Why honesty is always the best policy in capacity planning

If new business lands tomorrow, do you know if you have the capacity to take on the work… or not? The answer lies in how realistic you are in your planning.

You can’t run an agency effectively without planning. It would be very easy to say yes to every job that comes along, but then you’re left with an overworked team who simply can’t deliver quality work. And that’s when you stop being a great place to work and when clients start looking elsewhere.

So first and foremost, you need to get to grips with what your true capacity is. Not what you want it to be. Not what at first glance it appears to be. But what, after careful investigation and planning, it genuinely is.

And you do need to put this time in upfront by looking at your utilisation rates. There’s no one-size-fits-all approach. One of the most common questions I’m asked is ‘What’s the average utilisation rate?’. And my stock answer is ‘Why does it matter?’. The truth is, it doesn’t. A good rate for one agency may not be right for another.

Talking capacity

Imagine you have a team of 10 designers and you give each a utilisation rate of 75%. Multiplied by the number of hours they work — that would seem to be your capacity. But there could be a creative director in there who works on new business pitches, which aren’t charged. Or someone who is great at IT so often picks up agency issues. Suddenly, those available hours start to diminish. What you thought was your true capacity is no longer so, and that has a huge impact on delivering projects.

This is why I always advocate having a conversation with each member of your team. Ask them what they do, what’s asked of them, what’s expected of them. Get into the granular detail of their day to day working patterns. This gives you a better buy in from them, as well as creating a clearer capacity picture. You’re not telling individuals ‘this is your utilisation rate’. You’re asking them how you can calculate it.

Having this understanding can put you in a good position to know what projects to take on… or not. You know exactly who does what within each department and it can help you take the right call on what hours to sell. You don’t want teams and creatives so overloaded they burn out. Equally, you don’t want people spending longer on a project than you’ve accounted for, simply because they have nothing else to do. In this case, they achieve their utilisation but you end up with very low recovery rates.

Client budgets can also play a role in capacity planning — and can trip you up if you’re not careful. A lot of the time, agencies reverse engineer from what the client has budgeted. For example, the client says ‘We’ve got a £10k budget’ which could equate to 1000 hours. But you know the job will more likely take 1200 hours. You have to factor this in and be completely honest. Perhaps you’ll take the commercial decision to still take the job or pitch.  But if you don’t account for the extra hours, your framework is wrong right from the start.

People will do the work they need to do, you burn through the hours, but you’re not at a deliverable point. Once you see this happening, it’s really important to revise your estimates so you can get back to the right framework. Otherwise panic can set in.

Good capacity planning is pivotal for any project. And this means planning realistically, honestly, carefully, so there are no nasty surprises along the way.