The Capacity Trap
Which one are you? Three glasses depicting the different workload levels between three people.
I must confess, I love spreadsheets. I like to organise things that feel in a state of chaos and can be made sense of and tracked.
What is the Capacity Trap?
Working in project work for research projects and grant writing for many years has shown the importance of tracking ACTUAL work rather than relying on projections only that are not validated. This is pertinent today as we are in an economic environment which means we need to consider the costs of the things we are making and doing.
For fast-moving projects, managing capacity and communication in teams can be a challenge. Avoid getting into the Capacity Trap for project-based work that limits sales and growth.
The Capacity Trap is the situation where the team is working at full capacity and beyond full capacity and not being able to plan when and how much time will become available to book in the next projects.
Capacity Planning Tool
To manage capacity of a delivery team to measure and predict project delivery, comes down to the Capacity Planning Tool and its Principles.
The spreadsheet is available to view here as a template.
Key Principles
A team that can plan its capacity:
Principle 1: Takes teamwork seriously, this is a team sport
Principle 2: Agrees on a way to measure the project (or similar activity)
Principle 3: Has an ongoing collection of accurate data on the implementation of projects
Principle 4: Frequently communicate and update to keep this sheet relevant
Principle 5: Has one person completely responsible for updating the sheet
Principle 6: Feedback loops between sales and delivery teams
Principle 7: Knows the upper limits and delivery times accurately
Principle 8: Understand the cost of delivery and profitability of projects and products to have an efficient product mix
Principle 9: Regularly review variables of projects to improve health scores
Principle 10: Has psychological safety to suggest improvements and innovate processes and products
How to use the capacity planning spreadsheet
Before you use this tool:
1. Produce a process work flow diagram to show who does which part of the work. I like to use swimlane process flow templates on Miro.
2. Estimate how long it takes to do each type of project and have a way to regularly review and measure this.
3. Size each of the types of projects and assign a number to show if it's a small, medium or large project.
As an example, I’ve used a research project will be that has the following team who are providing consultancy services on a project-basis:
Research Lead
Researcher
Project Manager
So we can have the complexity of managing the complexity of small teams.
Let’s get started by giving you a tour of the spreadsheet
We can now get going to show you how this spreadsheet works so you can avoid the Capacity Trap.
Background Work for Capacity Calculations
Calculating T-Shirt Sizes for Projects
Okay, so I borrowed the idea of T-shirt sizing from Agile (read more here if you’re interested), but it is a really good concept that is so useful. Here we can see across sales and delivery that we have an estimation of the number of hours worked per project. This gives us an estimation of project sizes that we can group together and price accordingly. These estimations can be reviewed regularly, perhaps using another idea from Agile, which is Retros. Retros can be useful to understand what is going well and not going well, but also to uncover some of the variables impacting project delivery.
Project Accounting: Cost of Delivery
The devil is in the detail here. It’s useful to have an understanding of overall costs but having this broken down further can identify where parts of the process could be optimised or automated. It also shows the most costly areas of delivery and help to review who should be delivering which parts on a project and if other tools are useful such as templates.
Finance Tracker: Are you running a profitable business?
The biggest costs I’ve seen in projects is time creep and people pleasing, although feature creep is a culprit that can be added here if applying this to software projects. Time creep is where projects take a lot longer to deliver than planned. Sometimes this happens for good reason, but if it happens a lot, there is a quiet, but deadly cost to the business. Another cost is people pleasing, we know the customer is king, probably, but what if we’re giving them too much for free when we should be charging them? Having transparent costs for each project and aggregated cost of sales (management view below as salary information is sensitive!) can help to show that the efforts of delivering the projects are actually profitable or if they are loss-making. This will help to review product mix if projects are being sold on a consultancy basis.
Project Tracker: Data to review performance and what’s working
The Project Tracker is really useful to see what has been delivered previously and can be used in numerous ways for analysis of team performance, project performance and which clients are the best to work with for that particular business.
Capacity at the Coalface
The Dashboard: A Snapshot of current and potential capacity
The first page is a dashboard, using the traffic light system. Green means there is good capacity, orange means there is some capacity and red means that there is no capacity.
This gives you a snapshot of the projects happening now that have all been paid for and assigned, known as “Live Projects”. As you can see here, we have the different job roles split and the individuals, plus you can see what the maximum capacity is for that particular role.
Then we have “Live Projects and Potential Projects”, this comes from the next tab which we’ll go through next. Potential Projects are those in the sales pipeline that are very close to closing. You can add an extra tab to show earlier stages of the sales funnel if you want this all on one spreadsheet.
Potential Projects: Bottom of the Sales Funnel
These are the serious buyers where we need to have capacity for the project available and assigned. It may initially be ‘penciled in’ during the contracting stage meaning it lives in this tab, but as soon as it’s ‘written in pen’ and confirmed, the whole project becomes a live project and is deleted from this tab and moved to the next tab. Having a regular meeting once, maybe twice a week, depending on the speed of sales is useful to keep everyone updated on the spreadsheet in delivery and also in sales as well.
Live Projects
The aim of this tab is to show by role, what the current live project score is and when potential projects could be penciled in. This is broken down for each of the team members: Research Leads, Researchers and Project Managers as they all are part of one team. There may be situations where one of the team members is missing, this can be accounted for in the Project Health Score to show the increase in capacity for that that team. We’ll get to that soon!
Project Health Scores: Live Projects and Potential Projects
Reviewing Project Health Scores is probably one of the most important parts of this spreadsheet and doing this regularly will help you T-Shirt Size your projects more accurately to get a measure of length of delivery and cost of delivery.
Here we have Project Health Scores (PHS) for both live and potential projects, these are defined, calculated and then described in this tab and show additional capacity on top of planned projects. The PHS relate to the amount of risk to capacity is posed per project. I’ve given an example of some of the common risks, it’s up to you and your team whether these scores are made into an average or aggregated. You may wish to use a risk register type scoring as outlined below (source). If you do, you can group scores into what the equivalent would be for the project size. For example, if the score is between 1-3, then this equates to 0.3 as a PHS, between 4-8 is 0.5 and so forth.
Individual Capacity: Holiday and overall capacity planning
This breaks down individual capacity for live, actual projects and their PHS and records holiday. This is useful to have in one place the baseline for each person and can be useful for team members to have visibility and for managers to look at potential clashes in big project episodes and holiday clashes which will impact capacity.
Summary
Capacity can get pretty complicated, but once the team get into the swing of it, it works really well. Over time, you may find ways to automate it or use your CRM or other tools to collect the data needed. This exercise can be useful to see what data is needed to understand how to analyse delivery processes to identify capacity issues and decide how and when to use resources, and whether to recruit or use external freelancers.
I’d be interested to know how you manage and plan capacity and how much of an issue it is for you and your team and why.
