Agency Mechanics: Resource Planning & Utilisation Maximisation
If you run a digital agency, you and your team probably find yourselves trying to forecast for the future, answering questions like:
“What if we get this client?”
“When will we need to hire our next designer?”
“How many more clients can we bring on with our current team?”
While answering these questions in practice may seem simple, you’ve probably come to understand that it isn’t easy. The resource “plan” is a moving target that’s changing all the time. Just when you think you have it figured out, a project timeline shifts, a client cancels their retainer, an employee hands in their two-week notice, and you find yourself back in the weeds trying to figure out what it all means.
Once again, we turned to Marcel for advice, and not to anyone’s surprise, he did a stellar job of putting things into context.
How top firms approach resource planning using two distinct methods
These frameworks will allow your firm to see far into the future and run scenarios quickly while providing detailed insights into exactly who’s doing what on each client engagement. Don’t forget to download your free copy of The Agency Growth Book to understand Marcel’s analytical framework.
What is Resource Planning?
Resource planning is all about looking into the future to reconcile your planned work against your team’s capacity. There are multiple ways to do this, but this article will focus on the two most effective strategies: Top-down Resource Planning and Bottom-up Resource Planning.
Setting The Groundwork - What can you expect from the full article?
Why is Resource Planning Important?
High-level Overview of Agency Profitability
How Resource Planning Impacts Profitability
How to do Resource Planning & Forecasting
“The obvious reason why resource planning is critical for your team’s success is to ensure nobody is being overworked. If you’ve committed to delivering a service, someone is going to have to make that happen.”
Top-down Resource Planning
The top-down approach is a higher-level, broad approach that examines resources on a weekly, monthly, or quarterly basis. It will help you quickly run scenarios around hiring decisions or changes to your planned work.
This is a great way for an executive team to gain long-term visibility and make directionally accurate staffing decisions.
This strategy's advantage is that it is significantly lower-friction, easy to maintain, and easy to run scenarios in.
The downside is that it’s not quite as precise as its bottom-up cousin, so it doesn’t answer questions about who will be doing exactly what on a given day.
The steps detailed in Marcel’s article provide examples and insights with simple vs. precise methods depending on the use case:
Analyse the demand
Evaluate existing capacity
Identify the gap
Implement and monitor
Bottom-up Resource Planning
Bottom-Up is the more detailed and precise method for forecasting. It’s best suited for looking at shorter time horizons like days and weeks.
It’s excellent for helping project and delivery managers understand precisely who will work on what in the next few days or weeks.
The advantage of bottom-up is that it is precise and can help delivery managers and teams understand what they do daily.
The disadvantage of bottom-up resource planning is that it is significantly more frictional and much more difficult to maintain.
Because of all this operational drag, it’s also very slow and painful to try to run scenarios and model broad time horizons.
We recommend firms start with Top-Down forecasting and use it to get directionally accurate visibility into the future. Then, when they have a project or delivery manager in place who can own that process, they employ bottom-up resource planning to plan for work that is “mature” (has been sold and scoped).
Similar to the Top-Down resource planning framework, the same 4-step approach applies.
Strategies for Improving Agency Resource Plans & Utilisation
There are a few common techniques that you and your team can practice to optimise your resource planning process:
Resource Leveling
This is modifying project schedules to balance resource demand more evenly, typically achieved by changing task start dates, altering task durations, or rearranging project activities. The aim is to prevent resource bottlenecks and ensure more consistent utilisation by redistributing workload across time.
Resource Smoothing
This method seeks to maintain a steady resource utilisation rate by modifying resource availability or capacity. It includes adjusting resource availability, often by implementing capacity limits within specific timeframes, with the goal of sustaining a more uniform resource demand. This minimises fluctuations and prevents extreme peaks and troughs in resource allocation.
Time Boxing
Another handy technique is timeboxing. It’s like scheduling specific blocks of time for different tasks, which helps you stay on track and really concentrate on what you’re doing. This way, you can better prioritise your work, get more done efficiently, plan your resources effectively, and boost your productivity.
Closing Remarks
You would be surprised at just how much money your agency is leaving on the table by underinvesting in a proper resource planning system.
Choose a technique that fits your team’s capabilities and product maturity, run with it, and continue to monitor it as time goes on. That way, you can rest assured that your company is running like a well-oiled machine.
