Capacity planning is matching the hours your team has with the hours your work needs, a few weeks ahead, so you can see overload and idle time before they happen. In a service business it answers three questions: can we take on this project, who will do it, and when.
Below: the difference between capacity, allocation and utilization, how to calculate available hours, a worked example for an eight-person team, a weekly routine, and when a spreadsheet stops being enough. For the rate that shows how much of the time was billed, see utilization rate.
Capacity, allocation and utilization
| Term | What it measures | When you look at it |
|---|---|---|
| Capacity | Hours people can spend on projects in a period | Before the work: can we take it on? |
| Allocation | Hours already planned for specific projects and people | While planning: who does what, and when? |
| Utilization | The share of paid hours that went to billable work | After the work: how much of the time was sold? |
Capacity and allocation look forward; utilization looks back. A team can be fully allocated and still show low utilization if the planned work turns out to be internal or unbillable.
How to calculate available hours
Start with contracted hours and take away everything that is not project work:
Available project hours = contracted hours − leave and public holidays − internal time
Internal time covers meetings, admin, sales support, training and hiring. It is never zero, and it is usually higher for leads and managers than for the rest of the team. Measure it for a month instead of guessing.
Then leave a buffer. Planning every available hour means the first estimate that runs over, or the first urgent request, pushes something else late. A buffer of 15–20% is a common starting point; adjust it once you see how far your estimates usually run over.
A worked example: an eight-person team
A month has 21 working days, so each person has 168 contracted hours. The team has four designers, two developers and two leads. The leads spend more of their week on internal work, and both developers have two days of leave. The plan keeps a 15% buffer.
| Role | People | Available hours | Plannable at 85% | Work booked | Gap |
|---|---|---|---|---|---|
| Designers | 4 | 572 | 486 | 660 | −174 |
| Developers | 2 | 270 | 230 | 240 | −10 |
| Leads | 2 | 236 | 201 | 80 | +121 |
| Team | 8 | 1,078 | 917 | 980 | −63 |
Each designer has 143 available hours (168 minus 8 of leave and 17 of internal time), each developer 135, each lead 118. The booked work is a website build, two retainers and a brand project.
The team total says 63 hours over, which looks manageable. By role it is not: designers are 174 hours short, while the leads have 121 free hours that are mostly not design hours. The options are to move the brand project’s start by two weeks, bring in a freelance designer for about 170 hours, or trim the retainers’ extras that month. The total hides the problem; the roles show it. The figures illustrate the method.
A weekly capacity routine
- Update the pipeline. Which projects are confirmed, likely or only possible, with estimated hours by role.
- Update availability. Leave, public holidays, new joiners and people leaving.
- Compare demand and available hours by role for the next four to six weeks.
- Decide. Move dates, reassign work, bring in a freelancer or hire, or say no. Record the decision with the project.
- Check last week. Compare planned and recorded hours. If recorded hours keep running over the plan, your estimates need fixing, not your capacity.
Signs your capacity planning is not working
- The same people work late every week while others wait for work.
- Projects start late because the team is still finishing the previous one.
- You learn about overload from missed deadlines, not from the plan.
- Estimates are never compared with the hours the work really took.
- Utilization swings from very high to low from one month to the next.
Spreadsheet or software
A spreadsheet works for a small team with a few projects: one row per person, one column per week, hours per project in the cells. It breaks down when projects shift every week, when planned hours have to be compared with recorded hours, and when several people edit the same file. Software helps when planning and time tracking use the same hours, so the plan can be checked against what happened.
The utilization rate calculator and the hourly rate calculator start from the same available hours.
How PLYNTUM helps, and what it does not do
In PLYNTUM people record time against tasks on every plan, and leave requests go through approval next to the workload. Workload, capacity and resource planning are part of the Scale plan: you see who is booked on what in the coming weeks and where the team is over or under. From Core, approved hours become project cost, so estimates can be compared with what the work really took.
PLYNTUM does not forecast demand from a sales pipeline yet, because the CRM is still planned, and it does not schedule people automatically. See resource management and capacity planning.