Capacity planning ensures that you’re matching what you need with what you have before your project kicks off. It helps you deliver work on time, on budget, and on scope.
Imagine receiving a request from a high-profile client for a new app development project. It has a tight deadline, so you check your team's availability before committing to the project.
But, you quickly realize that understanding your team's current capacity is near impossible. You have team members working on multiple projects simultaneously, and it's challenging to determine who has the bandwidth for new work. You find yourself relying on vague estimations, hoping everything will turn right.
“Guesstimations" are a common approach to planning capacity for many teams. According to the 2022 State of Resource Management Report, 75% of respondents recognize the need to develop better processes for capacity planning. If you want to consistently deliver projects on time, keep workloads balanced, and have happier teams, capacity planning should never be left to chance.
In this article, you’ll learn how to create capacity plans based on data and find the right people for high-impact tasks and initiatives.
What is capacity planning?
Capacity planning is the process and practices for assessing team availability, forecasting resource demand, and making smart decisions to balance demand with the supply of resources.
It aims to prevent uneven use of resources and ensure that the correct projects receive priority and have sufficient staff.

Emily Feliciano
Creative Resource Manager at Atlassian
To me, at a high level, capacity planning is a strategic approach to understanding and actioning supply vs. demand to help maintain and grow the business.
It is understanding the nuances of what a company's needs are, who the resources available are, what skill sets we have at our disposal, and which micro and macro timelines or budget constraints we are limited to.
Project managers and resource managers who master capacity planning have a comprehensive understanding of their team's true capacity. They understand that capacity planning is a team effort and involve team members in the process. This approach enables them to prioritize projects effectively and allocate the right people to high-impact tasks and initiatives.
Types of capacity planning
Capacity planning can be long-term, medium-term, or short-term. Usually, organizations use a combination of three types.
- Long-term planning: This is planning based on your organization’s project growth and expansion. For example, your organization has the goal of increasing your customer base from 50 to 500 in one to two years. So, you might need to also increase your headcount and hire for new kinds of skills.
- Medium-term planning: This focuses on incoming projects and ongoing initiatives. For example, you might have two new projects set to start in the next quarter and a backlog of three projects. You’d need to plan how to schedule resources across the different projects.
- Short-term planning: This is the day-to-day planning required to keep projects running smoothly. It could be fulfilling a resource request for a website project that needs two new backend developers.
What is the difference between capacity planning and resource planning?
Capacity planning is a broader, strategic process focusing on managing resources and balancing resources with business demands. On the other hand, resource planning is a more specific and tactical process, addressing allocating and scheduling resources for individual projects to ensure successful project delivery.
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Try for freeLead, Lag, and Match: The three strategies in capacity planning
Organizations use the following strategies for resource capacity planning:
1. Lead strategy
Lead is increasing capacity in anticipation of increased demand. It envisions that you're going to be filling your project pipeline quickly.
The lead strategy is aggressive. It assumes that you will have more projects than you currently do (or have in the past), which requires you to hire more staff so you can take on more work.
For example, you hire more servers for your restaurant during the holiday season.
✅ The benefit of this strategy is that you'll have a team ready to take on the work when it comes in.
⛔️ The downside? If those extra projects never materialize, your business will have made a large investment in excess capacity that you don't need.
2. Lag strategy
This strategy is more cautious. Capacity is increased after the demand for resources surpasses availability. For instance, an agency that only hires new staff when the team is 100% is operating a lag strategy.
✅ Lag is a safe capacity planning strategy that cuts down the risk of hiring staff you don’t need.
⛔️ It can lead to overworking your team, increasing burnout, and delivering projects late.
3. Match strategy
The match strategy takes into account your team's current availability while keeping one eye on the future. It tracks your capacity and resource utilization and gives you the option to increase your capacity when you have resource constraints.
For example, if your team is working at a utilization rate of 80%, it's a sign they're handling their tasks without being overworked. However, if that utilization rate creeps up to 90%, your agency can hire freelancers to ensure the workload doesn't impact your team or clients.
✅ Whether it's looking for external contractors or making more permanent hires, the match strategy means you aren't hiring talent without a need for them.
✅ It also gives your organization room to grow. If the work is there, you can comfortably accept it and be confident that your team can get it done.
Plan projects in advance by creating tentative projects in Float. You can schedule a project with phases, milestones, and resources set out and see what you’d need and if they are available when needed, enabling you to make informed decisions.
Why is capacity planning important?
Planning your team's capacity is key to achieving successful project deliveries and avoiding disappointing clients and overstretching team members.
1. It supports proactive planning
Capacity planning enables you to proactively plan for changes in your team’s workload.
According to Jacqui Ford, Head of Operations at ThinkerBell, “Capacity is critical for understanding your resourcing needs. Understanding capacity means you’re going to be on the front foot when you need to either scale up or down based on volume and forecast volume.”
You are prepared at all times to adjust resources based on varying volume and forecasted demand.
2. It helps avoid overwork
In a Gallup survey of employees in 2021, 41% of respondents indicated that they worked for up to and more than 44 hours per week.
Often overloaded employees stay back at work to complete their tasks leading to higher rates of stress. Planning your team’s capacity ensures that people are allocated work that they can do within their work hours, leaving them time to rest and destress.
3. It leads to realistic schedules
Sixty-six percent of organizations regularly miss their deadlines. A regular culprit for missed deadlines is unrealistic timelines set at the beginning of the project. This happens when capacity is not considered and due dates are set arbitrarily with the expectation that team members will deliver their work.
Capacity planning ensures that all schedules are grounded in reality, increasing the chances of finishing projects on time.
4. It improves hiring decisions
A big hurdle for businesses like agencies is having enough resources to get the job done well, on time, and with minimal stress.
Imagine your agency is fully booked for the next six months. With capacity planning, it's easy to calculate if there are enough people available with the right skill sets to complete projects.
Knowing this information in advance gives you time to hire more staff or look for freelancers to fill the gap.
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Float manages your team’s capacity on autopilot. Get a high level view of your team’s workload, availability, and project pipeline to plan resources with confidence.
Try for freeChallenges of capacity planning
Capacity planning involves determining your team's availability at any given momen, identifying the business needs, and making smart decisions to optimize resource allocation. Due to this complex process, challenges are bound to arise, especially when you use disparate spreadsheets or tools.
No visibility into future capacity
One of the most common challenges project managers face is the uncertainty surrounding their team's future capacity.
Forecasting becomes arduous when you are unaware of factors like scheduled time off or upcoming projects in the next quarter. This lack of clarity often comes from decentralized scheduling and isolated planning, where capacity information is scattered across different sources.
Using spreadsheets
Tracking capacity in spreadsheets is like trying to roll a boulder up a hill– it's unnecessarily hard work. Spreadsheets are not made to handle the dynamic nature of projects, where schedules and timelines frequently change. And because manual updates are slow and prone to errors, the information is not as reliable as it should be.
Also, spreadsheets often live in isolation, disconnected from other project management tools, calendars, or resource management software. The lack of integration means they do not provide live and up-to-date information about resource capacity or project requirements. This makes it impossible to make the right decisions or allocate resources correctly.
Inaccurate expectations of capacity
Capacity is often misunderstood. For instance, in an organization with a 40-hour work week, the expectation might be that everyone is available to work for 40 hours. However, in reality, people typically spend less time on actual project work.
Consider the various factors that occupy their time, such as time off, meetings, administrative tasks, and other work-related activities. These responsibilities can significantly reduce the available work hours for project-related tasks. Additionally, unexpected events like sick days and family emergencies can further impact their work time.

Michael Luchen
Director of Product at Float.com
It’s important to understand your organization’s baseline capacity when it comes to planning projects. Think of admin and management tasks they might have to do. For example, if the design lead has to do admin work for an hour or two a day and then meet with team members for another hour, that should be allocated on their schedule.
When resource managers fail to consider these factors, their baseline capacity calculations become inaccurate, leading to skewed schedules and unrealistic expectations.
The unpredictability of projects/environments
Some industries have unpredictable demand. For example, if you are running an agency, you might experience periods of dry spells with minimal incoming work. Conversely, there will be other times when you have a waitlist of potential clients, but you are unable to onboard them because your team is working at capacity.
Furthermore, in certain cases, you may encounter projects that have never been attempted before, requiring the rapid hiring of new skills to meet the project's demands. The absence of a point of reference for expected demand makes capacity management and planning exceedingly difficult.
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Emily Feliciano
Creative Resource Manager
Atlassian
Emily is an experienced Resource Manager in the creative design, brand, and advertising industries. She's an expert at managing rhythmic chaos and a gel pen enthusiast.
What are some tips you could share about capacity planning?
I know capacity planning seems like science, but it truly is an art form to me.
Expect change and build trust. The key to my success has always been getting to know my team on a personal level. Most people aren’t in the room when the project plans or budgets are being committed to, so being trusted as an advocate for both the individual and business is a huge privilege. That, in turn, allows my strategic recommendations on resource allocation, team dynamics, or hiring needs to be more impactful.
The software and tools for capacity planning are relatively interchangeable. What works is being highly organized, adept at multitasking, understanding business goals and impact, quantifying utilization, and a willingness to take risks.
What mistakes have you noticed people make when making capacity plans?
I would say not considering team cohesion is one. You can’t always ensure everyone will like each other, but it does impact project health, speed, and delivery.
Also, understand that change is inevitable. Capacity planning is a constantly ongoing process; sometimes, people are unhappy with how tumultuous it can be. You can’t be too precious with outcomes because inevitably, something will shift, whether that’s a new higher-paying client taking priority, turnover in the org, or changes in deliverables. You have to be flexible.
How to plan your resource capacity in 5 steps
To plan the capacity of your team, follow the steps below:
- Determine existing and incoming project work
- Determine the current and future capacity of available resources
- Determine the difference between demand and resources available
- Decide how best to close the gap
- Take into account your people’s needs
1. Determine existing and incoming project work
What work is your team doing right now? What work would they need to be doing in a week, a month, or a year from now? It is essential to determine both the current and future demand on your resources to understand their existing commitments and upcoming responsibilities.
To find this information, you can look in two places. First, speak directly to team members about their ongoing tasks and immediate future projects. Second, review your project management tool to identify ongoing projects and their timelines. In larger companies, where speaking to individual team members might be impossible, meet with managers and department heads to gather insights about ongoing projects.
Once you have a grasp of current and ongoing work, the next step is to gather information about potential future projects or tasks.
If you work in an agency or service-based business, consult the sales department or account managers to find out what upcoming deals are in the pipeline. If you work in a product-led company, speak with the product team to learn about upcoming feature releases.
Additionally, consider any backlog of tasks that might be postponed for later execution, as these could resurface as future tasks. Don't overlook tasks within ongoing projects slated for the future; these should also be accounted for in your capacity planning.
Finally, consider your company's plans for growth and expansion. Find out if there are plans in place to increase customer acquisition, develop additional features, or capture a new market segment. Such ambitious plans could lead to an increase in demand for your team's time.
2. Determine the current and future capacity of available resources
Next, determine your team's availability and assess the type of work they can do.
Examining time constraints and skillsets ensures the allocated work matches your team's capabilities. You want to avoid situations where team members have availability but lack the skills to do the work, or vice versa.
Look into your resource pool to understand your team's roles, skills, and specializations. For instance, in Float, you can filter team members by tags, such as department or roles.
Next, look at your project schedule to see how much time your team is allocated to tasks. How many hours are allocated to projects? What are their utilization rates? Is anyone overbooked? Are team members on the bench waiting to be assigned work? Who has a public holiday coming up?
Float’s visual schedule displays all this information so that you can tell who is available and who is not at a glance. You can also choose specific time durations to see capacity, now and in the future.
When considering the time your team has, it's best to take a holistic approach by considering project and non-project work.
Meetings, lunch breaks, email and Slack communications, and administrative duties can consume a significant portion of their workday. According to Asana's 2022 Anatomy Of Work Global Index, these non-project activities account for approximately 58% of a typical workday.
Additionally, consider factors like scope creep, project delays, team dynamics, and accelerated timelines, as they can impact the duration of current projects and reduce your team's availability.
This process should involve the team members too. If you lead a small or medium-sized team, you could speak to them in 1:1s or have async conversations about their availability. For larger teams, speaking to department heads and managers to get an idea of team capacity would be more practical.
4. Decide how best to close the gap
Your analysis might reveal an imbalance between the available resources and the organization's needs.
If your team is overwhelmed with an excessive workload, you may need to prioritize high-impact projects and allocate resources accordingly.
For instance, when a new project comes in, and the team is already swamped with work, Feliciano tries to determine the project's priority. She asks questions like:
- What is the priority of this work?
- Is there a huge budget attached?
- Are we mending a broken relationship with a client we really want to salvage?
- Is this a new opportunity to partner with a client we have been seeking for a long time?
- What is the level of importance of getting this work accomplished?
- Is there flexibility in the timeline for us to deliver?
If the project must proceed, Feliciano identifies the best-suited team members and negotiates timelines for ongoing work. “9 times out of 10, I am able to push out project timelines to accommodate new work. Especially if I have leadership backing or if I can explain the client is paying a lot of money for the work,” she says.
Suppose your team faces resource constraints and they are stretched beyond capacity. In such a situation, one option to consider is hiring freelancers to ease the workload and meet deadlines. Feliciano explains, "If there is no option or wiggle room with the current staff, then I turn to freelance/contract options. But I always try to make it work with internal staff first."
Conversely, if your team is experiencing underutilization, you have the opportunity to take on more work to maximize their time and productivity.
5. Take into account your people’s needs
When it comes to planning capacity, remember that your team members are not just resources but individuals with unique needs and preferences. Feliciano emphasizes the significance of considering factors such as individual working styles, communication preferences, time zones, personal commitments like family, and opportunities for career growth and development.
"For instance," Feliciano explains, "when I am planning our team's capacity, I know some people have kids they like to be home and have dinner with after work. When I'm considering a project that might require late night work or unexpected weekend work, I try to ensure that we aren't constantly stacking work on those people.”
Why do teams need tools dedicated to capacity planning?
Capacity planning can be quite challenging as it involves assessing the team's capacity, forecasted demand, and making decisions to balance demand with supply. Adding disparate spreadsheets into the mix only complicates matters, making it harder to keep track of who is working on what and who is available for new projects. This is where resource management software comes in.
Float provides a visual view of capacity, offering a quick glance at team members' availability, overbooked situations, and utilization rates. You can easily view your team's capacity for any given time period, making planning more efficient.
It also gives you a live view of your team's resource availability, integrating meetings, planned work, time off, and custom work hours into the schedule, allowing you to accurately gauge their true capacity.
With Float, you can import public holidays and add custom public holidays along with your leave policies. This enables your team to request time off while considering the scheduled work and their leave balances. Time off approvals can be managed directly on the Float schedule.
Reports in Float provide a comprehensive overview of your team's available hours (capacity) compared to their scheduled hours (assigned tasks), empowering you to make data-driven resource decisions.
If you're ready to start planning your team's capacity more effectively, give Float a try for free.