Capacity planning for agencies: plan billable hours before you sell them

Capacity planning for agencies means checking, every week, whether the hours your team has will cover the hours your clients have bought and are about to buy. On one side are each person’s available hours, after leave and internal time. On the other is the work, which arrives from three sources: retainers, active projects and the sales pipeline. Done a few weeks ahead, it tells you whether you can take the next brief, who will do it and when, before you promise a date.

Below: where agency demand comes from, a weekly routine, buffers and time off, utilization targets, the signals to hire, bring in freelancers or say no, a worked planning table, and how it looks in PLYNTUM.

Capacity and demand in an agency

The supply side is easy to state: the hours each person can give to client work in a given week. Demand is harder, because in an agency it arrives in three forms, and some are more certain than others.

Retainers are the base load. Plan them first, by role, because they come back every month and clients expect the same people. Active projects come next, at their remaining hours rather than the original estimate. The pipeline is where the surprises come from: a pitch won on Friday expects a team on Monday. Keep likely deals in the plan at probability-weighted hours, so you see the crunch before the contract is signed. If you track deals in a CRM, review the pipeline in the same meeting as the capacity plan.

A weekly capacity routine, step by step

1. Update availability. For the next four to six weeks: leave, public holidays, new joiners, people leaving, and anyone moving to internal work such as a pitch or hiring.
2. Update retainers. Monthly hours by role, next to last month’s actual hours. A retainer that runs over every month is demand you are not planning for.
3. Update active projects. Remaining estimate by role, re-estimated wherever logged hours show the original estimate was wrong.
4. Update the pipeline. New deals, changed probabilities and expected start dates, with hours by role.
5. Compare by role and by week. Available hours against demand for each role, not just for the team. The total hides shortages: ten free developer hours do not cover a design overload.
6. Decide and record. Move a start date, rebalance work, bring in a freelancer, hire, or say no. Write the decision next to the project, with who agreed it.
7. Look back. Compare last week’s planned hours with recorded hours. If recorded hours keep running over the plan, fix the estimates before you add people.

The routine needs one owner and one fixed slot a week, for example Monday morning, ideally after last week’s timesheets are approved. Our guide to the timesheet approval process shows how to get them in on time.

Buffers and time off

Available hours = contracted hours − leave and public holidays − internal time. The team capacity formula is worked through with an example on its own page; here the question is what goes into it in an agency.

• Internal time is bigger than it looks. Pitches, proposals, account management, reviews, hiring and training all come out of the same week. Leads and account managers usually have more of it than specialists. Measure it for a month from timesheets instead of guessing.
• Leave is known early, so plan it early. Summer and year-end leave can empty a whole role for weeks. Put leave into the plan as soon as it is approved, not in the week it starts.

Then keep a buffer: do not plan every available hour. Agency work arrives unevenly: an urgent client request, another round of revisions, a pitch with a three-day deadline. A plan that books every hour turns each of these into overtime or a missed date. Size the buffer from your own history: over the last few months, how far did your estimates run over, and how many unplanned hours arrived each week?

Utilization targets

Capacity planning looks forward; utilization rate looks back, at the share of available hours that went to client work. The two meet in the target: if you plan each role up to a utilization target, the hours left over are that role’s internal time and buffer.

Set targets by role, not one number for the whole team. A designer or developer can spend most of the week on client work; an account manager or creative lead spends much of it on work you cannot bill to a project. Published targets differ because agencies count available hours and client hours differently, so start from your own recorded hours and move the target slowly. The utilization rate calculator shows what each percentage point is worth for your team.

Signals to hire, bring in freelancers or say no

• Bring in a freelancer when the shortage is in one role, for a few weeks, and the work can be briefed clearly: a production peak, a campaign launch, a site build.
• Hire when the same role is short week after week once retainers and signed work are counted, not only in the weighted pipeline, and the shortage stays after you fix the estimates.
• Move a date when the shortage falls on a few weeks and the client cares more about who does the work than about the date.
• Say no, or price it differently, when a new deal fits only by pushing a retainer client’s work late, or when the only way to staff it is overtime for people who are already overloaded.
• Watch the opposite signal too. A role with free hours week after week is either a sales problem or a sign that your mix of roles no longer matches what you sell.

A capacity planning table: an example

This is an example with illustrative numbers, not a benchmark. A 10-person agency plans the next four weeks: 4 designers, 2 copywriters, 2 developers and 2 account managers. Each person has 160 contracted hours in the four weeks. Designers, copywriters and developers each spend 24 of them on internal work; account managers spend 64 each, because reporting, sales and pitches take more of their week. One designer has 40 hours of leave. The plan keeps a 10% buffer.

The pipeline column is one deal: a website redesign, judged 60% likely, that needs 150 design, 40 copywriting, 120 development and 30 account hours if it closes and starts within these four weeks. Weighted at 60%, it adds 90, 24, 72 and 18 hours.

The team total says 27 hours short, which looks like rounding. By role it is not: designers are 56 hours short and developers 47, while copywriters and account managers have free hours that cannot do design or code. Signed work alone fits, with 34 design hours and 25 development hours to spare. If the redesign closes, it needs 150 and 120. So the agency decides before the proposal goes out: offer a start date that leaves room, or line up a freelance designer and developer for the first weeks.

How capacity planning looks in PLYNTUM

PLYNTUM is business management software for agencies and service companies. On every plan it keeps each person’s task assignments, attendance, leave requests with manager approval, and logged time. From the Scale plan, the workload, capacity and resource planning view puts these side by side for each person and forecasts capacity, so you can see who is booked on what in the coming weeks and where a role is over or under. Scale costs $450 a month for up to 25 members, or $360 a month billed annually.

From Core, logged hours become project cost at each person’s own rate, and timesheet approval locks each week, so the look-back step compares the plan with settled hours.

What it does not do: it does not move tasks or dates to resolve overbooking, because a manager decides what moves; it does not match people to work by skill; and it does not read availability from Google Calendar or Outlook. The CRM pipeline does not turn into staffing demand automatically, so you weigh likely deals yourself, as in the table above. See resource management software for what each plan includes.