GARA, ALDRIN DAVE GARCIA, ISABEL VICTORIA

Capacity Management and Capacity Planning

• Intro and 3 types of capacity

  Capacity is a measure of the amount of work that can be accomplished by a business within a fixed
amount of time. It's measured in terms of the number of resources or staff members that are available
to complete a project within a certain period.

Capacity is the maximum output rate of a production or service facility.

Capacity also includes

Equipment Space Employee skills

Capacity management and capacity planning are similar but different. It’s easy to want to use the words
synonymously since, at their core, they are both parts of an overarching strategy seeking to solve the
same problem: how can a business ensure they operate efficiently enough to always have the capacity
to meet evolving demands?

Capacity management is a project management (management of a project, management of capacity)

and resource allocation technique. By using capacity management skillfully, organizations dramatically
raise the chances that the availability of team members (and freelancers) ready for work can match the
demands for their professional skills to be used to meet strategic goals.

Using capacity management allows project managers and other resource-concerned roles to turn what
normally falls to guesswork and intuition into a more scientific endeavor. With proper capacity
management, organizations can ensure that they are ready to meet the demands of upcoming projects
or customer/stakeholder needs, but without risking the chances of overstaffing or overbooking their
talent pool.

What is capacity management?

In the world of project management, capacity management is a process used to predict project needs
and then allocate available talent strategically. The primary goal is to match supply with demand, within
budget constraints, with a secondary goal of avoiding over-extending talent and over-investing time
when not needed. 

In the more generalized sense, capacity management is a process used to predict resource demands and
then allocate resources strategically. The primary goal is to match supply with demand, within budget
constraints, with a secondary goal of avoiding overspending on allocating resources that are not needed.
While some organizations try to diligently match supply with demand perfectly, the reality is that there
are pros and cons to this strategy (which we will dive into further below). Those engaging with the
capacity management process should strive to understand their goals and their budget constraints. They
should also set contingency plans for cases when the number of people (or, more generally, the
available supply of resources) cannot keep up with project demands or if there are too many people (or
an oversupply of resources) compared to the current levels of demand.

In a nutshell, the process of capacity management involves:

Measuring current resources to derive your current capacity

Understanding what resources could be procured and how that will affect (add to) your current capacity

Accounting for demand to utilize your capacity, including forecasting known or likely future demands

Strategically allocating resources to meet your desired level of capacity (many strategies are available,
only a few of which attempt to meet demand exactly)

Monitoring final capacity usage, making note of how your actual productive capacity and demands did
not meet your estimates

Recalibrating benchmarks as you measure your current capacity and demands, starting the process over

What Is Capacity Planning?

Capacity planning is a process that balances the available resources to meet

customer demand or the project capacity requirements. Capacity, in project
management and manufacturing terms, is the most work that can be done
over a certain timeframe.

In project management, the capacity planning process is very important

because it’s related to critical project management knowledge areas such as:

 Resource management

 Time management
  Team management

 Work Management
Capacity planning is a type of production planning that involves
determining production capacity and workforce needs to make sure
your supply chain is equipped to meet demand. Capacity planning lets
businesses know how and when to scale, identify bottlenecks, create
better design capacity, and mitigate risk, within a planned period of
time.

Capacity planning in operations management is the process of balancing demand for a good or service
with the ability of a manufacturer or organization to produce enough to meet demand.

2 Defining Capacity Capacity is defined under 3 categories; design capacity, effective capacity and actual
capacity. The operations utilisation of resources and the efficiency of its processes can then be
calculated using these. 3.2.1 Design Capacity This is a theoretical number and not one that is applied to
the daily production of an operation. Design capacity is the output that an operation can produce
continuously, at maximum rate without stopping for any shift changeovers, maintenance or any other
delays. What the process is capable of producing under perfect conditions. In some cases this might be
interpreted as maximum capacity. 3.2.2 Effective Capacity This considers how the operation will run on a
long term basis, how it will be staffed and how it will be maintained. All planned stoppages under the
normal working time frame are taken into consideration. This can also be known as available capacity.
These stoppages may include shift changeovers, lunch breaks, set up times and many other operational
factors. 3.2.3 Actual capacity This is the same as effective capacity but contains unplanned losses as well
as planned ones. These could include poor work rate, absenteeism or new staff training for example.