Capacity Planning vs. Resource Management: Why the Difference Matters

Scrum planning

Is capacity planning the same thing as resource management? I was once asked this question in a job interview, and immediately wondered if it was some kind of trick question. Not exactly – many people get the two concepts confused or use them interchangeably. Knowing the difference can help you understand one of the top pitfalls of resource capacity planning—and avoid the #1 reason for project failure especially as it pertains to professional services.

Understanding capacity planning will put, you in a better position to evaluate, articulate and communicate what your organization can realistically take on.

What’s the difference?

While capacity planning and resource management are certainly related, they are indeed two entirely different things. Not just because you can’t have one without the other, but because they translate into different results for your organization.

Resource management means that you have the adequate resources to execute on work. At it’s simplest level, this means asking whether you have the people to work on the project—but it gets more complex when you factor in resource allocation and utilization.

Capacity planning, on the other hand, is more of a matching game than a strategic snapshot. Capacity planning comes only when you have a combination of visibility and assessment, to both understand and then communicate what the organization can take on at any given point.

Resource Capacity Planning and the “Next Cool Thing”

Understanding the nuances that separate resource management and capacity planning is great in theory. But in practice, it can be a lot more challenging to say “no” to projects, especially when it’s the “next cool thing” that everyone from C-level execs to product development to marketing teams are wide-eyed and eager to pursue.

As PMPs and PM leaders, we know better than anyone that there’s no shortage of great ideas within organizations. But going after those opportunities isn’t as easy as it sounds. I call these projects “the golden snitch” with a wink to the Harry Potter series: they seem so bright and shiny we should all chase them. Yet we know well that when we try to do too much with the limited resources we have, every time we add something on, it usually means something else fails.

For example, an organization I once worked with was asked to bid on producing a certain component of a product line for a large national retailer. This was not only “the next cool thing”—it would have meant tens of millions of dollars in increased revenue for the company. Yet when I tested the portfolio’s current projects against the opportunity, it was clear we couldn’t handle the additional work unless several programs were put on hold or dropped.

I had to write the note to the executive leadership team that all PMPs dread sending: “No. We can’t do this with all of the other things on our plate.” Fortunately, I had a solid understanding of resource capacity planning and gathered the right data to prove that it wasn’t possible. I was able to confidently say to the CEO and CFO, “It’s time to decide what’s most important, because this is our capacity.”

Unless you can clearly assess the true capacity of your organization, you’ll continually be tasked with more than you can handle. And until you can irrefutably prove what needs to be put on hold, and what capacity constraints need to break open, you can’t make room for a new project, even if it is the “coolest new thing” for your company.

Resource Capacity Planning Maturity: How to Get There

While being in a state of confident capacity planning is every project leader’s goal, the road to get there definitely isn’t easy. Yet you can start taking measures now to get you closer to better managing resource capacity and more accurately forecasting (and then communicating) what you can take on or what you will need in order to take it on.

One of the keys to successful resource capacity planning is employing a project management automation solution. In fact, a recent survey revealed 94% of enterprise IT project managers and PMO leaders and 77% of project and PMO managers working in the professional services industry reported that resource assignment capabilities were the number one reason they needed project management automation.

What makes project management automation so attractive? It allows PMOs to take a holistic top-down view of the portfolio of projects in their enterprises, and agnostically analyze the inputs of new opportunities, whether those opportunities are truly urgent or simply the “next cool thing” of the loudest executive on the team. This offers the ability to evaluate new opportunities and their accompanying capacity planning from both a time-and-money perspective, but also in terms of strategic impact. When you’re able to do this, you remove risk and have achieved mature resource capacity and true strategic business planning.

Understanding the difference between capacity planning and resource management – and having the power of project management automation tools on your side to aid in analysis – are the keys to being able to confidently say “no” when you need to and happily say “yes” when opportunities have the most strategic heft and likelihood of success.  

Tim Short

Tim Short

As the VP of Professional Services at KeyedIn, Tim brings over eighteen years of project and portfolio management, employee, business leadership and overall customer success experience. He has a track record of proven success in growth oriented and change needed organizations through knowledge and implementation of best practices, strategy, process improvement and change management. He can be reached at Tshort@keyedin.com.

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