Optimising Your Agency's Capacity Planning
Time and money are two things that agencies don't want to waste. Optimising your capacity planning can help you get on top of both.
Putting it simply, capacity planning is the process of matching your agency's resources and capabilities with your expected workload. With a proper strategy in place, you'll know when your team can take on more work, when you should look for a new hire, and even if you're utilising your team optimally.
To optimise your capacity planning strategy, you'll need to consider a few key pillars upon which it will stand strong, and this short capacity planning guide can serve as a framework.
The Key Pillars of Capacity Planning
The first pillar you should consider when devising your capacity planning strategy is your billable hours. Those are the number of hours that your teammates spend working on a client project that are then charged to the client.
Once you know your billable hours, you'll be able to calculate your agency's utilisation rate by dividing your billable hours by the total hours spent working. A good utilisation rate means that you're using your resources efficiently. Most agency professionals agree that the optimal utilisation rate is between 75% and 80%, which indicates that employees are efficient and profitable without being overworked.
Another key pillar of capacity planning is forecasting. Workload forecasting allows you to set aside the necessary resources and ensure you deliver client projects on time. Revenue forecasting is the practice of predicting the future income of your agency based on billable hours, cost rates and client contracts. Forecasted revenues make it easier to see and understand what needs to be adjusted to achieve optimal revenue flows.
The last of the three would be project management. Effective project management warrants that client projects are delivered on time and within the budget budget. This includes overall project management as well as task management.
Developing a Capacity Planning Strategy
To develop and successfully implement a capacity planning strategy, you should consider your current position and where you want to be in the future. You'll also have to identify the resources you'll need to bridge the gap between where you are and where you want to be.
Here are some steps you can follow while creating a capacity planning strategy:
Assess Needs and Resources: Understand your agency's business goals, forecast demand, and evaluate current resource capacity.
Allocate Resources Strategically: Develop plans to allocate resources based on forecasted demand effectively.
Implement Monitoring Systems: Install monitoring mechanisms to track resource utilisation and performance against targets.
Review and Adapt: Regularly review and adjust the strategy based on updated data and feedback.
“We’re able to see our schedule out for the next three months easily, and I can put in tasks where I know we have work coming up. That allows me to make sure that I’m not overbooking people, or it lets me know where people are overbooked and that I need to get some resources to help us out with the workload.”
To make things more manageable, you can consider investing in an agency management tool like Productive. A scalable platform for agencies of all shapes and sizes that lets you consolidate data in one place, run projects from prospect to payment and everything in between and use one tool for complex budgeting, and resource planning. Productive can give you all the data you need when forming a capacity planning strategy.
The Benefits of Capacity Planning
There are many strategies that can help you grow your agency, but capacity planning integrates project management, budgeting and resourcing which are three critical aspects of any business. By implementing a robust capacity planning strategy, you can align your resources with demand, improve project management efficiency, and maximise financial performance.
Optimising Resource Allocation
Having all of your data in one place makes it easier to see how your projects, budgets and staff connect, which, in turn, helps you make data-driven decisions. Having well-balanced resources is crucial for the growth of your agency. By optimising resource allocation and scheduling, you can reduce unnecessary strain on your resources, leading to increased efficiency and cost savings in the long run.
“That’s a key thing that we get out of the reports that really feeds into our utilisation and resourcing. If we know we’re doing 30% on internal projects, then we know we’ve got the capacity to take on more client work.”
Improving Project Management
Once a capacity planning strategy is in place, project managers can accurately anticipate project demands and delegate tasks based on their team's availability and skills. Considering that most project managers handle multiple client projects at the same time, it's crucial that the resource plan allows for easy context switching and resource reallocation.
Financial Benefits
Some of the key financial benefits of capacity planning include:
Better Financial Forecasting: Capacity planning provides crucial data that enhances accuracy in financial forecasting and budgeting.
Profit Maximisationutilisation: By aligning capacity factors with demand, agencies can maximise their revenue potential and save on costs.
Reduced Risk: Effective capacity planning minimises financial risks associated with poor use of resources.
Ensuring Sustainable Growth for Your Agency
Optimising your capacity planning isn't just about managing time and money; it's about ensuring sustainable growth and operational excellence for your agency. Through strategic allocation of resources and proactive monitoring, you can navigate challenges and seize opportunities with confidence. By investing in the right tools and processes, such as agency management tools like Productive, you can streamline your capacity planning efforts and unlock new levels of productivity.
Take the time to develop and refine your capacity planning strategy—it's an investment that will pay dividends for years to come.
