Capacity Planning

Capacity planning is the strategic process of forecasting future resource needs and ensuring your agency has the right people with the right skills available at the right time to meet client demand. It involves analyzing current workload, upcoming projects, team availability, skill requirements, and business development pipeline to determine if you have sufficient capacity or need to hire, subcontract, or adjust timelines. Effective capacity planning is critical for agency success because it prevents the twin problems of overcommitment (promising work you can't deliver) and underutilization (paying for capacity you're not using). Capacity planning operates at multiple time horizons. Short-term planning (next 1-3 months) focuses on ensuring current projects have adequate resources and identifying immediate bottlenecks. Medium-term planning (3-6 months) helps with hiring decisions, subcontractor needs, and project scheduling. Long-term planning (6-12+ months) informs strategic decisions about team growth, service offerings, and business development priorities. Each horizon requires different data and approaches, but they all contribute to overall resource optimization. The capacity planning process typically involves several steps. First, you forecast demand by analyzing your sales pipeline, retainer commitments, and expected project work. Then you assess current capacity by calculating available hours from your team, accounting for time off, non-billable work, and current commitments. You compare demand to capacity to identify gaps or surpluses. Finally, you develop plans to address imbalances—hiring for shortages, finding projects for surpluses, or adjusting timelines and commitments. Effective capacity planning requires accurate data. You need to know team members' availability (accounting for time off, training, and non-billable work), their skill sets and billable rates, current project commitments and timelines, and your sales pipeline with probability-weighted forecasts. Many agencies struggle with capacity planning because they don't track this data systematically or they rely on gut feel rather than data-driven analysis. Capacity planning helps agencies make better decisions. It informs hiring timelines (hire before you need people, not after demand arrives), helps with project scheduling (knowing when you have capacity for new work), supports pricing decisions (understanding true cost of committed capacity), and guides business development (knowing what types of work to pursue based on available skills). It also helps prevent team burnout by ensuring workloads are manageable. Common mistakes include planning only for billable work (ignoring non-billable time and creating unrealistic expectations), not accounting for time off and training (leading to overcommitment), relying on gut feel instead of data (making poor decisions), and not planning far enough ahead (reacting to problems instead of preventing them). The most successful agencies treat capacity planning as an ongoing process, reviewing and updating forecasts regularly as conditions change.