Capacity Planning and Project
Portfolio Management

By Kathy Martucci, PMP

Capacity Planning?  There’s an app for that. Actually, there are several apps for that.

But wait. Does a piece of software, regardless of how sophisticated it is, ever successfully define and drive a critical business function? The answer should be a resounding “NO!”

Let’s look at Capacity Planning from a process perspective.

Capacity Planning, probably most familiar to ITIL^® enthusiasts, can and should be used by the Project Portfolio Management Committee. Using the principles of Capacity Planning in an iterative and continuous process, the Committee can effectively forecast needs, allocate resources across the project portfolio body of work, and use performance metrics and work performance information to feed back into the forecasting effort.

Capacity Planning is primarily concerned with long-term projections and decisions about the organization’s resource demand and supply. While project managers are busy estimating resource requirements in the shorter term and for their project alone, it is imperative that senior management set overall utilization targets, project performance metrics, and a robust process to forecast future needs and maximize resource allocation.

If this sounds like a tall order, it most certainly is that and more. Like the good project managers we are, let’s break down the Capacity Planning process into three main components for better understanding:

1. Business Capacity: Business capacity management is about the demand that comes from the business and ensuring that the supply is in place when the business needs it. The main objective of business capacity management is the forecast of the skill sets, numbers and timing of resources to fulfill future business requirements.
2. Resource Capacity: While resource capacity can mean allocation of both human capital and the technology infrastructure, our focus is on the human capital available for project work. If the organization can get the right number of resources with the right skills in the right place at the right time, costs can be lowered and performance can be enhanced.
3. Service Capacity and Performance Management: In order to understand if the resources are appropriate and performing to agreed standards, Service Capacity Management is essential. Data collected will be analyzed and the resulting information will cycle back through the process of overall Capacity Management to verify that Business Capacity forecasts are valid and meaningful. While Performance Management traditionally concentrates on allocating existing resources to meet objectives, Capacity Planning is a means of predicting resources needed to meet future objectives.

A much more thorough understanding of this work is, of course, a prerequisite for a successful implementation of a comprehensive Capacity Planning process. In addition, the organization needs the resources (processes, people, data) to perform the work. As always, a critical success factor in any new initiative is senior management buy-in and ongoing support. Like most organizational initiatives, Capacity Planning can be so pervasive that lack of management support will result in limited value to the organization, or dismal failure.

How would you start the conversation about Capacity Management in your organization?