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Understanding Capacity and Demand

Summary

Organizations often plan their demand pipeline as if they have all the capacity in the world to deliver on it. Then, when the right resources aren't available when needed, because they're overloaded on other work, the projects get delayed and windows of opportunity are missed.

On one hand, this is because of a lack of capacity planning, and a lack of understanding that capacity and demand are two sides of the same coin. Capacity planning involves predicting resource needs at multiple levels of detail along multiple phases in the planning horizon, so that demand is always scheduled with capacity in mind. Second, organizations often have a narrow view of demand, not accounting for all the types of work that consume a resource's time. This leads to wishful thinking about how much new work can actually be accomplished scheduling it accordingly.

This best practice offers an overview of capacity and demand, and advises on common pitfalls to avoid.

Types of Demand

Demand can come from many sources, internally and externally. It can also take the shape of multiple types of work, including major strategic programs and projects, medium-sized projects, ongoing base services, and other planned work. Care must be given to allow for unplanned work as well, possibly allowing a standard percentage for that type of work.

Many organizations only examine demand from the perspective of major strategic efforts. This is ill-advised, as often the resource pool for those efforts is heavily consumed by other projects and base services (which can sometimes use 50 percent or more of the total resource pool). An organization is a complex ecosystem. Any demand for resources in one area is likely to impact some other area. Thus, it is important to have the complete picture of demand across the organization, especially where resources are shared.

For more on how to account for non-project work in Planview Enterprise, see our best practice, Tracking Non-Project Work via Standard Activities and Annual Bucket Projects.

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