In pharmaceutical, software development, or engineering organizations, having an effective and efficient R&D department is a critical component to driving the profitability and success of the company. Most R&D departments assign resources to complete projects or tasks to determine what value the organization can deliver to their customers. An important part of measuring that value is measuring the amount of time and effort resources spend completing those activities.
A common list of questions that your leaders within your R&D department will ask when considering the time and effort spent on projects are:
- What are my team members working on?
- Are we working on the right projects?
- What are those projects costing?
- Are our projects on budget?
- Am I optimizing my resources – do I have enough of the right people to complete my projects on time?
- Do I have the information I need for any Capital/Expense and/or R&D tax credit reporting?
The Role of Project Accounting for R&D
Project accounting is the practice of creating financial reports specifically designed to track the financial progress of projects, which can then be used by managers to aid project management. In the case of R&D, project accounting is used to track all costs (time and expenses) associated with the research and development phase of a new product – including labor, clinical trials, product maintenance, and other project work – enabling companies to determine a product’s profitability before it goes to market.
In an R&D environment, however, this is much more complex than it sounds. Because of its multidisciplinary nature, resources across departments and collaboration partners must be managed carefully in order to gain the full picture of what each employee is working on. Tracking time and effort to R&D projects, studies, clinical trials, and other associated activities will go a long way towards managing this effectively, as well as providing the data needed to make more accurate cost estimations on future projects.
Implementing a simple, user-friendly project time tracking solution allows your managers to answer the questions I listed above. With the right solution, R&D team members can quickly and accurately track the amount of time and effort they spend each day on the projects to which they are assigned, which provides the organization the information it needs to make better decisions regarding product development.
30-Second Case Study
For some more context, here’s real-life example: A large pharmaceutical company based in Germany uses Journyx to track the time their R&D team members – spanning to thousands of users worldwide – spend on the development of new medications. The information this organization receives using Journyx allows them to determine if and when a new medication will be profitable. This allows them to reduce their internal costs, which is passed along as savings to the people who need these medications. Learn more about Journyx’s time tracking solution for pharmaceutical companies.