Project accounting is a critical concept for today’s business world. More and more, corporate executives are seeking to understand their project accounting costs. If they know their project costs, they can discover financial problems with projects early on and fix them. This can potentially save companies millions of dollars.
Unfortunately, many companies have not structured their project accounting system in a way that allows them to draw upon the data for future knowledge. While it is important to understand a current project, it is equally important to be able to glean information from past projects and apply that information to future endeavors.
Fortunately, here at Journyx we have some time-tested ways you can structure your project accounting system to increase its value.
1. Quality Data In = Quality Data Out
In order for project accounting data to be accurate, the data that is put into the system must be accurate. Bad project accounting leads to unnecessary overtime, bad estimates and canceled projects. And so, while employees are often resistant to the idea of tracking their time, they need to understand that there are tangible benefits. Without tracking time to specific projects, it is impossible to calculate the real worth of their time, and the real value of their contributions to the project. Additionally, not providing accurate time tracking information will skew the project accounting data for the entire project.
Tying bonuses or other benefits to complete data collection is often used in customer relationship management (CRM) tools to adjust sales commissions. The same can be done for other forms of data collection. Even if you don’t like to dangle a carrot to get results, providing employees with a template for future success can prove the value of accurate time and resource tracking.
2. Intuitive User Interface
When it comes to choosing a time tracking system, it’s important to consider the system’s interface and ease of use. While your IT professional might be comfortable implementing a system with a highly technical front end, other employees will balk at a complex system. Most employees just want to enter their time as quickly as possible, and then close the program and forget it.
Instituting a system that will notify employees when their time is due will help with compliance. Look for a system that pre-populates memorized information and common tasks. Even small time savings for the employee will increase the value of information you will get from them. Make it easy, make it quick, and they will do it right.
3. Early Warning System
Most project time-tracking systems support some way of indicating what percentage of each project is complete. This can create an early warning system for projects that are going out of control. If you’ve spent 45 percent of the money allocated for a project, but you are only 10 percent done, it’s time to hit the panic button.
4. Limited Visibility
Any project time-tracking system that is worth its salt will be able to limit an employee or department’s visibility into the project list. An employee confronted with 500 entries on his timesheet will usually enter bad data. Pushing this burden up to an administrator will vastly improve data accuracy. You can also use this mechanism to assign people to projects, limit hours on projects, and see who has been assigned to which tasks.
5. Estimation Improvement
Expensive and complex portfolio planning systems are designed to help you refrain from starting projects you don’t have the resources to finish. They can save you lots of money but their Achilles heel is bad estimates. Time tracking can be particularly helpful in estimation improvement when many of the projects in your company are similar, and they usually are.
Detailed time-tracking data shows the cost of the first phase of a project. If the cost is 10 percent and you’ve spent 100 hours gathering requirements, then any estimate far from the 1,000-hour mark should be reexamined. Furthermore, 10 percent is probably the wrong number for the projects in your company, so your mileage may vary. But historical time data will give you important insight into what this average is and how variable it is, and therefore, how to perform that calculation.