How to know if your team has capacity for a new project

A team has capacity for a new project when the hours available in the period, once annual leave, absences, internal time and work already committed have been taken out, cover the hours the project will require. If that headroom falls short, the options are to move the start date, reduce the scope or add people to the team. The calculation is done in hours, per person and per week, and it is only reliable when it starts from hours that were actually recorded.

In service SMEs, the decision to take on a project is often made on the instinct of whoever is selling it. Management knows the team is 'busy', but not by how much, and only sees the problem when deadlines start to slip or overtime becomes routine. A simple capacity check, carried out before the project is confirmed with the client, prevents most of these situations.

What is team capacity?

Team capacity is the number of hours people can dedicate to client work over a defined period, usually a week, a month or a quarter. Four concepts are worth separating from the outset.

• Gross capacity. The contracted hours for the period, in other words the number of people multiplied by the working days and the hours in each day.
• Net capacity. Gross capacity without annual leave, absences, public holidays and internal time such as meetings, training, sales proposals and management.
• Committed workload. The hours already planned for projects in progress and for projects that have been won but have not yet started.
• Headroom. The difference between net capacity and committed workload. This is the figure that shows whether a new project fits.

Utilisation brings both sides together and measures the share of net capacity that is already committed to client projects. A team running at close to 100 per cent utilisation is not more efficient. It has no slack for the unexpected, and any urgent request from one client delays the work of another.

How to calculate available hours, step by step

1. Choose the period and the unit. To decide on a new project, the most useful view covers the weeks in which it will run, person by person, rather than an annual average for the whole team.
2. Calculate gross capacity. The working days in the period multiplied by each person's daily hours, taking account of anyone who works part time.
3. Remove public holidays and booked absences. National and local holidays, approved annual leave, training and any other absences already known. In Portugal, for example, the Labour Code sets annual leave at a minimum of 22 working days, which weighs heavily in the summer months and in December.
4. Remove internal time. Team meetings, management, sales proposals, training and support for colleagues. The safest figure is the one shown by recorded hours over recent months, not a percentage chosen by guesswork.
5. Add up the committed workload. The hours remaining on projects in progress, per person and per week, plus those for projects already won that have not yet started.
6. Compare the headroom with the new project. The estimate for the new project, also in hours and by role, set against the headroom of the people able to deliver it.

The step that most often goes wrong is the fourth. Without recorded hours, internal time is almost always underestimated, and calculated capacity ends up higher than real capacity.

Which criteria decide whether a new project fits?

Total hours are the first condition, but not the only one. Before confirming a project with the client, it is worth checking five criteria.

• Hours by role, not just in total. A headroom of 100 hours across the team is of little use if the project needs 80 hours of a skill that only two people have, and both of them are fully booked.
• The calendar. Leave and absences fall in specific weeks. A project that fits within the quarter may not fit in the month in which it has to start.
• Slack for the unexpected. Client requests, corrections and urgent work arrive every week. Planning the team at 100 per cent of net capacity is a guarantee of delays.
• The team's real pace. The speed at which the team closes tasks on similar projects says more about the effort required than the estimate made during the sale.
• Billable value. When capacity is scarce, the question becomes which of the possible projects justifies the available hours, based on the rate and the expected hours.

A practical example in a six-person consultancy

Imagine a consultancy with six full-time consultants, each working eight hours a day, that receives a request for a 160-hour project over the next four weeks. That period has 20 working days and no public holidays.

In this example, 94 hours of headroom do not cover the 160 hours the project needs. Utilisation already stands at 87 per cent of net capacity, 610 hours out of 704, and accepting the project as requested would take the team beyond 100 per cent.

The answer does not have to be no. The consultancy can propose starting two weeks later, when one of the current projects finishes, or split the work into two phases, with the first one fitting into the 94 free hours. The difference is that the proposal to the client now carries dates the team can actually meet.

Which mistakes make planning unreliable?

• Planning with estimated hours that are never recorded. Without time records, there is no way of knowing how much internal time the team uses or how many hours projects really consume.
• Keeping holidays in a separate spreadsheet. Whoever plans the projects cannot see approved leave, and the holiday calendar and the project plan end up contradicting each other.
• Looking only at the team total. The average hides the people who are overloaded, and they are precisely the ones who end up delaying the project.
• Forgetting work that has not started yet. Projects that have been won but not yet started already take up capacity and belong in the committed workload.
• Updating the plan once a month. Workload changes every week, and a plan reviewed only at month end arrives too late to inform a decision.

How Engi360 brings hours, absences and team workload together

Engi360 is the Engibots operations management platform for teams that bill hours or run projects for clients. It brings the pieces this calculation depends on into a single platform, working from the same data.

• Hours by task. Each person records hours on the weekly grid in their portal, with validation, AI suggestions and missing-hours alerts, which shows where the team's time actually went.
• Leave and absences with a calendar. Each person submits the request in their portal, the manager approves it, and the calendar and balances stay up to date, visible to whoever plans the projects.
• Velocity and workload panel. Projects and tasks, with kanban, sprints and custom fields, include a panel with velocity and workload.
• Billable value before month end. The rate per project, team workload and the billable value of each project are visible before the month closes.
• AI assistant. The AI assistant reads the operation from the same data.

The Free plan costs €0, with the whole team for the first 14 days and then up to 3 users, with no credit card, and includes the base modules, among them Hours, Vacations and absences, Projects and tasks, and Time and team. The Professional plan costs €7 per user per month, billed annually. Since the same recorded hours are later used for billing, the article on pre-invoicing hours explains the next step, from timesheet to pre-invoice.

Frequently asked questions

What is team capacity?

It is the number of hours people can dedicate to client work over a defined period, after annual leave, absences, public holidays and internal time have been taken out.

How is team utilisation calculated?

The committed workload, in hours, is divided by net capacity for the same period. A team with 610 hours committed out of 704 available is at roughly 87 per cent utilisation.

What level of utilisation is healthy in a service business?

There is no single figure, but it is always worth leaving headroom for urgent requests, corrections and the unexpected. The most reliable benchmark is the team's own, measured from hours recorded over recent months.

How often should team capacity be reviewed?

Every week, looking at the weeks ahead, and always before a new project is confirmed with the client. A review carried out only at month end comes too late to change dates.

Does Engi360 help to see team capacity?

Engi360 brings together hours recorded by task, the leave and absences calendar with approvals, and the velocity and workload panel for projects on one platform. The Free plan includes the base modules, such as Hours, Vacations and absences, and Projects and tasks.