Capacity Building Plan: Development & Implementation

Lucija Bakić

February 16, 2024

Screenshot of project management software displaying a Gantt chart with team members' tasks and schedules for various project phases.

For ongoing agency success, you need to have a capacity building plan.

Capacity building is part of the larger capacity planning process in agencies, which considers how to best manage resources to satisfy demand. It’s a process that includes outlining an agency’s gaps and providing actionable strategies on how to build up and optimize your resources.

In this guide, we’ll consider the main steps and best practices of the capacity building process. Keep reading to learn everything you need to know about creating a successful capacity building plan.

Key Takeaways

  • A capacity building plan is a strategic approach agencies use to optimize resources for improved service delivery, focusing on identifying and addressing gaps in skills, processes, and technology.
  • The process involves assessing current capabilities, defining desired capacities, developing objectives and strategies, monitoring progress, and making necessary revisions to ensure continuous improvement and growth.
  • Effective capacity building strategies include upskilling and reskilling employees, leadership development, outsourcing resources for flexibility, forming partnerships for added value, and streamlining agency processes for efficiency.
  • Upgrading to integrated agency and resource management software is crucial for managing resource capacity effectively, offering real-time insights, and supporting long-term capacity planning initiatives.

What Is a Capacity Building Plan?

A capacity building plan is a comprehensive strategy that agencies use to optimize their resources for successful service delivery. It includes identifying your agency’s weak points and addressing them with targeted actions to strengthen skills, processes, and relationships.

Key components often include developing plans for staff development, driving process improvements, fostering partnerships, and upgrading technology. By implementing a capacity building plan, organizations can better respond to capacity challenges, seize opportunities, and ensure long-term growth and success.

Capacity Building: Creating Your Roadmap

Your agency’s roadmap identifies specific goals, milestones, and capacity building initiatives. It starts with a thorough capacity assessment and then defines the desired state of skills and resources. The next step is developing strategies based on gathered insight and then reviewing them by monitoring results. Regular revisions ensure the roadmap adapts to changing needs, driving continuous improvement and organizational growth (see more: capacity model template).

1. Assessing Current Capacity

To start creating your capacity building plan, you first need to evaluate your agency’s strengths, weaknesses, and necessary areas for improvement.

Examine your current staff: what are their skills? How efficient are their processes?

Time tracking data can help you spot certain trends between departments or individual performance levels. For example, you can check your estimated time vs actual completion with the help of professional services time tracking software. When considering productivity data, make sure to take into account the specifics of each staff member, their particular position, and tasks.

Screenshot of capacity building plan software highlighting the Design Team Scheduling for October 2021, with team member workload and availability, indicating an overbooked status for tasks from different companies.


Additionally, consider your technology stack. Do you provide enough support to your employees’ daily processes, or are you making their workflows less efficient? Some key features that can help teams gather information and stay up-to-date include:

  • Task statuses
  • Automatic notifications
  • Collaborative documentation
  • Various project views, such as Gantt charts

The findings from this assessment will guide the development of the capacity building plan, focusing on covering the most critical gaps and moving on to optimizing the overall process.

2. Defining Desired Capacity

Defining desired capacity is the middle step between identifying current capabilities and the strategic implementation of improvements. During this phase, agencies should pinpoint the specific skills, knowledge, and technological enhancements needed to meet current market demands and anticipate future trends.

This isn’t an easy task, but you can collaborate with stakeholders, such as employees, customers, and industry experts, to benchmark your capacity targets. By setting clear, actionable goals based on a thorough understanding of both internal capabilities and external market conditions, agencies can start building towards their sustainable growth.

3. Developing Objectives and Strategies

Address the following questions:

  • What skills do our teams need to attract more clients?
  • How can we improve project delivery efficiency?
  • What training is needed to adapt to new industry trends?
  • Which methods are best for achieving specific goals?

During this step, consider utilizing the so-called S.M.A.R.T. framework to keep your goals specific, measurable, achievable, relevant, and time-bound. Additionally, don’t work in isolation: consider that your capacity-building efforts should always be aligned with long-term business goals.

4. Monitoring and Evaluating Progress

The essential part of implementing any new process is monitoring and assessing your results. In the previous section, we’ve mentioned that your goals should be measurable — this refers to establishing some key performance indicators and specific targets to see whether you’re heading in the right direction.

Screenshot of a staffing report interface from a project management software, detailing individual and department billable hours versus worked hours with efficiency percentages.


Some capacity planning metrics that you can consider include:

  • Employee Retention Rates: Reflect how many employees remain with an agency over a specific period. High retention suggests that employees are satisfied with their work environment. This metric is important because it can directly impact recruitment and training costs, institutional knowledge, and team collaboration.
  • Client Satisfaction Rates: Measures how satisfied clients are with the provided services. It shows how effective your efforts in improving service delivery are. It involves collecting and analyzing feedback. Product agencies can also consider churn rates and customer lifetime value (CLTV).
  • Project Delivery Efficiency: Measure the average time taken to complete projects or deliver services before and after implementing capacity building measures. A decrease in delivery time suggests improved operational efficiency. Agencies should track project timelines, consider industry standards, and review their practices based on past and current performance.
  • Revenue Growth or Profitability: Analyze changes in revenue or profitability margins as a direct indicator of the impact of capacity building on business performance. Higher revenue or better profit margins indicate that capacity building efforts are effectively boosting business performance and making the company more competitive in the market.

5. Reviewing and Revising the Plan

Frequently reviewing your strategies is important to maintaining relevance and effectiveness. Consider whether there are changes you need to account for, such as:

  • Differences in internal circumstances, such as organizational structure or goals
  • Shifting market demands or industry trends
  • Technological advancements or innovations, such as AI

Adapting your plan in response to these assessments ensures your organization remains agile, competitive, and prepared to meet future challenges. Make sure to establish regular review cycles to truly drive this proactive mindset.

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Capacity Building Approaches & Best Practices

Now that we’ve gone through an overview of the entire process, let’s discuss capacity development strategies in more detail. These can include upskilling employees, outsourcing resources, improving your current processes, forming partnerships, and updating your technology.

Upskilling Employees

According to LinkedIn, 59% of recently surveyed CEOs name upskilling and reskilling as their top priorities.

  • Upskilling is the process of improving an employee’s work performance by building on their current skills. For example, a marketer might learn how to utilize digital tools to evaluate campaign performance.
  • Reskilling involves training employees to transition to new roles by teaching them skills unrelated to their current position. An example would be a marketer changing their role into a data analyst.

You can apply multiple methods for upskilling employees. For example, you can ensure that they have opportunities for cross-functional cooperation for passive learning, or you can assign them a mentor within the operation to support their growth. Another method is to provide guided training programs, such as workshops, seminars, and online courses.

No matter how you approach it, make sure that you set personal development goals and monitor progress, as well as regularly assess the impact of upskilling efforts on employee performance and business operations.

Leadership Development

A McKinsey article on optimizing your capacity building plan states that:

Leaders at every level, from the shop floor to the C-suite, face the challenge of learning how to organize, communicate, delegate, facilitate, and manage a workplace and a workforce undergoing technical transformation. Amid any substantial change come the human elements of stress, uncer­tainty, and, often, even fear. Leaders are tasked with stewarding their people through what can be demanding and disruptive adaptations.

Effective leaders are at the heart of creating a culture of continuous improvement and professional growth. They can help:

  • Identify the unique strengths and needs of their team members
  • Monitor their growth and motivate them
  • Maintain organization continuity with succession planning

Ultimately, investing in leadership capacity development ensures that an organization has the guidance and strategic oversight needed to address challenges and capitalize on growth opportunities.

Outsourcing Resources

Outsourcing resources can be a good strategy to enhance capacity at short notice. It allows organizations to quickly access specialized skills and expertise that may not be available internally, filling gaps without the time and expense of recruiting and training new employees. It offers flexibility to scale operations up or down based on demand, which can help mitigate the effect of seasonality on agencies.

However, outsourcing as a strategy does have its unique downsides. Full-time employees can:

  • Contribute more significantly to building institutional know-how
  • Ensure continuity within teams, improving community and client relationships
  • Help build a unified culture and mindset

Agencies must carefully consider their long-term objectives and the impact on their internal team dynamics before deciding to outsource. Ultimately, a strategic approach that combines the strengths of both outsourcing and building in-house resources may be the best option.

Building Capacity Through Partnerships

By seeking out like-minded agencies to collaborate with, you can fill gaps in service delivery to deliver additional value to clients. Partnerships help agencies combine their resources, share knowledge, and create something new that benefits both sides. They also draw from diverse perspectives and capabilities to foster innovation, efficiency, and expertise.

Consider some best practices that Nick Dan-Bergman, the VP of Marketing and Partnerships at LaneTerralever, shared with Productive’s Bold Community:

  • To start off, consider establishing partnerships in your area of expertise
  • Find influential companies that have some skin in the game
  • Figure out who’s the right point of contact for your company
  • Manage your expectations — this goes for internal teams as well
  • Be patient, as evaluating ROI, such as revenue, can take up to a year

If you’re interested in first-hand expert tips and tricks on partnerships or other hot industry topics, join our Bold Community.

Connect With Agency Peers

Access agency-related Slack channels, exchange business insights, and join in on members-only live sessions.

Development Plan for Agency Processes

Another capacity management strategy is putting a focus on the processes that support daily workflows.

Streamlining communication is an important part of efficient service delivery and balanced workloads. According to research by McKinsey, employees spend up to 10 hours per week searching for the information they need to do their tasks. Adopting collaborative tools with real-time sharing and data updating can also ensure that team members have immediate access to the resources they need.

Screenshot of a user interface of a content management system displaying a task for creating motion graphics with options for descriptions, attachments, subtasks, and assignment details.


Real-time updates are also important for keeping your projects on track and managing scope creep. If you have immediate insight into how certain tasks or resources affect your project finances, you can make informed, data-driven decisions. Additionally, automating repetitive tasks can free up your resources for more crucial tasks.

Without a doubt, in the billing area there has been considerable change. I can say that the hours we dedicate have been reduced in a 15-20%.

Stephan O,
Manager at BICG

Learn how businesses use Productive to gain a 360-degree view of their operations.

This can also include examining your infrastructure, such as hardware, network capabilities, and software systems. To learn more, read our Guide to IT Capacity Planning.

Upgrading Your Technology

By implementing technology into your resource planning and building process, you can optimize your operations and meet changing demands more easily. Tools like project management software, enterprise resource planning (ERP) tools, or capacity planning software provide key features such as:

  • Collaboration tools
  • Financial forecasting
  • Workload balancing
  • Utilization insights

According to research by SoDa & Productive, more than 50% of agencies don’t use an integrated system that can help them get the most out of their data. When it comes to tracking specific metrics, 43% track their forecasted revenue, 33% track their project gross margin, and only 18% track the project budget burn rate.

But what can integrated tools really do for your business?

Productive – The All-in-One Tool for Agency Management

Productive is an agency management software tailored to businesses of all shapes and sizes. This includes design agencies, marketing agencies, development companies, and consultancies.

The fact that Productive is agency-focused means that the whole ecosystem fits together so that there are fewer tools we have to pull together in order to do what we need to do.

Orion Jensen,
CEO at Clear Launch

It provides various capabilities that can make a positive impact on your high-level and day-to-day agency workflows.

Screenshot of a graphical dashboard of a rebranding campaign showing weekly financial and hourly progress with bars and a trend line, alongside summaries of time spent, budget allocation, and invoicing status.


Key Features for Resource Management

  • Assess current capacity: Productive gives you full insight into your agency’s resources. Track your utilization across various metrics, such as project teams, seniority, and more. With integrated leave management, you can process and view sick days and vacations on the platform. Furthermore, you can forecast your utilization to make more informed decisions on future client engagements.
  • Scenario planning: With Resource Planning, you can simplify your capacity building by planning out different allocation scenarios and monitoring their impact on key agency metrics. This includes revenue, profit margin, and budget burn. Use tentative placeholders to create various allocation scenarios without impacting your confirmed hours.
  • Manage reports: Productive delivers real-time data from all of your essential agency operations, including time tracking, resource planning, billing and budgeting, and more. You can share these insights across stakeholders with custom dashboards or via email. To get more in-depth data, Productive’s Reporting offers custom fields for adding agency-specific parameters, as well as capacity report examples.
  • Align your processes: As an all-in-one platform, Productive offers many features, including a Sales Pipeline, project budget management, client invoicing, and time tracking. All of these capabilities are linked together, helping you automate processes and align work between various departments. Additionally, integrations with tools like QuickBooks, Xero, BambooHR, Slack, and Google Calendar help you unify your tech stack.

Additional features include: Automations, Docs

Capacity Building: What’s Next?

Capacity building isn’t a one-and-done process. It takes continuous monitoring, reviewing, and updating in order to stay current and effective. Don’t expect to see results immediately, and consider the benefits it has on intangible success factors, such as client relationships and employee satisfaction.

When implementing your strategies, consider approaches that build up your internal resources and those that assess processes and external opportunities such as partnerships. Finally, don’t underestimate the importance of building your technical capacity with the right agency management software.

Want to learn more? Check out our Guide to Capacity Requirement Planning (CRP).

Connect With Agency Peers

Access agency-related Slack channels, exchange business insights, and join in on members-only live sessions.

Lucija Bakić

Content Specialist

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