organizations that want to do to-do planning. To-do planning simply requires less management than capacity planning.
3. Feeling of freedom
A final advantage is that to-do management gives your staff a sense of freedom and responsibility. The strict rules and procedures with which you set up capacity planning in your organization are not present in to-do planning. This makes this method a lot more flexible and freer for your employees. They must carry the project themselves and implement it in their own way. This is not externally determined by a planner. In addition, the result is that employees may feel more responsible for the project than in capacity planning.
The disadvantages of to-do planning
Just as with capacity planning, to-do planning also has disadvantages. This method demands more from your staff and you start steering more on your feelings than on numbers. There are three drawbacks.
1. Less management
To-do planning demands more from your staff than with capacity planning. As a result, to-do management is not suitable for junior employees and for organizations where employees need to be managed more. To-do planning offers no structure. There is a project and it must be carried out independently before the deadline. Not everyone has the ability to properly estimate this.
2. No clear picture
Another disadvantage of to-do planning is that there is no clear picture of the workload. Unlike with capacity planning, hours are not planned in advance for employees in to-do planning. Employees receive a to-do and they must carry it out. The extent of a to-do is not known in advance and can therefore vary from calling a customer to conducting extensive and lengthy research. The amount of to-dos therefore does not automatically mean that an employee is busy or has little to do.
3. No figures to measure
Unlike capacity planning, to-do planning does not offer hard figures that can contribute to the learning ability of your organization. There are no budgeted hours, planned hours or actual hours worked that are recorded. As a result, you as an organization do not have the opportunity to learn from mistakes and to optimize inefficiencies. With to-do planning you work on your feelings and not on the basis of figures.
When is to-do planning useful?
To-do planning is useful for other organizations rather than capacity planning. Small organizations and independent entrepreneurs benefit more from to-do planning. Companies of this format are generally in the first phase of resource planning, as described in the previously mentioned blog.
To-do planning also better suits organizations where there is decentralized responsibility for the implementation of projects. A requirement for this method of project planning is that your employees can work independently. If you have a lot of specialists, capacity planning fits better. To-do planning flourishes more with all-round employees because projects are not centrally linked to employees. It is difficult to estimate in advance how long a task will take. As a result, the capacity and staffing of an employee cannot be checked. It can therefore happen that more time has to be spent on a project than that an employee has contractual available hours. Overtime should therefore not be a problem in your organization.
The method of planning you choose depends on various factors, such as the size of your organization, the maturity with which projects are tackled and the extent to which employees work independently on projects. There is no hard separation between to-do planning and capacity planning. You can eventually grow from one method into the other.
A mix of capacity planning and to-do planning is also possible. Some of the activities to be carried out can be so short that you start planning too tightly. An administration office that takes care of the payroll administration of dozens of customers will not start planning every 10-minute salary run, but will, for example, schedule a four-hour block to do all the salary runs then. With the help of to-dos you determine the different salary runs for the payroll administrator, to check that all customers are actually being processed.
The most important factor in choosing a planning method is the size of your organization. Smaller organizations have no use for capacity planning. That is why we have a minimum purchase of five licenses at Timewax. All-rounders often work in small organizations, so it does not matter who carries out the project. The only thing that is important is that the project is completed with sufficient quality and before the deadline. The fact they work overtime in these cases is less relevant to control.
Mark de Jong
Mark is Sales & Marketing Manager at Timewax. He has a background as a project and resource manager with PricewaterhouseCoopers Management Consultants with expertise in the field of Professional Service Automation (PSA).