Resource Planning: A Formula for Success
Resource capacity planning can help you overcome project-related roadblocks, ensuring you have the right resources at the right time with the right people. But is there an actual resource capacity planning formula for success?
Well, yes. By using this formula, you can accurately figure out the number of employees, hours, and skill sets you need to complete a project, meaning no more overworked staff, overspent budget, or underused assets.
In this article, we'll discuss the key elements of the resource planning capacity formula and how you can use it to get the best results possible.
What is resource capacity planning?
Resource capacity planning is the process of identifying the resources you need to complete a set of tasks or projects, and ensuring those resources are available at the right time. This typically involves choosing the people with the best skills and expertise for each task, as well as the tools and equipment you need to get them done.
Capacity planning can help your business in several ways. By ensuring that you have the resources you need to complete your projects on time, you can avoid delays, overspending and overworking your employees, which can improve your overall efficiency and productivity, as well as your reputation with customers and stakeholders.
In addition, developing a resource capacity planning formula can help you optimise your resource utilisation, which can help you save money and boost your bottom line. You can also make adjustments to your staffing or equipment levels easily to get the most out of your team and assets, without overloading people with responsibilities.
Resource capacity planning formula: How to calculate resources
The resource capacity planning formula uses various important variables. The most important is known as the Full-Time Equivalent (FTE). FTE is a unit of measurement that indicates an individual's capacity or availability to work during a specified time period. Resource conflicts are common. However, they’re most likely due to how you’re calculating FTE.
How to calculate Full-Time Equivalent (FTE)
To calculate FTE, you need two factors: the full-time hours for your company and the number of hours an employee works. Of course, full-time hours will vary depending on your location and industry. For example, holidays in the UK may differ from the US, while some industries may consider weekends as working days when others don’t.
First off, to calculate full-time hours for your company, you need to determine which days are workdays, which are holidays, and how many hours per day your employees normally work.
In the UK, the average full-time work week is about 40 hours, but that might not apply to your specific company. For instance, your office may close early on Fridays, or some team members may work longer days.
Once you’ve defined full-time hours, you can calculate an employee's FTE by dividing the number of hours they work by your full-time hours. So, an employee working 40 hours a week in your company – which defines full-time hours as 40 hours – would count as 1 FTE.
As you know, no two employees are truly the same – some may work longer than others, meaning someone may count as more (or less) than 1 FTE.
In that case, someone working 45 hours one week instead of your company's full-time 40 hours would count as 1.13 FTE. Conversely, part-time employees would count as less than 1 FTE.
FTE and Availability
Employee absences play an important role in the resource capacity planning formula. In the UK, the average number of annual sick days is 4.6 days per employee. To help you get the most out of the formula, we recommend entering employee absences in your project management tool as soon as they’re planned.
If an employee takes a full week of holiday, their FTE for that week would be 0. But don’t worry, long weekends and spontaneous absences are usually manageable for most projects.
Let's say one of your employees works five full-time days, which is 40 working hours, but they take a day off during one week. That means they work 32 hours for that week. As a result, their capacity for that week is 0.8 – instead of 1 FTE.
By factoring in that person’s FTE of 0.8, and assigning projects that only require an FTE of 0.8, you can plan accordingly and avoid overloading them with additional projects by 0.2 FTE.
How many employees does your project need?
The next step in the resource capacity planning formula involves determining the number of employees you need to start and finish projects on time. This starts with accurately calculating your total FTE.
You can calculate the total FTE required for a project by dividing the number of Person Days (PDs) – or the number of days required by an individual to complete the project – by the project's duration (in days).
After calculating the project's FTE, you can figure out exactly how many employees you need by dividing the FTE by the total FTE of all the employees. Assuming that full-time employees have an FTE of 0.8, the project's FTE would be divided by 0.8 to determine the number of employees you need for that project.
Let's say your next project needs 10 PDs, and will take 5 days. The project's FTE is 2 (10 divided by 5). Dividing 2 by 0.8 gives 2.5, which means you’ll need two full-time employees and one part-time employee to complete the project.
Better yet, you can adjust the distribution of employees, whether you want one full-time and three part-time employees, or two full-time employees and one part-time employee working half of the project. The resource capacity planning formula can be flexible to suit your specific needs and budget.
Resource capacity planning formula best practices
As with any business strategy, there are best practices you should follow in order to get the most out of your resource capacity planning. Our top recommendations include…
Monitor Real-Time and Effort
To make accurate forecasts, you need reliable data. You need to understand the actual time and effort required to complete tasks at a high standard, which is where the resource capacity planning formula comes in.
Failing to accurately estimate these factors can result in inaccurate resource demand assumptions, so, we recommend encouraging members to track their time while performing tasks to help you get accurate data. Using resource management software, such as Retain, makes this all super easy.
Keep Competency Information Up-to-Date
As we’ve said, accurate planning needs up-to-date information, which includes the competencies of your resources. Whether people with key skills have left, or others have recently have been trained in something new, it’s a good idea to stay informed about the competencies available at any given time to anticipate any challenges in getting the skill sets you need.
We recommend holding meetings at the beginning of your projects to highlight people’s experience and strongest skill sets.
Identify Potential Bottlenecks
Bottlenecks can happen for a number of reasons, such as lack of personnel, equipment or skill set. If, for example, you increase worker capacity but fail to expand your number of machinery, this part of the process will become a bottleneck. To counter this, we recommend being proactive in identifying and addressing potential bottlenecks before they come about.
Utilise Multiple Inputs for Capacity Planning
The resource capacity planning formula involves multiple factors, including the person-days, working hours and locations of your resources. Consider each resource and its true capacity when planning for demand.
Allow for Potential Mishaps
Roadblocks happen. However, by including time for potential mishaps in your capacity planning, you can build in some contingency time. The worst case scenario here is that you finish early. Great! In contrast, planning resource capacity down to the last meticulous hour may leave you vulnerable to unforeseen circumstances, such as last minute holiday requests.
Calculate True Work Availability
Your contracted team members may be available for eight-hour days, but they won’t necessarily be doing ‘actual work’ the entire time. You should always consider the time they spend on work-related tasks, like replying to emails or attending meetings, which should help you take appropriate action to reduce non-productive activities.
Account for Industry Dynamics
Each industry has its own unique client demands and resource skills, and your specific resource capacity planning formula needs to reflect this. Things like project scopes, task durations, and resource availability will vary, so make sure you account for the specific dynamics of your industry to help you hit your targets on time.
Resource capacity planning formula: Roundup
Effective resource capacity planning is crucial for your business to deliver projects accurately, on time, and within budget. Thankfully, the resource capacity planning formula should set you up for success.
Alongside the formula, you also need to implement strategies like time-tracking, identifying bottlenecks, and allowing for potential mishaps, among other best practices.
To help you nail your projects first-time, we also recommend using resource management software to stay on track of all your assets and resources, ensuring you’ve the right people, with the right skills, in the right place, at the right time, and with the right amount of work to do.