How to estimate team capacity

How do you make sure your product team delivers on time? As a product manager, you are responsible for setting a bold strategy and building a roadmap for what the team will achieve. You also need to figure out the logistics of how the tactical work will actually get completed. Determining how much effort it will take to complete upcoming work — and weighing that against the development team's availability — is an important part of transforming your roadmap into reality.

Capacity planning helps you accomplish this. Capacity planning is the process of estimating the work that needs to be completed, then comparing that to the team's availability. Typically product managers do not do detailed capacity planning — but you do need to determine whether the product plans are realistic and attainable. This helps everyone focus on producing their best work and building what matters.

Estimating team capacity is not just about reducing the team's workload or making the amount of work feel more manageable. Rather, you are trying to achieve a balance — between the available resources of the team and the timing of the plans, and between the team's workload and the needs of the business. After all, you are an advocate for both the team and the business. In order to deliver against the product roadmap, you have to understand the resources that are available and determine how to best allocate and schedule the work.

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Capacity report

This is an example of a capacity report for teams built using Aha! Roadmaps. The white, blue, and red portions of each bar indicate where a team has availability, has already planned work, and is over capacity, respectively.

Benefits of estimating team capacity

Is it possible to complete all the development work in a given time frame? Does the team have enough capacity to build the right feature at the right time? Is the team on schedule to meet upcoming delivery dates? These are some of the questions that estimating team capacity helps you answer.

Estimating work accurately is important for any product team that wants to improve efficiency, deliver new functionality on time, and enjoy doing it. But many teams struggle with overcapacity — there is more work to do than time to do it. If you are consistently missing deadlines or feeling overwhelmed due to a heavy workload, it is impossible to accomplish the product goals you are working towards. On the other hand, some teams are underutilized, leading to inefficiency and reduced output. Neither situation is ideal.

When you know what is needed to deliver each release on time, you can better predict delivery dates and ensure fewer delays, bottlenecks, and surprises. This is true no matter what you are building or which development methodology your team uses. Consider the example of an engineer working on features across two products. If the engineer is unable to finish their work in time, this puts the delivery dates of two different products in jeopardy.

Based on what you discover during the planning process, you might decide to align tasks to more realistic delivery dates, adapt the scope of an initiative, or hire more people to help. Here are some of the benefits of estimating team capacity:

  • Set realistic and achievable plans

  • Make sure strategic initiatives are feasible at a high level

  • Set the scope of releases so you can deliver on time

  • Identify features that are at risk

  • Anticipate resourcing and scheduling problems between teams before they happen

  • Reallocate work to teams with extra capacity

  • Make better trade-off decisions about where to invest the team's efforts and what to build next

  • Optimize cross-functional alignment so everyone can achieve big efforts like product launches and major releases

  • Track the team's overall progress so you can compare completed work to in-progress work

  • Announce key launch dates to executives and customers with confidence

  • Forecast long-term initiatives so you can better weigh the resources you need to invest in against the overall goals

Challenges of estimating team capacity

Capacity planning is an essential part of turning your roadmap into action. But many product managers struggle to accurately estimate the amount of effort needed to complete upcoming work, which then impacts how long it takes to complete. One explanation for this is the planning fallacy, a cognitive bias that causes people to underestimate how long it will take to complete a task. Despite knowing that past projects have taken longer than expected, it is easy to misjudge the length of time you will need to complete future work.

Making accurate predictions when there are multiple team members, teams, and dependencies is even more complex. Additional moving parts make it more challenging to anticipate problems and calculate exact delivery dates. For example, completing a phase or reaching a milestone you have set might depend on another team finishing their own portion of the initiative on time. If someone is out of office or an unexpected problem arises, everyone's work can be delayed.

You also need to consider how company size and structure impact the team's ability to deliver on time. For instance, in large organizations, multiple teams might be working simultaneously on several complex initiatives. With sophisticated structures and workflows, maximizing each team's availability will likely require more coordination as you weigh different variables.

The good news is that as a product manager, you likely do not need to do detailed capacity planning — you simply need to make sure the plans are realistic. Typically you will create the high-level plan for an initiative or release, then a project manager or engineering manager will dive into the precise scheduling details as the start date gets closer. But even if you are not doing the detailed capacity planning work, it is important to have a solid understanding of the process to ensure that the product plans are achievable and realistic.

How do you create team-based estimates?

Each company and team approaches capacity estimates differently. And depending on the level of detail needed, you can do capacity planning at different levels of work (e.g., , epics, releases, or features). Agile teams, for example, usually calculate capacity in points rather than hours. The scrum lead will look at past sprints, determine the number of story points the team can deliver in future sprints, and give this information to the product manager to help set the overall capacity for the release.

This is a simple approach to making sure the release plans are feasible. You set the scope of a release in time or points, estimate each feature, and use that information to collaborate with engineering on a timeline.

A more advanced approach entails estimating work by team, creating different scenarios based on the work you want to complete, and then using this information to effectively allocate resources. While capacity planning can happen at different levels of work, let's use the example of planning initiatives to gain a high-level overview of the process.

Here is how to estimate team capacity for an initiative:

1. Decide the level of detail for estimates For example, you could opt to create only high-level estimates of an initiative as part of your roadmap planning. Then as you get closer to delivery, you might estimate at the feature level. You can also set up auto-calculations for a more accurate approach.

2. Choose an estimation unit Common ways to estimate include people, hours, and cost. You can use different timelines and estimation methods to create multiple versions of your plan — so you can pick the scenario that works best for your needs.

3. Pick a time frame Choose a period of time for estimates. For example, you can opt for total time or time per month or week. Just make sure you stay consistent when comparing different planning scenarios.

4. Define your teams How many people are actually doing the work? And when are they able to do it? Figure out the number of hours the team is expected to be available in the future. You will want to pay attention to variables, such as team members' scheduled vacation time.

5. Plan out the work Now it is time to set target completion dates, estimate the work, and assign the work to teams. Instead of doing complex calculations on your own, you can use a tool like Aha! Roadmaps to simply enter your team-based estimates (in people, hours, or cost) to your active scenario. Then, let the software update each team's capacity in real time. As you reallocate or reschedule work across teams, you will be able to visualize each team's workload.

Capacity report scheduling conflict

This example of a capacity report for teams shows a scheduling conflict — the green team is overcapacity in June.

6. Compare scenarios Finally, you can compare different scenarios to determine whether or not each team has capacity. For instance, you may want to see how changing dates, assigning work to another team, or reducing scope impacts the allocation of work and delivery dates. Pay attention to any capacity conflicts so you can reallocate or reschedule work ahead of time.

Remember that your goal should be to evaluate whether or not the team can deliver the work in a specific time frame. You also want to ensure that the right teams are available and have enough time to commit. This requires that you understand the total amount of time that a team has to do their work — which will vary based on team members' skills, availability, and shared resources.

Getting started with capacity planning

You do not have to be a capacity planning expert to be a successful product manager. But the more knowledge you have, the more informed you will be about how accurate future estimates are. You can make better trade-off decisions, align the team around a realistic plan for what you will accomplish, and build more of what matters to customers.

Many teams use Aha! Roadmaps to help them do this. Teams can set team-based estimates, visualize each team’s workload, and share detailed capacity reports. Capacity bars update in real time, making it easy for you to reschedule and reallocate work across teams.

Once you have estimated what the team will be able to do and when, the engineering team can focus on implementation — so you can deliver on your product roadmap's promise and turn your plans into reality.

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