Capacity planning is one of the pillars of great construction resource management. Ensuring you have enough people for your projects at any given time can be the difference between profitable projects and finding projects suddenly at risk. It’s no easy task to juggle your entire workforce while being mindful of your project timeline, but if you’re ultimately looking to turn a profit on every project… it’s time to start juggling.
In its simplest form, capacity planning for construction (or “workforce juggling”) is the process of determining the production capacity needed by a general contractor to meet the changing demands for its projects. Capacity in this case, is referring to your workforce.
As a general contractor, this means working with your project management team and sub-contractor schedules, along with material delivery and forecasts. The more accurate and up-to-date your communication is with your teams and vendors, the more effective your capacity planning can be. The end result being a realistic and accurate project completion timeline.
Why is capacity planning so important for construction resource management?
The main reason for capacity planning will be reducing the risk to your organization by understanding and developing a workforce management strategy that can handle the ebbs and flows of your project pipeline. This helps with time management, reducing operational costs, and improves the planning process to deliver customer satisfaction.
When planning a new project, you’re able to allocate team members, materials, and subcontractors, but when business is good the work required by general contractors can shift along with its bid conversion ratio. This creates challenges for operations teams: when work is slow, prices get dropped to lock-in future projects. Adversely, when work is booming bid prices need to increase to ensure you can hire new team members to execute the new project. For more information about resource planning visit our guide to construction resource allocations.
What to consider when capacity planning?
TAKE A LOOK INTO YOUR FUTURE
This responsibility will include your operations, sales, and marketing teams. Sales and marketing are responsible for filling the project pipeline, which can be very difficult to forecast. Operations teams without tools that have accurate oversight will sometimes wind up basing their project forecasting on gut-instinct.
Forecasting for construction resource management should be a more detailed process than simply relying on gut-feel. Your sales team should be included in your capacity planning and providing them with training to better understand the process will greatly benefit the process and customer service.
TAKE A LOOK AT YOUR WORKFORCE PLAN
It’s no surprise that your current workforce will play a major role in your capacity planning. You should have an understanding of how much work your team is capable of handling. Construction resource management tools can help to track how your team members are performing and better understand their capacity. It’s likely that some of your team can handle more work than others, but by providing the right tools and training you can increase the capacity of your entire team.
Your project managers will often also have a good understanding of labor requirements and availability, so including them in your capacity planning should be a priority. They can provide valuable input and identify potential issues with vendors, materials, and labor. They can also offer input on variables that can’t be controlled like how the weather will impact certain project schedules.
DECIDE ON YOUR CAPACITY STRATEGY
There are a few different strategies that your organization can use when capacity planning, but one important decision in regards to strategy will be whether you want your capacity planning to be proactive or reactive.
If you’re able to stay ahead of any short-term labor shortages it can help to maintain or improve your company reputation, relationships with customers, and your ability to complete projects on time. Adversely, you can invest in recruitment that you may not need, but it will cost money. Adding new team members as you need them is a great way to ensure that you are only paying to acquire the needed workforce. However, adding team members only after maxing out your current capacity can be detrimental to the project costing the longer it takes. Finding a balance may be difficult, but will benefit your organization in the long run.
HOW DO YOU TACKLE CAPACITY PLANNING?
This is where your capacity planning will benefit from different software and construction resource management tools that are helping to collect and analyze important information in real time – bid tracking conversions, project and budget management, employee management and communications. Resource management tools built exclusively for the construction industry, like Bridgit Bench, can play a major role in capacity planning and while you don’t need software to manage your capacity, it can certainly help to simplify what can be a complex process. For more information about resource management, check out our guide to construction resource management.
First, hone in on forecasting capacity. Involve your sales team to figure out the most realistic forecast for upcoming projects to meet demand. Try to get as accurate an estimate as you can around the likelihood of winning each bid, and also when the project will be awarded. You need to have an understanding of which bids you’re most likely going to win and when those projects will need to happen.
Once you have an understanding of a realistic forecast, you can begin to overlay your forecasted projects with your existing workforce plan. Managing your growth to avoid risk will require that you analyze the current situation and comparing it outward. This may mean a month or two into the future and, depending on your specific organization, up to a year out for some team members.
Now you can begin to identify gaps and create an accurate plan that includes a strategy for acquiring needed resources long term. For your workforce it’s simple, you can either hire new team members with the required skill sets, or you can train them up to the needed skill sets. Hiring can be costly, whereas training can be time consuming but also allows you to tailor training to meet your specific needs and standards. You should also have sub-contractor and vendor evaluation processes in place to find and approve new ones in the case that your current subs are too busy or vendors can’t meet your supply demands.
You should consider tasking someone in your operations team with the responsibility of monitoring your capacity planning model and providing regular reports during your manpower meetings. They will keep everyone informed with any upcoming gaps, and make it easier to identify when to take action to acquire needed resources to manage growth.
Once you have a consistent understanding of what resources you need to complete forecasted projects you can make informed decisions that suit your company’s current situation and future needs.
Bridgit Bench is a construction workforce planning tool that can provide valuable insight when capacity planning. It allows for you to customize your experience to track team member skill sets and experience, and create custom project fields to track likelihood of bid success. Bridgit Bench will also identify potential allocation issues in your workforce plan and helps to monitor the capacity of full time equivalent team members. For more information about workforce management and capacity planning, visit our blog.