According to theStandard for Portfolio Management, the distinction betweenCapacityandCapabilityis fundamental to ensuring the portfolio is achievable. While capacity refers to thequantityof resources (e.g., hours, heads, dollars), capability refers to thequalityandattributesof those resources.
The rationale forOption Bis as follows:
Defining Capability:A best practice in portfolio analysis is to look beyond mere headcounts. Capability analysis involves a deep dive into theknowledge, skills, and competenciesrequired to execute the portfolio.
For example, a mattress company may have 100 workers (capacity), but if none of them have the
"competency" to operate a new automated sewing machine, the portfolio's new product line cannot be realized.
Resource Readiness:By evaluating these qualitative factors, the Portfolio Manager can identify "capability gaps". This assessment informs thePortfolio Human Resource Managementplan, determining whether the organization needs to invest in training, hiring, or outsourcing to bridge the gap between the current state and the requirements of the future portfolio.
Alignment with Strategic Objectives:Strategic initiatives often require new skill sets. Evaluating competencies ensures that the portfolio isn't just "full of work," but is staffed by people who have the specific technical and leadership skills necessary to drive value.
Why the other options are incorrect:
Option A (Employ a resource management process):This is a broad procedural statement. While a resource management processincludescapability analysis, it is the overarching framework rather than the specific best practice for performing the analysis itself.
Option B (Use it once resources are in the plan):Capability and capacity analysis should be usedduringthe optimization and selection phases to determine if the plan is even feasible. Waiting until resources are already in the performance plan is too late to prevent over-commitment.
Option D (Evaluate resource optimization):Resource optimization is theoutcomeof effective capacity and capability analysis. You cannot optimize resources until you have first evaluated the underlying competencies available to be optimized.