The Ultimate Guide to Capacity Planning

Ruth Hadari
Ruth Hadari
Agile Advocate, Engineering Ops Expert
Posted on
Aug 3, 2022
Updated on
Mar 21, 2023
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.

Other types of capacity planning includes workforce capacity, tool capacity, and product capacity:

Workforce Capacity Planning

Workforce capacity planning is the process of determining how many people are needed to complete certain tasks and jobs within a company.

It involves analyzing current production levels, estimating future demand, setting staff requirements, and ensuring that the right number of employees have the necessary skills to meet these demands. By properly forecasting labor needs, companies can better manage their resources while reducing costs and improving efficiency.

Through careful analysis, forecasting, and monitoring with workforce capacity planning, companies can ensure that they have enough staff to handle current demands while also preparing for future growth.

Tool Capacity Planning

Tool capacity planning is a critical component of any successful business, as it involves making sure that the proper resources are available and being used effectively to meet production goals.

Generally, this includes everything that you require in order to deliver the product or service that you provide to your customers, such as electronic equipment, industrial machinery, transportation, and so on. Tool capacity planning includes not only the tools themselves but also their maintenance, scheduling, and other related tasks.

As production levels change or customer demand shifts, the plan may need to be adjusted accordingly in order to stay ahead of any potential issues. This can help ensure that all resources are being used efficiently and effectively while also keeping costs down.

By assessing current needs, developing estimates for future use, scheduling and maintaining tools properly, choosing cost-effective solutions, and monitoring plans regularly, businesses can ensure that their tools are always available and optimally work when needed.

Product Capacity Planning

Product capacity planning involves forecasting demand for products, anticipating customer needs, and ensuring that businesses have the resources to meet them.

It requires an understanding of how future customers are likely to use a product or service, and how customer behavior has changed over time, along with industry trends and changes so that you are able to accurately predict future demand.

This can be used by companies in a variety of different business contexts, including manufacturing, distribution, and retail. To ensure that you have all the ingredients you need to create your own product, raw material management is an integral component of product capacity planning.

As a retailer, it's your responsibility to secure the products you need from suppliers to meet your customers' needs. It might be necessary to forecast seasonal demand, for example, by equipping a store with winter goods for the upcoming winter season.

Capacity Planning Strategies

Capacity planning strategies are used to find the most efficient way to allocate resources in order to meet customer needs while also maximizing profits. There are three main capacity planning strategies: Lag Strategy, Lead Strategy, and Match Strategy.

Lag Strategy

Lag strategy is a type of capacity planning strategy used to match production output with expected customer demand. This means organizations don't need to spend more than they have on resources, reducing the chances of having idle capacity.

The goal of lag strategy is to reduce the costs associated with either overproduction or underproduction. Over-producing increases storage costs and may require additional labor hours in order to complete extra jobs, while under-producing leads to lost sales opportunities due to unmet customer needs.

It is possible, however, that a sudden spike in demand can cause a delay while extra resources are acquired, potentially resulting in missed customer deadlines or lost business. This tactic is known as a lag strategy because it could lead to delays when additional demand is faced.

Businesses with predictable demand or those with no drastic changes in requirements are best suited for this capacity planning strategy.

Lead Strategy

Lead strategy is a type of capacity planning strategy that focuses on the proactive management of resources. It involves anticipating customer demand and making sure that the necessary resources are in place to meet it.

This strategy allows companies to stay ahead of customer demands and take advantage of market opportunities as they arise. The goal is to make sure that when customers need a product or service, they can access it quickly and easily.

Lead strategy involves forecasting future trends, analyzing current capacity levels, determining potential expansion needs, and arranging for additional capacity if necessary. Companies use this strategy to anticipate upcoming changes in customer demand so they can ensure their supply chain is able to meet those needs.

Unlike lag strategy, the flip side of lead strategy is the possibility of resources being idle if demand does not meet expectations.

Match Strategy

Match strategy focuses on ensuring the right amount of production capacity matches the demand for goods or services. This is basically a combination of lead and lag capacity planning.

This strategy typically involves analyzing current and future demand to determine how much capacity will be needed and then adjusting production processes accordingly.

The goal is to ensure that the company has sufficient capacity to meet customer needs without over- or under-producing. Businesses should also consider external factors such as economic trends, competitor activity, and industry developments that could impact future demand.

Once these figures are established, companies can adjust their production capacity to match the demand. This could include increasing or decreasing production levels, adjusting lead times, and/or making changes to their inventory management systems.

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.

Top 8 Capacity Planning Tools

Capacity planning tools are incorporated into project management software that allows businesses to forecast future capacity requirements and plan accordingly.

These tools provide insights into current usage trends, resource availability, and utilization patterns so that organizations can make informed decisions about their computing requirements. By leveraging these tools, businesses can improve efficiency while avoiding costly overinvestments or underutilization of resources.

Our best tools vary in their functionality, and by the end, you will be able to determine which capacity planning software is most suitable for your company.

1. GoRetro

GoRetro Capacity Planning
GoRetro Capacity Planning

Cost: Free; premium starts at $29 a month per team

GoRetro leverages Sprint data and team sentiment to help drive continuous improvement with a user-friendly, entertaining, and customizable tool.

As a retrospective tool, GoRetro incorporates Agile capacity planning into data-driven sprint planning. In order to deliver on your roadmap, it is important to plan resources accurately, so you can make informed decisions and mitigate risks by considering team members' availability, personal leave, holidays, on-call duties, and more.

GoRetro's deep data integration allows teams to improve continuously without the hassle of dealing with spreadsheets and tabs. Utilize your existing tools and Sprint retrospectives to speed up decision-making and become a data-driven organization.

2. ClickUp

ClickUp Capacity Planning
ClickUp Capacity Planning

Cost: Free; premium starts at $5 a month per user

ClickUp is a powerful productivity platform for teams of any size to organize projects, collaborate more effectively, and store all their work in one place.

It offers over 15 customizable ways to view your tasks, like the unique Workload feature that lets you visualize workloads and plan resources efficiently. Plus, its real-time reporting capabilities give an immediate snapshot of progress so you can pinpoint areas needing improvement.

ClickUp's advanced scheduling feature also allows you to easily plan out how much time each task requires, so you know what needs to be done exactly. You can also use the reports feature to get an overview of upcoming projects, workloads, and team performance, allowing you to better manage expectations and prioritize tasks accordingly.

3. Float

Float Capacity Planning
Float Capacity Planning

Cost: Starts at $7.50 a month per user

With a capacity management system used by over 3,000 teams, Float is an effective resource planner that helps keep projects on track. The platform's interface offers a precise view of people's tasks and progress, holidays, and public days off, in addition to upcoming assignments and capacity.

A number of noteworthy features of Float are its ability to streamline project management flows, such as adding milestones, phases, and link dependencies, as well as its forecasting capabilities, which allow you to monitor the budget, actual costs, and utilization rates in real time.

Also, Float is easy to integrate with third-party applications, including project management software such as Jira, Teamwork, and Asana, productivity tools such as Slack and Zapier, and calendars such as Google Calendar and Outlook Calendar.

4. Resource Guru

Resource Guru Capacity Planning
Resource Guru Capacity Planning

Cost: Starts at $2.50 a month per user

Resource Guru boasts of its straightforward approach and yet offers a wide range of features for task scheduling, resource management, leave management, plan scheduling, asset management, meeting room booking, capacity planning, and project forecasting.

It can be integrated with other programs, such as ERP and CRM software, providing features to manage projects and tasks. The collaborative aspect of this software allows the user to see who's working on each task and how long it will take them to complete it. Scheduling capabilities are available so that resources are distributed evenly amongst team members, preventing overloads.

There is also an option for monitoring utilization rates of resources, tracking time off taken by employees, and booking reservations in order to avoid double booking.

5. Forecast

Forecast Capacity Planning
Forecast Capacity Planning

Cost: Starts at $29 a month per user

Forecast is a robust management software that offers automation, team collaboration, project management, business intelligence, resource management, and project accounting capabilities.

This tool boasts an efficient AI-powered capacity planning feature enabling users to easily plan and compare projects at the same time. With Forecast's AI you can eliminate non-billable tasks such as project planning, resource allocation, and timesheets so you can focus on what matters.

Forecast stands out for its ability to integrate with a variety of other tools like Azure, Google Drive, or Microsoft Excel. Its user-friendly interface is also further enhanced by highly visual color coding, which helps users track progress in real-time.

6. Jira Capacity Planning

Jira Capacity Planning
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. 


  • 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

7. Meisterplan

Meisterplan Capacity Planning
Meisterplan Capacity Planning

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. 


  • 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

8. Streamline

Streamline Capacity Planning

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. 


  • 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


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.

To learn more about capacity planning and how to use GoRetro's capacity calculator click the below:

Data driven capacity planning

Capacity planning templates and examples

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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