You can’t keep pouring into a full cup. But some project management businesses do exactly this with their team’s workload. Here’s how to fix a workload capacity crisis.
Workload and capacity aren’t the same thing – even though some businesses act like they are. Capacity is finite, and teams can’t stretch to accommodate unlimited workload. So what can managers do about it?
In this article, you’ll discover the difference between workload and capacity, why a mismatch between them is bad for business, and how to fix workload management problems.
In resource management, workload is the amount of work that needs to be done, and capacity is the amount of work that can realistically done – based on staff time and availability. They’re often used together in planning conversations, but there are critical differences.
For project and operations managers, understanding the difference between workload and capacity is critical. Aligning work and capacity keeps workloads balanced, projects on track, and people burnout-free. But when they’re mismatched, projects stall, profitability falls, and people carry the emotional toll.
Think of it this way. Every person is like a cup. They have a certain capacity. Sometimes they’re a 20-oz Venti and can handle a lot. They’re at work all week, and their availability is straightforward: they don't have additional admin or other in-work commitments taking up time.
But other times, they're a 12oz Tall and can’t take as much. Think weeks with public holidays, training, or paid leave. Their capacity for work is going to be much more limited on a week like this.
Managers are the baristas. They’re the ones filling that cup, and workload is what they’re pouring in. But they need to pour carefully to match workload to capacity.
Put simply, if you have more coffee than your cups can hold, you’re going to need more cups or less coffee.
Further reading: How to Measure Capacity vs. Demand in a Professional Services Business ➡️
When you understand the difference between workload and capacity, it’s hard to imagine any business would treat them as one and the same. But it happens.
It’s like trying to squeeze your feet (workload) into a too-small pair of hiking boots (capacity). There’s a heavy dose of denial at play – if you just push hard enough, surely they'll fit. Your feet won't be hurting by the time you're halfway up the trail, right? 🥾
Sadly, that’s not the case. Some things simply don’t fit, and it's not a good idea to force it. Like trying to squeeze too many tasks or story points into too few working hours. And what happens is detrimental to your people, projects, and profits. Let’s see why.
Overutilization is when you assign more workload than a resource or team has capacity for.
Unlike parts in a machine that can be used 24/7 until they snap and get replaced, people don’t work like that. Sadly, some businesses treat them like they do. They cram them over capacity and are surprised when they break down or walk away.
From a business point of view, that’s a bad idea. It incurs costs like sick pay, recruitment costs, and maybe even legal fees. Plus loss of productivity, disruption to existing operations, and – of course – the cost to your immortal soul.
Human resources can’t work to 100% capacity. So even if you’re trying to balance their workload, a 100% utilization rate is a bad idea.
Firstly, it leaves no room for anything else. Like meetings, training, or unexpected new priorities. Or the downtime at work that keeps people sane, like a cup of coffee, bathroom break, or chat with a co-worker.
Plus, there’s no buffer to accommodate the unexpected. That means as soon as something changes, your people are left scrabbling to catch up. And that risks quality, schedules, and budget. One small slip could send everything spiralling out of control.
Finally, quality slips. Overutilization leads to multi-tasking, rushing, and ‘good enough-ing’ just to get work shipped. Plus, people burn out, which is shown to reduce mental acuity.
Put simply, past a certain point, the harder you make people work, the worse that work gets!
Underutilization is just as bad as overutilization. That’s when you don’t schedule people’s full capacity for work.
You might think team members would love working under capacity. But it can actually get pretty boring to be constantly on the bench, and if you're not getting assignments then you're not learning, networking, and growing – which most people feel pretty strongly about.
Which is why underutilization is another risk to staff retention. They feel like they’re going nowhere with you, so they go somewhere else.
Then there’s the business cost. This is much clearer cut than overutilization.
When you underutilize your workforce, you’re paying for time and talent you’re not using. This reduces your Return on Resource Investment (put simply, you’re paying the same money out but bringing less money in). Plus, it reduces productivity and efficiency, which impacts revenue generation and profitability.
Now you know the risks, how can you fix your workload vs capacity conundrum? We’ve got you covered 👇🏼
In project management, managing workload capacity is key to keeping projects on track, teams productive, and delivering client expectations. That makes workload planning a non-negotiable. Here are four tips to help you better align workload capacity.
Better workload planning starts with reliable capacity information. You need a way to monitor workload capacity over time, as it isn’t constant. Holidays, leave, training, etc all eat into team members’ workload capacity.
This means tracking real-time availability – not just their standard working hours – using tools like capacity calendars and heatmaps. These capacity planning tools give managers visibility into actual capacity overlaid onto forthcoming project schedules, to spot clashes in advance.
Workload should always be slightly less than capacity. But how do you know if you’re achieving that? By monitoring utilization rates. The utilization rate is how much of your resources’ capacity is allocated with work.
You should be aiming for a maxmium 80% utilization rate. Within that, you should aim for 80% billable utilization. This creates a managable workload, that has space for client work and other essential duties.
Read more: Resource Utilization Rates and Why They Matter ➡️
If you have higher workload than capacity, something’s got to give. And since no business wants to turn down work, it’s going to have to be increasing capacity.
Remember, capacity planning and optimizing doesn’t have to mean hiring new staff.
If overload is a significant problem in your business, you may need to review how much work you take on.
Unintentional overload points to problems in your project intake and management processes.
Further reading: Dive into Project Demand Management & How It Relates to Resource Planning ➡️
Knowing how much work your team can handle starts with capacity forecasting. Better forecasting means less guesswork, fewer surprises, and a team workload that fits capacity. Here are some capacity planning strategies that can help.
Runn resource management software equips managers to balance workload and capacity for higher efficiency, happier clients, and healthier teams.
It includes visual data on capacity and workload now and in the future, so you can create balanced workloads, avoid icebergs on the horizon, and profitably sell spare bandwidth.
Runn protects people and projects against overutilization, and productivity and profits against underutilization, by ensuring every team member’s time is optimally allocated.
Plus, centralised visibility into capacity and workload improves alignment between sales and delivery, to prevent overload before projects are even onboarded.
