The success of a construction project often depends on whether there’s a balance between the supply of workers and the demand for their labor. Construction projects typically require heavy machinery, skilled labor, and specialized equipment, often in limited supply.
As a project manager, it’s important to ensure that you have enough capacity to meet the demands of your project without overburdening your workers or running up costs. You can use construction software for this purpose.
In this guide, we explain how to keep this balance and discuss the importance of capacity planning for construction and its best practices.
What is capacity planning?
Capacity planning simply means matching the number of available employee hours with the project’s needs. Team leaders and project managers calculate the maximum number of hours their whole workforce can put in. Then, they determine how much their team can do in the given time.
When calculating the number of hours, it’s important to account for obstacles, such as availability, delivery delays, sickness, and holidays. In essence, capacity planning has a simple and straightforward goal; to know how much your construction workforce can do without a quality compromise or burnout.
Which construction project demands do you have to match with supply?
There are three main types of construction project demands you must match with their supply. They are the workforce, tools, and products.
Workforce demand refers to the number of people you need to finish a construction project. You must understand the current staff level and determine future requirements.
The key to success is to make sure you don’t hire more people than necessary. It can lead to increased costs and chaos on the construction site. But you should also not hire too few because that would result in your current staff overworking and the project being delayed.
If you do not have enough tools at your disposal, you won’t be able to finish the project on time, even if you have enough workforce. On the other hand, if you have too many tools, it could waste resources.
Project managers should audit the tools they need while considering their size, cost, and availability.
The third demand is materials. It includes materials like wood, nails, and concrete. Plus, it includes equipment like tractors and excavators. The project should have enough equipment and tools at all times to meet the demand of every step of the project.
3 best practices for balancing construction project demands with capacity
A proper balance between project demands and supply reduces costs, lowers production time, helps with supply chain management, and prevents stock-outs. It also enhances resource management on the project site.
But how do you accomplish this? Here are three good practices to follow.
Use capacity planning strategies
A capacity planning strategy refers to the plan of action that a construction manager puts in place to ensure that they have the resources and capacity needed for their current and future operations. There are three main types of capacity planning strategies for you to choose from.
The lead strategy takes an aggressive approach toward work completion, envisioning that you’ll go through the pipeline quickly. It involves hiring more workforce because deadlines are shorter, and the organization is expected to deliver rapidly.
Lead strategy requires more investment in terms of infrastructure, materials, tools, training, and people.
The lag strategy takes a slower approach to work completion, focusing on long-term planning. It involves fewer investments since more time is given to complete tasks and projects.
In match strategy, you account for your team’s current capabilities and account for the future too. You track your resource and capacity utilization while keeping the option to increase workforce, tools, or products available in case you hit a resource ceiling.
Use a capacity planning tool
Another way to match construction project demands with capacity is to use a tool that allows you to plan capacity. A capacity planning tool can help you identify potential problems with your construction project’s capacity before they become an issue.
Nowadays, there are several capacity planning tools you can use to ensure you always have enough resources. Here are some features to look for when finding a tool.
- Shared view – It should have a shared view feature since transparency is key to successful planning.
- Project forecasting – It should also have project forecasting capabilities to help you plan for future demands on your resources.
- Designate hours – Look for a tool that lets you set default work hours or personalize your workforce’s availability without affecting the reporting tab.
- Task assignment – The tool should also allow you to assign tasks to your team members or departments.
Project managers must measure key performance indicators (KPIs) like on-time completion, budget adherence, and labor efficiency to determine if the project demand meets the supply.
Here’s how to measure labor efficiency:
(Predicted capacity / actual output) x 100
Ideally, the result should be above 90%. If the labor efficiency is below 90%, then you might need to increase the number of workers or resources assigned to a project.
Similarly, you can calculate schedule compliance and adherence to gauge whether the workforce is sticking to the schedule. If there are issues with missed deadlines or call-outs, you might have to hire more workforce and or adjust the schedule.
Some other KPIs you can measure include return on investment, net capacity, gross capacity, backlog, etc. These will give you an insight into how many steps of the project are in the backlog, how many resources you need for each step, and how many hours you should schedule a week or month.
If you do not keep a balance between construction project demands and supply, you risk delayed deadlines, overworked employees, poor productivity, inefficient workflows, and, ultimately, failure. By using a capacity planning tool coupled with KPIs and a good strategy, you can ensure your project is sailing to success smoothly.
Do not stop at creating your capacity plan just once. Construction projects are not always linear, as there’s always a looming threat of weather, a change in demand, or budget shortages. You should update the capacity plan continuously to reflect your project’s demands.