More Profitability for Less Work
In today’s knowledge economy, it is hard for companies to determine where they’re profitable. After all, how exactly do you quantify your production? Fortunately, using time as a metric for production provides companies with not only insight, but also the opportunity to unleash profitability without significant effort or expense. Through project accounting, businesses are able to better understand their costs, anticipate and curb project risk, and even devise efficient business strategies. The data required to make these connections is already available, and all that is needed is the right software to deliver it.
In the past, tracking time was essential for payroll but not much else. New technology, however, has given us the ability to reap even more benefits from time data. Time tracking software gives organizations valuable insight into which projects are profitable and which ones are not. Studies support this premise. According to the Center for Business Practices, over 97% of senior level project management professionals stated that implementing such tools added value to their organizations.
How Project Costing Software Increases Profitability
What many business professionals do not realize is that by using the amount of time spent on the first and second phases of a project, one can predict the total project length with startling accuracy. The more difficult or complex a project is, the more time it will take to complete its specification and design, and this allows for such a formula to exist.
Once it is determined that the first two phases of Projects 1 and 2—approximately the first 10%—took a certain amount of time to finish to completion, it is simple to figure out how long it will take to complete Project 3. Furthermore, let’s say that the project manager discovers that after 30% of the allotted time, only 10% of the project is completed. This is a signal that there is a problem, a signal that is much more useful when 30% of your money has been spent as opposed to 80 percent. Simply knowing how much time is spent on various types of work makes a world of difference in a competitive business environment.
Having an automated system to take care of all of this saves time and energy that would otherwise be put into maintaining paper and/or spreadsheet-based processes. According to a study done by the University of California, Irvine, fully automating the timesheet process also reduces errors by 75 percent. For these reasons, more businesses than ever before are implementing timesheet applications to help them manage and track all projects as well as forecast current and future project requirements.
Automated Project Costing Benefits Everyone
Only two things are required to begin moving in this direction: the right time accounting platform and total buy-in. The latter is important because time data has to be accumulated, and some people dislike filling out timesheets. Describing its benefits in a clear way, however, is usually enough to get everyone on board. With an automated timesheet system in place, employees can count on a more balanced workload. They also enjoy more job security because the company has a clear understanding of the resource levels needed for current and future projects—understaffing and overstaffing due to poor planning are virtually eliminated. Project managers benefit from being able to complete projects on time and under budget. They are able to pinpoint problems before they occur, and ultimately have more job security as well because they have greater control over their results. Furthermore, executives can use the system to determine which projects are profitable, thereby helping them in future decisions. Everyone wins.
Choosing a Timesheet Solution for Project Costing
The ideal timesheet solution will integrate payroll, billing and project accounting processes into one, easy-to-use program. It should be effortless for the employee to enter timesheet information, employee expenses, projects and tasks with little effort or training. It should also be web-based and enable remote access so that mobile workers and employees in various locales can login to a centrally maintained system.
Measuring Time is Imperative to Profitability
It is essential that companies have a system in place that houses dynamic project, cost, and profitability data. Today’s competitive players need to be smarter, faster, and more accurate in forecasting projects and allocating resources. Without an automated timekeeping mechanism in place, it is difficult for organizations to understand and improve the many time- and project-related variables that affect a company’s profitability on a daily basis. Companies who fail to recognize the need for efficient project costing may not survive in the long-term. Organizations who implement the right timesheet solution have an advantage because they have the data needed to understand how time, projects, and the people who work on them impact their profitability.
