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"Algorithmics Selects Journyx Timesheet to Manage Workforce & Optimize
Project Costing"
Source : Journyx
Project Costing for Maximum Profitability
Project costing is also known as:
project costing management,
project costing and billing,
project and job costing,
activity-based project costing,
project cost,
costing in project management,
project costing software,
costing in project,
IT project costing,
project costing template,
costing projects,
project costing module,
total project costing,
project job costing.
To be competitive in most markets today, companies must have a way to manage
costs accurately and understand profitability. More than ever before, companies
and workgroups are looking for tools that will help employees and project
managers track projects efficiently as well as provide quality cost and
profitability data. By implementing a timekeeping solution for the purposes of
accurate project costing, organizations are obtaining valuable insight into
which projects are profitable and which ones are not. Project-oriented
timekeeping data is also used by forward thinking companies to bid on future
projects, stay within budgeted costs, allocate the appropriate number of
resources, and track projects while they are underway. These project-oriented
timesheet solutions deliver more than just an attendance tracking system. They
provide organizations with the tools necessary to understand the impact of time
and resources on project profitability.
According to Giga Information Group, the time tracking software market is
growing at a rapid pace. Fueled by the Web and new software technologies, the
market is expected to grow 25% annually and reach more than $800 million by
2005. Studies show organizations have good reason to implement project-based
timesheet solutions. According to the Center for Business Practices, over 97% of
senior level project management professionals stated that implementing project
management tools added value to their organizations. In fact, organizations of
all sizes in all industries reported improvement after implementing project
management methodologies.
The Reasons Behind the Growth
As web-based technologies have improved, full automation of the time capture
and analysis process has become a real possibility. Paper and spreadsheet-based
processes are still in use, despite the fact that these methods are cumbersome
and require manual collation of data. PC-based ("client-side") software limits
access to individual machines and still requires some kind of manual
synchronization process. As server-based systems have grown faster, more
scalable, and easier to integrate with other systems, automated project tracking
has become the preferred choice for project-oriented companies.
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. This ongoing project tracking
process leads to increased profitability, as companies have the ability to
manage projects efficiently and to understand their most profitable
processes/cost centers. With a company-wide timesheet solution, organizations
can shift resources where needed and optimize existing resources as they are
needed.
Giga predicts that the market for time and attendance solutions will grow at
a healthy 25% annual rate through 2005
Why Traditional Project Costing Methods Fail
Traditional timekeeping processes require time clocks, paper time cards, and
other clerical procedures to capture and analyze labor data. Some companies use
paper and spreadsheet programs to track costs and time spent on various
projects, but these methods have proven to be problematic. The data is often
incomplete and/or incorrect, and most manual methods require extensive man-hours
to input, filter, and organize the data. Additionally, these methods
significantly limit company-wide access to timely data and reporting
capabilities.
Manual Methods Result in Costly Mistakes
In addition to the drawbacks of limited data and increased clerical overhead,
manual project costing methods increase the likelihood of mistakes such as
inaccurate charge costs, duplicate entries, and general calculation errors.
Manual systems do not provide methods of presenting dynamic and detailed
hierarchical project lists, cost codes, and other important time reporting data.
Further, manual methods have cumbersome approval processes, requiring employees
to pass paperwork from desk to desk. This results in delayed payments, misplaced
paperwork, and numerous other problems.
Related manual approval processes is the problem with employee notifications.
Frequently, timesheets are turned in late by remote employees who are delayed
due to travel and/or inability to access their computers or desks. When remote
employees are late submitting project data, expenses, and timesheet information,
their pay and expense checks are also delayed resulting in ongoing payroll
problems. Additionally, project status and billable work information is not
provided in a timely manner. With an automated process, reminders are sent, data
is entered online, and information is routed for approval with one click of the
mouse.
Manual methods are also undesirable because they require double entry-- the
employee must enter/write down records, then accounting must re-enter the
records into their system. Double entry increases the likelihood of duplication
errors and costly calculation mistakes. Many companies have attempted to
automate certain aspects of this process, such as data capture and
summarization, but significant staff time is still needed to filter, integrate,
and interpret the data; few companies invest the time needed to obtain the level
of information project costing timesheet solutions provide automatically.
For companies who do invest the time to analyze project costing data
manually, entering, collating, and analyzing the data is cumbersome and costs
companies substantial non-productive man-hours. By the time these processes are
complete, the information collected may no longer be relevant. Companies who
have automated these process have a clear advantage from a time standpoint -
they are equipped with real-time project data and are able to act faster, bid
smarter, and beat out the competitor who may still be gathering data from the
last project.
Automating Reduces Errors by 75%
According to the Gartner Group, fully automating the timesheet process
reduces errors and staff time by 75 percent or more. Automation technologies and
practices reduce improper time tracking activities and associated costs by
validating project/cost code lists and monitoring approval processes
electronically. Additional savings are realized by eliminating paper costs, and
policy and regulatory compliance is improved.
Typical costs of time tracking applications deployment, including software,
hardware and implementation, generally range from $50 to $150 per employee. The
Gartner Group states that companies can often recoup this investment within one
year of deployment through the resultant increase in both efficiency and
accuracy. Because project costing with a timesheet solution gives companies
insight into whether or not projects are on track, costs are in line, and
resources are properly allocated throughout the scope of the project, managers
are able to adjust for problems before it is too late.
How Project Costing Software Increases Profitability
With a project-based timesheet system, actual costs are consistently tracked
across the company and reported for current and future project forecasting.
Project managers who begin using a timesheet system immediately notice
significant discrepancies that may have gone undetected before. For example, a
timesheet solution makes it apparent when the actual project hours worked is
about to exceed the amount of hours forecasted. Awareness of these discrepancies
and anomalies makes it possible for companies to resolve issues quickly and
maintain profitability. Companies are able to pinpoint exact costs because they
can see which employees are working on which projects, and how much time it
takes each individual to complete specific tasks.
A project costing timesheet solution can help decision makers and project
managers answer these kinds of questions:
- Is the project currently on time and on budget?
- Are actual project costs in line with projected costs?
- How much is being spent at each phase of the project?
- What percentage of total time is being spent on each phase of the
project?
- Have enough resources been allocated to complete the project?
- How much is being spent per person?
- How much is being spent per project?
- How much is the actual cost versus the projected cost per resource?
- What types of projects have the highest return on investment?
- What types of projects consistently lose money?
With this level of information, companies can hire the precise number of
staff required, establish predictable profit margins, identify comparatively
high cost areas, and manage projects effectively from start to completion.
Project costing using actual numbers, not estimated data, gives companies a
significant edge over competitors. Organizations can capture potential business
from competitors by knowing exact project costs, bidding on projects accurately,
and accepting only the most profitable projects.
Automated Project Costing Benefits Everyone
Once a project-oriented timesheet system is in place, its value to employees,
project managers, and the company as a whole is almost immediate. Employees can
count on a more balanced workload, including well-defined, predictable project
assignments. With a timesheet system, it is easier for employees to enter
project and time data, and they can access personal and project team data
quickly. Employees 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.
The benefits to project managers are countless. Through automated time entry
project managers have support data to help them plan, coordinate, and complete
each phase of the project on time and under budget. With automated project
costing, determining how many resources and hours are needed to complete each
project is simplified. Project managers are able to maximize the financial
contribution and measure their personal value to the company. This also leads to
an increased sense of job security because project managers have greater control
over their results. Many will be able to identify problems before they occur by
reviewing current data, such as roll-up reports by project and phase that allow
a project manager to pinpoint excess time and money being spent.
The company's Accounting, Payroll and Human Resources departments reap the
benefit of having an easy-to-use tool for tracking billable time, payroll,
expenses, vacation, sick leave, and other pertinent administrative functions.
The automatic transfer of data to accounting/HR systems eliminates the need for
double entry, and the resulting increased accuracy reduces time spent on
corrected invoices and payments.
Executives also benefit from the ability to compare and contrast time and
resources spent on different projects to determine which are profitable and
which are not. With company-wide project data, executives are able to identify
problems and successes with ease. Executives and decision makers can assess the
data on an ongoing basis and use the information to make vital business
decisions that impact the company's bottom line.
Most importantly, project costing benefits the organization's customer, who
receives products and projects delivered on time and within budget. Customers
can also be given access to detailed work data that allows them to track the
project progress, verify invoices, and avoid billing disputes
Why Choose a Project-Based Timesheet Solution?
- Assess projects at each phase of the project to keep costs and resources
on track.
- Track current projects and use to accurately bid future projects.
- Use project data to optimize staffing and hire the precise number of
people.
- Multiple users can contribute data across the company for the most
accurate project costing data.
- Use data to pinpoint the most costly phases of the project so
improvements can be made
- Automated approval process saves days or hours tracking down signatures.
- Reduces paperwork errors by a factor of 75%
Timesheet Solutions Give Organizations a Competitive Edge
Over the past two decades, rapid increases in efficiency, a more globalized
economy, and significant advances in communication have allowed companies all
over the world to compete for even the smallest amounts of business. To stay
competitive, all industries must be able to deliver short product runs, operate
as efficiently as possible, and sometimes survive on the slimmest of margins.
When companies have in-depth project data readily available, they gain a new
understanding about their profitability. Organizations can change strategy to
place more emphasis on revenue-generating projects and let go of low-producing
projects. Projects are rarely underbid or overbid because historical and
real-time project data is readily available for budgeting costs and resources
accurately. Initially, a competitor may win the deal based on a lower bid or
quicker time to completion, but may lose in the end because they have mistakenly
underbid the project or underestimated the time needed to complete the job. With
accurate project costing data, these kinds of errors no longer occur. Companies
without automated systems may be driven out of business by taking on monumental
projects that they can't deliver for the price quoted.
Over the past few years, CEOs in particular are seeing the value in managing
the business by project. This trend toward management by project has allowed
organizations of all sizes to compete on a more level playing field. Even a
small organization can deliver an efficient project by having insight into their
actual costs and resources being used across the company. With a project costing
solution in place, divisions, directors, and project managers are easily able to
demonstrate their value to the organization by consistently turning out
profitable projects.
Choosing a Timesheet Solution for Project Costing
Many timesheet applications are not project oriented and focus too heavily on
time card and payroll functions. Project managers are often frustrated with
these timekeeping systems because they are not project-oriented in nature. Even
many of the payroll timesheet systems that claim to track tasks often cannot
link to the project management systems that are already in use, and do not have
the depth or breadth of entry and reporting capabilities that project costing
applications have. Implementing a project-oriented timesheet application is the
fastest path to establishing a company-wide project costing system.
In most organizations, the timesheet application is owned by the Payroll or
Accounting department and is used to manage employee hours, absences, vacation,
and sick leave. Project managers, on the other hand, have little use for these
payroll features; they want to track all phases of the project and know how much
time each person spends on projects, and what tasks were worked on. The problem
is most project tracking systems (usually desktop applications) do not mesh with
the company's time tracking systems (usually centralized applications). It is
important for companies to find a tool that integrates both accounting and
project management requirements so the tool will be well received across the
organization. The ideal solution is one that has all of the time tracking and
project management features that will serve both project management and payroll.
For maximum value, the tool should be able to integrate with existing
accounting, payroll, and project management applications already in use
throughout the company.
In addition to being useful to both project management and accounting, the
application selected should be a highly intuitive program that automates
everything for the employee. It should be effortless for the employee to enter
timesheet information, employee expenses, projects, and tasks with little effort
or training.
A Best-of-Breed Solution Delivers Maximum Value
In addition to considering a niche versus total time tracking solution,
evaluators must also compare the benefits of stand-alone offerings versus
product suites. The project-oriented timesheet applications categorized as best
of breed provide distinct advantages for companies. These programs are focused
on the time component, rather than offering time as an add-on to other software.
These timesheet solutions bridge the gaps across the company and automate
numerous business processes used by accounting, project management, executives,
and employees. Best-of-breed solutions are also preferred because they leverage
the company's existing infrastructure, so companies are not required to discard
existing programs or make new investments in IT.
A best-of-breed solution should provide configuration options for a variety
of entry environments for different types of employees. The configuration should
be flexible enough to mimic the employee's existing time tracking process so it
is adopted quickly and requires little to no training. Because some solutions
can mirror the employees' existing project tracking process via the Web,
web-based applications are considered the best for overcoming the hurdle of
access to the employee's entry environment anytime, anywhere.
Features to Include as Requirements
A best-of-breed project costing timesheet solution should include all of the
following characteristics:
- Remote Access. Choose a solution that allows full access from remote
locations so mobile workers and employees in various locales can login to a
centrally maintained system. In addition to web accessibility, the solution
should include offline options for time capture (i.e., email submission,
telephone/voice entry).
- Web-Based Application. Choose an application that can be installed at
one location and requires nothing more than a web browser to input and
access data. The application should be scalable across multiple locations.
This will reduce IT and ongoing maintenance costs, as well as the time and
trouble it takes to upgrade the system. Web-enabled software is not the same
as web-based software. Web-enabled software is client-side software with a
limited set of its features available via the Web. Only web-based programs
allow companies to bypass the problems with client-side programs which are
not remotely accessible, must be installed on many individual machines and
are extremely time-consuming to upgrade. Web-based applications will always
result in a substantially lower total cost of ownership.
- Automated Approvals. Selecting an application with customizable
approvals reduces a formerly lengthy process down to minutes. The tool
should include a non-static workflow engine to automate the approval process
so that it essentially runs by itself once it is configured. Ideally, the
engine should be capable of being customized to match the various approval
methods of the company, project, and/or department. The engine should also
include options for approval reminders and late notifications.
- Integration with Existing Systems. Choose a best-of-breed time
application that meets the time data requirements of the various parties
within an organization and integrates well with existing corporate systems.
Many software vendors require the customer to replace existing software and
buy an entire suite of products to get only a portion of the functionality
that comes standard in a best-of-breed time solution. Best-of-breed time
applications do not replace other corporate systems. As a result, they must
include open and flexible integration tools, including support for open
standards such as XML and web services.
- Flexible Installation and Deployment. Installation and deployment should
be very straightforward. Select a product with an architecture that
minimizes maintenance costs and is easy to deploy across multiple locations.
In order to leverage current IT investments, the application should be
supported on multiple platforms including a variety of browsers, databases
and operating systems. Additionally, the vendor should offer hosting
services for those who choose not to maintain the application internally.
- User Friendly and Intuitive. The application should automate everything
except the initial data entry for the employee. It should also include
configuration options that allow the administrator to emulate the current
project/time/expense tracking process of each employee or department. With
this type of solution, little employee training is needed and user
acceptance is extremely high.
Project Costing Management Products to Avoid
There are some timesheet systems on the market that have specific
shortcomings with respect to time capture for project costing. These
characteristics can result in a lack of acceptance, increased administration
costs, customization fees, and other ongoing problems that can significantly
reduce the ROI for companies. Products that are not categorized as
project-oriented or best of breed should be avoided.
Narrowly Focused Applications
Many time tracking systems only capture time for a single purpose. They may
focus more on tracking employee time for payroll purposes or professional
billing. In order to realize the greatest gains in terms of project efficiency
and overall corporate profitability, a broader time reporting solution should be
selected.
Client-Side Applications
Some products claim to be web-enabled but hide behind a thin web veneer.
Web-enabled is not the same as web-based. Most products that present themselves
as "web-enabled" require a client side component. Web-enabled applications can
only offer a limited set of their features for access from a remote location.
The full functionality can only be accessed on the specific machine on which the
client component is installed. Client-side architecture is more difficult and
costly to maintain than the web-based counterparts.
Weak Reporting Features
The timesheet application should have flexible report creation and
modification abilities, as well as prepackaged reports. Products that provide
only a set of canned reports may require the customer to pay additional fees for
custom reports or supplemental software to create reports to fit their needs.
Limited Scalability
Company-wide time tracking systems must be able to handle large and complex
sets of data. Most of the software on the market today cannot scale for
thousands of projects and employees. Additionally, they do not support the deep
levels and work breakdown structure of the project-task hierarchy that are
required for a typical project plan. Without a robust interface and support for
enterprise quality installation options (i.e., support for multiple technology
platforms) the timesheet application will not be able to expand as the company
grows.
Measuring Time is Imperative to Profitability
"Time is the scarcest resource and unless it is managed nothing
else can be managed."
—Peter F. Drucker
It is essential that companies have a system in place that houses dynamic
project costing data (i.e., project, cost, and profitability information). 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 management tools may not survive in the
long-term. Organizations who implement a best-of-breed timesheet solution are in
the most advantageous position because they have the data needed to understand
how time, projects, and the people who work on them impact their profitability.