Since I work for a software metrics and estimation company, many people ask me questions regarding capacity planning and demand management. Most of the project managers that I speak with are using project portfolio management tools for very detailed, task-level resource capacity planning. They spend a lot of time planning the person hours for each task and then these task-level plans are prioritized and viewed across the organization. These are useful tools and methods and they usually require a sizable investment.
The problem is that many of these project managers don’t have a good way to support demand management. That is to say that they aren’t able to accurately estimate the key drivers that go into their PPM tools. They need to be able to answer key questions like: Should we commit to 6 months or 9 for the project duration? Do we need 10 software developers or 20 to finish in 9 months? How much is the overall project going to cost? What alternatives do we have? Has anyone ever achieved that duration in the past? Should we even go forward with this project; what is the risk?
Oftentimes the project manager comes up with this information informally based on experience. Unfortunately, when they don’t use a scientific approach to estimating, they leave out key factors that affect the estimate and project success, like project complexity, team efficiency, and overall project uncertainty.