Top 6 capacity management challenges for consultancies
Running a streamlined consultancy is challenging due to fluctuating client work and projects. Getting on top of capacity management helps businesses optimise resources to match demand.
Properly allocating staff resources and ensuring productivity is crucial to maximise cost efficiency and meet utilisation targets.
Common Capacity Management Challenges
Here are the leading capacity management challenges in consultancies today, and how you can approach them.
Challenge #1: Assigning Low-Skill Work to High-Cost Employees
Many consultancies have an ad hoc approach to resource allocation that diminishes their profit margin.
A common scenario is a senior, more expensive, staff member is assigned to another project because that’s what they’ve always done.
However, a junior staff member, who costs less to the business, is also capable of working on the project. The client is still billed for the same amount, and the only difference is it costs your business more to complete the work.
Capacity planning tools can help with planning by making it easier to assign project time based on skills, not reputation. This enables you to develop skills across your team so you can allocate cost-efficient resources to a range of projects and improve your profitability.
Challenge #2: Insufficient Visibility into Employee Workloads
Utilisation metrics are crucial for understanding your team's workload. Without real-time monitoring, it's hard to gauge their resource utilization accurately.
For junior staff, optimal utilization ranges between 85-90%, while senior staff with non-billable responsibilities should aim for 50-60%. Going beyond these thresholds risks overworking and burnout or negatively impacting profit margins if underutilized.
The key challenge lies in maintaining consistent visibility of utilization rates. Fluctuations occur during busy periods but should stabilize afterwards. Detailed reporting over time is essential to track productivity and plan future allocation.
Having utilisation reporting is an important part of a workforce capacity report, and tools like Projectworks make it simple with automated insights based on both real-time and historical workloads.
Challenge #3: Managing the Busy Season
Capacity planning involves aligning resource supply with shifting demand. Peaks in demand bring revenue opportunities but introduce two issues:
Acquiring additional resources to meet demand
Managing resource costs when demand decreases
To address these challenges, a combination of long-term and short-term capacity planning is beneficial. Long-term planning focuses on business growth and adaptation, while short-term planning includes strategies for handling busy periods.
For instance, a short-term capacity plan may incorporate an overtime policy, the availability of contractors, and staff members with versatile skills who can support units experiencing peak demand. These options increase capacity in the short term without incurring long-term expenses.
Challenge #4: Ineffective Manual Processes
Manual monitoring of staff workloads often falls short of providing an accurate assessment of their capacity. Capacity planning tools, on the other hand, enhance productivity and efficiency by maximizing performance with existing resources and aligning output potential with demand.
Through streamlining performance and avoiding unnecessary overspending on resource supply, these tools become indispensable in maintaining a balanced and optimized operation.
Challenge #5: Managing Resources Across Multiple Projects
Managing resources across multiple projects in consultancies poses challenges due to limited visibility. Project managers focused on their respective projects find it difficult to assess individuals' workloads accurately, leading to potential overwork or underutilization of shared resources.
For instance, a project manager may heavily rely on a specific team member for a particular project without considering their existing workload. This can result in unintentional overload.
Project management tools, including capacity management tools, greatly enhance visibility for cross-functional teams. These tools enable project managers to assess individuals' current workloads when assigning project time.
Challenge #6: Accurately Planning Future Resourcing Needs
Manual resource planning is challenging, given the unpredictability of demand. Effective capacity planning relies on historical data to identify trends and make informed future resource plans - these can all be generated with software.
While it may not be possible to predict every client emergency, recognizing overall demand trends allows for better resource allocation. By closing the gap between actual capacity and demand fluctuations, short-term capacity planning strategies can be implemented.
Having a dedicated capacity planning tool like Projectworks takes the work out of attempting to plan future resource needs and improves accuracy.
Summary
Capacity planning offers a range of benefits, particularly for consultancy businesses today. However, it’s important to spend time understanding and addressing the challenges of capacity management to ensure you get the most from it.
Tools like Projectworks are worth their weight in gold when it comes to capacity planning. Projectworks was developed by professional services veterans, with a hand-picked suite of features, data insights, reports and integrations designed specifically to overcome the challenges that consultancies face.
To find out more, check out the many Projectworks features, or a no-obligation free trial today.
