Capacity Planning

Capacity Planning is a process whereby an organisation comes together to agree on what they are going to focus on in the medium term. There are two outputs from the Capacity Planning process:

1. An ordered backlog of initiatives (MVDs) that the entire organisation agrees on.
2. A list of the constraints and options within the organisation.

The Capacity Planning does NOT produce a plan or schedule of work.

The purpose of Capacity Planning is to provide the organisation with focus. To agree a backlog based on the constraints that exist within the organisation. Rather than determine the capacity of the organisation based on its headcount, the capacity is based on the capacity of each group within the organisation.
Without an organisational backlog, there is a very real chance that the organisation will end up with too much work in progress because each group will seek to develop their own locally optimised priority.

<strong>Preparation</strong>

The start of the process is to create a roughly ordered list of Minimum Viable Deliveries (MVDs*). This provisional list is then pruned to create a list that is probably about twice the size of the eventual backlog. I call this a list of unicorn horns as it little to do with reality.

The groups are the set of Scrum Teams that look after a particular system, service, component or function within the organisation. In fact, any potentially limited resource that needs to participate in the delivery of an MVD.

The (product) owner of each MVD then engages with the product owners working with the groups. The groups create an Epic for each MVD they need to contribute to, and provide a SWAG, a Sweet Wild Assed Guess. The minimum effort required is that the group’s product owner makes up a SWAG. It would be too much to involve the team in a story point style estimate (even if bulk estimation is used) as they are only needed to help order the backlog and identify constraints. They are not a commitment by the team. The units for a SWAG are team weeks, the work that a single “Scrum” team can do in a week. One of the main reasons for the SWAG is to ensure that there is engagement between the MVP Owner and the Group’s Product Owners, To ensure that the groups are aware of any work that may be required of them in the medium term.

You will probably want control reports to help product owners spot any gaps.

Each group calculates its available capacity. The default is the number of weeks in the period multiplied by number of the “Scrum” teams in group, multiplied by 50%. The 50% is based on the work of Todd Little.

<strong>Capacity Planning</strong>

Capacity Planning should involve all key decision makers. If any are missing they may go outside the process to get their MVD done.

Now that you have the ordered list of MVDs, you go through them in order. For each MVD, you check to see if there is enough Capacity in each of the groups to deliver all of the Epics in the MVD. If there is enough capacity, the MVD is included in the backlog and the remaining Capacity of the groups is reduced by the amount on the Epics. Whenever the Capacity of a group becomes zero, the group is identified as a constraint. If there is not enough capacity in one or more of the groups, then the following can be done:
1. The decision makers decides to deselect one of the MVDs that has already been selected in order to free up the capacity.
2. The MVD can be reduced in scope. Theoretically it should be impossible to reduce something that is minimal but given the choice between nothing and something, the MVP Owner will find a way to shave some functionality off.
3. The MVP Owner and Group Owner can defer the decision to reject the MVD by looking for additional Capacity.

Eventually, it will not be possible to do any further MVDs as they all rely on groups that have run out of Capacity.

You will find that about 20% of the groups will be constraints, having used all of their capacity. About 60% will have some work on the Corporate Backlog, and 20% of groups will have no work on the Corporate Backlog. This list is gold dust for the IT management team.

How the spare capacity is allocated will be the subject of a subsequent blog post.

You now have a backlog agreed by all the key decision makers, and the list of constraints in the organisation. You have done step one and two of Theory of Constraints, namely Identify the constraint, and prioritise the constraint. The rest is easy from here on in.

* I have deliberately avoided defining an MVD. Its the smallest piece of work to deliver value.