The Ultimate Guide to Capacity Planning

Ruth Hadari
Ruth Hadari
Agile Advocate, Engineering Ops Expert
Posted on
Aug 3, 2022
Updated on
Aug 3, 2022
Table of Content

Agile teams need to be able to respond quickly to changes in customer demand. To do so, they need to have a good understanding of their team's capacity. Imagine you are a consultant helping a team to understand and plan their capacity.

You might think that planning capacity is all about ensuring that there are enough people with the right skills in the right place at the right time. And while that's certainly part of it, there's much more to consider if you want to do it effectively. In this guide, we'll cover everything you need to know about capacity planning, from understanding your team's velocity to using historical data to predict future demand.

What is Capacity Planning?

Capacity planning is the process of determining how much work your team can realistically accomplish in a given period. It's about understanding both your team's current capabilities and its potential for growth.

There are two main types of capacity planning:

Long-term capacity planning: which looks at high-level trends to identify areas where your team will need to grow or make changes in the future.

Short-term capacity planning: which uses data from past iterations to understand how much work your team can realistically accomplish in the upcoming iteration.

While long-term capacity planning is important for setting the overall direction, short-term capacity planning is what will help you day-to-day. That's because it's based on data from past iterations, so it gives you a more accurate picture of what your team can actually achieve in the near future.

Calculating how many resources you'll need to satisfy demand is known as capacity planning. This "demand" may be for the upcoming week, the upcoming season, or even the upcoming year.

Capacity planning includes, among other things:

-   Determining how much work can be accomplished by your current staff

-   Identifying areas where additional staff may be needed

-   Deciding when new hires should start

-   Planning for employee vacation and other time off

It's important to note that capacity planning is not the same as forecasting. Forecasting looks at historical data to make predictions about the future, while capacity planning is more concerned with understanding the present so that you can make informed decisions about the future.

Benefits of Creating a Capacity Plan

A successful capacity planning process, both short and long-term, will help your team in several ways:

Making better use of your team's time

If you know how much work your team can realistically accomplish in a given period, you can avoid overloading them with too much work. This will help to improve both their productivity and their morale.

Avoiding unrealistic deadlines

If you know your team's capacity, you can avoid the risk of failure by setting unrealistic deadlines. This will help to improve both the quality of their work and their relationships with other teams.

Keeping track of self-organizing teams

If you are using Scrum or another Agile methodology, your team is likely to be self-organizing. This means that they will need to be able to adjust their own workload based on the ever-changing needs of the project. Capacity planning can help self-organizing teams keep track of their progress and make sure that they are not taking on too much work.

Keeping track of distributed team

If your team is distributed, you will need to be able to trust them to manage their own workload. Remote teams can find it hard to be in sync with one another when it comes to managing workload, but capacity planning can help align the team on how much work they need to be doing to satisfy user demand. 

Preparing for future growth

As your business grows, you will need to be able to adapt your capacity planning accordingly. This includes adding new members to your team and making sure that your existing team has the resources they need.

How to Make a Capacity Plan

It's incredibly easy to calculate and plan your capacity using this method for anything from individual servers to your entire data center.

1. Plan the Sprint’s capacity 

The first step is to calculate your team's capacity for each Sprint. This is the number of hours that your team has at its disposal to work on tasks in each Sprint. To do this, simply take the total number of hours available in the Sprint (usually 160) and subtract the number of hours that your team will be unavailable during the Sprint (for vacations, holidays, etc).

2. Determine your team's average velocity 

Now that you know how many hours your team has available to work in each Sprint, you need to determine your team's average velocity. Velocity is the number of story points that your team can complete in a Sprint. You can calculate your team's average velocity by looking at the past few Sprints and taking an average.

For example, if your team's average velocity is 40 points per Sprint, that means that on average, your team can complete 40 story points worth of work in each Sprint.

3. Calculate your current capacity 

Now that you know your team's average velocity, you can calculate your capacity for the current Sprint. To do this, simply take the number of hours available for the entire Sprint and divide it by the number of hours required to complete one story point. 

For example, if it takes your team 2 hours on average to complete a one story point, then your team's capacity would be 80 points per Sprint (160 hours available / 2 hours per point).

4. Things to consider

Once you have your team's capacity for each Sprint, there are a few things to keep in mind:

- Your team's capacity may change from Sprint to Sprint. For example, if your team has more vacations planned in one Sprint than another, then their capacity will be lower in that Sprint.

- If your team is new or just starting out, their velocity will likely be lower than average and will increase over time as they become more familiar with the process and learn to work together more efficiently.

- Don't forget to account for other activities that take up your team's time, such as meetings, planning, and reviews. These activities should be factored into your team's capacity so that you don't over-commit them.

5. Use your capacity plan 

Once you have your team's capacity for each Sprint planned out, you can use it to help you determine how much work your team can realistically take on. This will help you to avoid over-committing your team and setting them up for failure.

Capacity Planning Tools

Jira Capacity Planning 

Overview: Jira Capacity Planning is a tool used by developers to predict how much work can be completed in a given Sprint. This guide will show you how to use Jira Capacity Planning and what factors to consider when making your predictions. 

Pros:

  • Easy to use
  • Accurate
  • Can be used for multiple projects

Cons: Only works with Jira 

Pricing: $10/user/month for Jira Software Cloud 

Platforms: Windows, Mac, Linux

Deployment options: Cloud, on-premise

Meisterplan

Overview: Meisterplan is one of the top capacity planning tools that allows you to see the big picture when it comes to capacity planning. It gives you an overview of all your projects, resources, and capacities in one place. 

Pros:

  • Easy to use
  • Drag-and-drop interface
  • Can be used for multiple projects

Cons: Steep price

Pricing: $7000 per year

Platform: Windows, Mac, Linux

Deployment options: Cloud, on-premise

Streamline

Overview: Streamline is another capacity planning software that helps you optimize your processes and get more work done in less time. It does this by streamlining your workflow and giving you real-time insights into how your team is performing. 

Pros:

  • Easy to use
  • Real-time insights
  • Can be used for multiple projects

Cons: Limited integrations

Pricing: Free version available

Platforms: Windows, Mac, or web browser

Deployment options: Cloud, private cloud, or on-premise

Conclusion

Agile software development teams use capacity planning to help predict how much work the team can complete in future iterations. It is very important to get this estimation right, as too much work in an iteration will lead to the team feeling overwhelmed and stressed, while too little work will result in the team being bored and unproductive.

Follow the steps and tips mentioned above and you'll be well on your way to being a master at capacity planning! Choose from the tools we listed to help make your life easier, and always remember to communicate with your team and stakeholders to ensure that everyone is on the same page. 

In addition to those tools, GoRetro can also help to improve your retrospective meeting. This is a very crucial part of capacity planning as it allows you to track your team's progress and see where improvements can be made.

About the author

Ruth Hadari
Agile Advocate, Engineering Ops Expert

Highly experienced in leading multi-organizational teams, groups, in-shore as well as off-shore. The go-to person who is able to simplify the complex. An agile advocate, experienced in all common methodologies. Responsible for the entire software development lifecycle process from development, QA, DevOps, Automation to delivery including overall planning, direction, coordination, execution, implementation, control and completion. Drives execution, and communicates on status, risks, metrics, risk-mitigation and processes across R&D.

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