tech
Capacity Planning
Matching delivery capacity to expected demand. The discipline that prevents over- and under-staffing.
Definition
Capacity planning is the process of estimating how much delivery work you can produce (capacity) vs how much you have or expect (demand), and making the hires/cuts/process changes to align them. Under-capacity means missing deadlines, burned-out team, lost customers. Over-capacity means margin compression. Service businesses are particularly exposed to capacity mismatches because delivery is people-time and people-time is lumpy (you can't half-hire). Forecasting capacity 2-3 months out, with a margin of safety, is the standard discipline.
In your business
- →Forecast capacity 2-3 months out - too short and you can't react, too long and the forecast is unreliable
- →Build in 15-20% capacity buffer for surprises (sick days, faster-than-expected ramps)
- →Track capacity utilization - sustained above 85% means people are about to burn out