Capacity forecasting: how to predict future capacity and workload

What is a capacity forecast?

A capacity forecast is an estimate of how much work is expected over a future period and how much time people or machines have available to complete it. By comparing the two, you can identify potential capacity shortages or spare capacity in advance. This gives you time to reschedule work, arrange additional support or agree on a different start date.

Throughout this blog, you'll also come across the terms 'capacity planning' and 'capacity forecasting'. These are closely related concepts, all focused on looking ahead to determine whether you have enough capacity to handle the expected workload.

You start by looking at the time available, the work already scheduled and any additional work likely to come in. This helps you predict when and where your team might become overloaded.

Why is capacity forecasting useful?

A schedule shows the work that has already been planned. But additional work can still come in, such as a new project or extra hours needed for an ongoing job.

Imagine you're expecting a large installation project next month. You'll need three engineers to complete the work, but two experienced colleagues are on holiday during that period. By looking ahead, you can start arranging additional support or discuss an alternative start date with the customer. If you wait until the project is confirmed, your options may be much more limited.

This helps you assess whether you can meet your commitments and identify when there's room to take on additional work.

Projects can be cancelled or grow in scope. That's why it's important to update your capacity forecast regularly, so you can make decisions based on the most up-to-date information.

Capacity forecasting vs capacity planning: what's the difference?

Capacity forecasting helps you predict whether you'll have enough people, machines and time to handle the expected workload. Capacity planning focuses on how you allocate those resources to get the work done.

For example, your capacity forecast shows that your engineers will be short on time in four weeks. You can then adjust your capacity plan by rescheduling a maintenance appointment or bringing in an additional engineer.

The two therefore go hand in hand. To learn more about the basics, read our blog on capacity planning.

What information do you need?

Much of the information you need is available in your schedules, staff rotas or project overviews.

Also check who is qualified to carry out the work. Some jobs require specific qualifications or equipment.

Always compare figures for the same period. For example, compare the available hours in November with the workload expected that month. For longer projects, spread the required hours across the months in which the work will take place.

Gross and net capacity: how much time is actually available

When looking at capacity, you'll often come across the terms gross and net capacity. Gross capacity is the total amount of time you start with, while net capacity is the time actually available to complete the work.

Gross capacity

Gross capacity is the total number of working hours based on your team's schedules. For example, if you have ten employees who each work 40 hours a week, your gross capacity is 400 hours per week.

However, you usually can't dedicate all 400 hours to projects. Some time is spent on meetings and administration. Employees may also be on holiday, or there might be a public holiday that week.

Net capacity

Net capacity is the number of hours remaining after accounting for absences and other activities. If 55 of those 400 hours are taken up by absences and other tasks, you're left with 345 hours available for project work.

Net capacity = gross capacity - time unavailable for project work

The same principle applies to machines. For example, a machine may be scheduled to operate for 40 hours a week. If four hours are reserved for maintenance, that leaves 36 hours available. Remember to account for the time needed to prepare the machine for the next order.

Be careful not to count the same time twice. If you've already deducted time for internal meetings from your available capacity, don't include it again as work that needs to fit into those remaining hours.

How to create a capacity forecast in six steps

1. Decide how far ahead you want to look

Choose a practical timeframe, such as the next six weeks or three months. Start with one team or department that regularly experiences a high workload. You can always expand your forecast later.

2. Calculate how much time is available

Review your team's schedules and add up the working hours. Deduct holidays, public holidays and any other time that can't be spent on projects. This gives you the net capacity we discussed earlier.

If you work with machines, look at the available operating hours and scheduled maintenance. For a service team, it's also worth setting aside some capacity for unexpected breakdowns. Use data from previous weeks to estimate how much time you might need.

3. Calculate the workload that's already confirmed

Work out how many hours are needed for confirmed orders, ongoing projects and scheduled appointments. For ongoing projects, focus on the hours still required to complete the work.

Spread these hours across the relevant weeks or months. A project requiring 200 hours doesn't necessarily need to be completed in a single week. How you distribute those hours determines when your team will be busiest.

4. Include potential new projects

Next, look at the work that's likely to come in. This could include outstanding quotes awaiting customer approval. Keep this separate from work that's already confirmed.

You can estimate the likelihood of each project going ahead. For example, a potential project requiring 160 hours, with a 50% chance of being confirmed, would account for 80 hours in your forecast. This is known as weighting your expected workload.

These 80 hours help you make a more realistic estimate. However, if the project goes ahead, you'll need the full 160 hours. That's why it's important to check whether you could accommodate the entire project. Once the customer confirms, move it into your confirmed workload to avoid counting it twice.

5. Compare available capacity with expected workload

Add together your confirmed workload and the estimated hours for potential new projects. Then compare the total with your available capacity.

Capacity surplus or shortage = available hours - expected workload (hours)

If the result is positive, your calculations suggest you'll have spare capacity. If it's negative, you're likely to face a capacity shortage. It's also worth considering what happens if more projects are confirmed than expected. This helps you prepare for different scenarios rather than relying on a single forecast.

6. Decide what adjustments to make

Consider whether a project could start later, another team could help or some work could be outsourced. Agree on the best solution together and adjust your schedule accordingly. Remember to update your capacity forecast whenever a project changes or a team member becomes unavailable.

Example calculation: a team is 25 hours short of capacity

Imagine you have ten employees who each work 40 hours a week. Together, they have 400 working hours available. However, 55 hours are unavailable for project work due to annual leave, a public holiday and internal activities. This leaves 345 hours of net capacity.

Confirmed work requires 280 hours. On top of that, you're expecting additional projects. After accounting for the likelihood of these projects going ahead, you include another 90 hours in your forecast. This brings the total expected workload to 370 hours.

Based on this calculation, you're facing a capacity shortage of 25 hours. Check which projects are causing the peak in workload. You might be able to reschedule a project or arrange for a colleague to help out.

Two examples of capacity forecasting in project management and manufacturing

A project team: limited capacity for additional work

A project team has 520 hours available for project work next month. Confirmed projects require 430 hours, leaving 90 hours of spare capacity.

There's also an outstanding quote for a project requiring 160 hours, with an estimated 50% chance of going ahead. You therefore include 80 hours in your forecast. This brings the total expected workload to 510 hours, leaving just 10 hours of spare capacity.

If the project is confirmed, the team will need 590 hours, resulting in a capacity shortage of 70 hours. The project manager can already start discussing an alternative start date with the customer or explore options for additional support. The same principle applies to service businesses, although they also need to allow for unexpected breakdowns and urgent jobs.

A manufacturing company: one machine is fully booked

A manufacturing company has enough employees available next week. However, it may still struggle to complete all expected orders on time. That's because several orders need to be processed on the same machine.

The machine has 36 hours of available capacity, while the orders require a total of 44 hours. This means the capacity shortage lies with the machine. Adding more staff hours won't solve the problem.

The planner could arrange for an order to start earlier, use another suitable machine or outsource some of the work. Capacity forecasting gives them time to make these arrangements. To learn more about organising production activities, read our blog on how to create an effective production schedule.

Look at capacity by team, employee or machine

An overall capacity overview is useful, but it can hide where the real bottlenecks are. For example, an agency might have plenty of spare capacity among its designers, while its developers are already fully booked. Those available hours can't simply be transferred between teams.

Pay particular attention to the availability of employees and machines that are frequently working at full capacity. These are often the first places where problems arise. To learn more about allocating work across people and resources, read our blog on capacity planning vs resource planning.

How far should you forecast?

Look far enough ahead to give yourself time to address potential capacity shortages. If recruiting a new employee takes several months, it makes sense to forecast your capacity a few months in advance. If you can easily reschedule work or arrange additional support at short notice, the coming weeks may be more important.

A practical approach is to review capacity week by week for the near future, then use a broader overview for the following months. At that stage, you don't need to schedule every project down to the exact hour.

Make it clear which figures are confirmed and which are estimates. This distinction becomes particularly important when forecasting further into the future.

Common mistakes in capacity forecasting

Assuming every working hour is available

An employee contracted to work 40 hours a week usually can't spend all 40 hours on customer projects. Account for annual leave and other activities to avoid overestimating your available capacity.

Treating all outstanding quotes as confirmed work

Some projects will go ahead, while others won't. Keep potential work separate from confirmed projects and consider what happens if several customers accept their quotes at the same time.

Only looking at total capacity

Spare capacity in one team doesn't automatically solve a shortage in another. Check whether the right people or machines are available to carry out the work.

Using outdated time estimates

If a project takes longer than expected, update your forecast accordingly. It's also worth comparing your estimated hours with the time actually spent on completed projects. This will help you make more accurate estimates for future work.

Creating a capacity forecast in Excel or planning software

For a single team with relatively few changes, Excel can work perfectly well. Simply compare the available hours with confirmed and expected work for each week or month. Calculate the remaining capacity and make a note of the estimates you've used.

Things become more complicated when multiple teams work on different projects. Annual leave changes, projects get rescheduled and employees may also support other departments. This means constantly checking whether all your information is still up to date.

Planning software helps you see availability and scheduled work in one place, reducing the need to maintain information across multiple systems. However, you'll still need to estimate which potential projects are likely to go ahead and when they might start.

Plan ahead with vPlan

With vPlan, you can bring scheduled work and available capacity together in one place. Set up working schedules for employees and machines, and account for absences. This helps you assess how much time is available for the work you need to plan.

The timeline view shows how work is distributed over the coming weeks and months. With workload management, you can compare scheduled work with available hours. You can also view capacity by group, employee or phase (a specific stage in your workflow). If employees work across multiple planning boards, you can take their capacity across those boards into account too.

This gives you a solid foundation for capacity forecasting. You can assess potential new projects separately. Once a project is confirmed, you can schedule the work and immediately see how it affects your available capacity.

Ready to get started? Learn how to create a capacity plan in vPlan, step by step.

Spot capacity shortages before they become a problem. With vPlan, you can compare available capacity with scheduled work, giving you time to reschedule tasks, arrange additional support or agree on a suitable start date.

Discover capacity planning with vPlan.

Discover what your team can handle with vPlan

Want to spot busy periods earlier and see how much additional work you can take on? Discover how vPlan brings available capacity and scheduled work together in one clear overview. Request your free demo environment today and see for yourself how you can identify potential bottlenecks early and make adjustments in time.