With the Edward Snowden revelations, the ensuing NSA scandal and the increasing realization that social networks collect every possible scrap of data about their users, people are increasingly becoming leery of “Big Brother”. Entire companies, even industries, are growing up around the premise of protecting you and your data from prying eyes.
Unfortunately, that sense of suspicion can sometimes permeate the workplace, causing employees to be uneasy about standard time-tracking and data collection. They may even believe that management is using the data to cut costs or eliminate jobs. Often, these fears couldn’t be any further from the truth. In fact, time-tracking can be a valuable tool to help employees, add jobs and improve existing ones. So how does this actually provide valuable data and how can you use it to assuage the fears of your team?
Few things are so detrimental to a company than a lack of information. This is especially true when it comes to knowing when and where your organization is making profit. So where does tracking your time fit into this business process? Time tracking helps you know what projects are profitable and which ones are not. This, in turn, helps you focus your efforts where they count and prioritize acquiring more clients and projects of a similar nature. According to Investopedia, there’s even an algorithm to employ once you’ve aggregated the data sets you need.
“A PI [Profitability Index] greater than 1.0 indicates that profitability is positive, while a PI of less than 1.0 indicates that the project will lose money. As values on the profitability index increase, so does the financial attractiveness of the proposed project.
The PI ratio is calculated as follows:
PV of Future Cash Flows
The more profitable a company’s projects, the more room there is for raises and bonuses, bigger budgets for future campaigns, and more.
Understanding the true cost of a project, in terms of the actual man-hours it takes to complete it, is one of the most valuable elements to successfully bidding on future projects. Without this information, a company can find itself repeatedly trying to complete projects that simply aren’t worth the time and resources it’s taking to complete them. This can only happen so many times before profitability tanks and lay-offs become an unfortunate necessity. Tim Washington writes in “The Value of Time Tracking” that collecting time just for the sake of it is a huge sink of valuable data and resources.
“…it is important to track actual project costs. If a customer will be billed for work done on a project, then it makes sense to track time,” said Washington. “Managers or project managers actually use the variance reports [that come with time tracking] to take good corrective action.”
Only through proper time-tracking can an organization truly understand what a project is costing them, and make necessary adjustments to the bidding process to maintain future profitability.
Let’s start this one off by asking what exactly does ‘resource allocation’ mean? According to Wikipedia, resource allocation is “the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by markets, by central planning, or by some combination of the two. In project management, resource allocation or resource management is the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time.”
So let’s look at this in relation to project management. Proper resource allocation in this context is almost impossible without proper time-tracking. Understanding where employees are spending their time, and why they’re spending it there, is an important step in knowing where to spend money in the present and in the future.
Here’s a good example: a particular team may be logging substantial hours because of the size of the project they’re working on. Alternately, they may be logging those hours because they’re struggling with outdated software, antiquated equipment, or some other limitation that can easily be resolved. Similarly, a team might be logging excessive overtime, perhaps even to the detriment of the project’s quality, a problem that may be resolved by assigning more personnel. Whatever the cause, without proper time-tracking, management will be limited in their ability to address the situation.
So what does it look like when a project fails due to improper resource allocation? Capterra put together a list of great stats listing out the results of just this kind of catastrophe. According to their report citing Pricewaterhouse Coopers, “An astounding 97% of organizations believe project management is critical to business performance and organizational success.”
Even so, “Businesses identified “capturing time/costs against projects” as their biggest project management challenge,” according to a similar report by The Access Group.
The consequences of this can be seen when, “one in six IT projects have an average cost overrun of 200% and a schedule overrun of 70%,” according to the Harvard Business Review.
While it is true that some companies have abused time-tracking, when properly used it can be a valuable tool for management and employees alike, leading to a better workplace, improved job security and better pay for all.