Curt Finch, Journyx
Chances
are you’re quite familiar with project accounting, and you understand how
financial reports that track the financial progress of projects can be used by
managers to aid project management. Project accounting gives businesses insight
into the comparative value of current and past projects, as well as the
projected value for future endeavors. However, if project accounting is
approached primarily from the top down, these estimates may be flawed. Project
knowledge must be granular, and individual team members should contribute and
review that information on a per-person level to determine its accuracy.
Unfortunately,
it is often the case that businesses implementing a project accounting system,
even if done with the goal of tracking individual time and resources to
projects, might run into a snag: team members just do not have the time,
desire, or know-how to accurately account for activities and expenditures. This
doesn’t mean they’re lazy. In fact, the most productive team members may be the
worst at documenting their activities since they might view any time not spent
actively completing the project as wasted time.
Following
are the top five most common mistakes made in project accounting, and the best
ways to make sure you avoid them and stay on track.
1. “Tracking
time is a waste of time!”
Unlike
many decades ago when traditional manufacturing and farming were the
predominant industries and employers, most of us today are knowledge workers,
dealing in numbers and information. Whereas in the past, profitability could be
measured by comparing the cost of individual components to the profit of that
completed product, now the product that knowledge workers provide is their
knowledge and expertise. Therefore, time itself because a critical piece of
data to measure. It is necessary to know the relative worth of your people’s
time, as well as their expenditure of that resource, to get a clear insight
into costs relative to budget.
Further,
it is important to know where exactly a project stands in relation to the
approved schedule. If, for instance, it is determined that a project has used
80% of its resources but is only 50% complete, a reevaluation of resource
distribution is in order. To enable this level of control, project team members
should track time and resources individually to a project. This will highlight
larger trends, and allow you to make micro-corrections as necessary.
2. “Any System
Will Do The Trick!”
One
of the biggest benefits of tracking time to projects is the backlog of specific
data that it provides. Project managers can review previous information on both
successful projects and those that ended in failure to make accurate forecasts
for future projects. A poorly configured system can cause significant problems
if data is lost or misapplied.
If
it is difficult to enter data, the system will not be successful. Employees may
submit simplistic, incomplete information to just be done with it. Time data has
to be easy to enter, retrieve, and view. When selecting a system, look for ones
that allow anytime, anywhere entry screens so employees can always access
information. Also, check the reporting capabilities of potential software.
These reports should be easily understandable and available to any authorized
individual in an organization so information can be shared.
3. “That
Doesn’t Count.”
The
old Boy Scout motto of “Be Prepared” applies perfectly to project accounting.
It is necessary to have insight into both what is happening and what will not be happening. There will
be times when unpredictable expenses arise. A time management system can help
mitigate these surprises.
If
a system allows employees to schedule vacations in advance, then it will be no
surprise when a key resource takes two weeks off in the middle of a project to
go out of town. If no one realized the vacation was coming up, it could
jeopardize the completion of a project. You need to see all expenses relative
to the budget, even if they are not directly related to the project itself.
These can include travel expenses, facilities maintenance, and even meals
provided to a hard-working team that has to stay late!
4. “I’m Sure
They’ll Figure It Out.”
There
is a fine line with any software between complexity and sufficiency. Too
simple, and the data won’t be of much use. Too complex, and users will have
difficulty inputting or interpreting it. That’s why it is important to make the
system simple on the front-end, yet robust internally.
An
automated system that accounts for the human element will greatly enhance the
availability and value of time data. Issuing daily or weekly reminders for
entry data safeguards against common entry errors and will reduce the time
necessary to “clean” project data. It will also provide insight into ongoing
projects. Determine who should approve the data and then make sure that the
timesheet gets filled out every time by using built-in system reminders. By automating
these tasks, you will save time and ensure the quality and consistency of time
data.
5. “We’re All
Set For The Next Decade!”
Employees
should be able to see the benefit of spending extra time entering analytic
data. There is nothing more frustrating to knowledge workers than feeling like
their time is wasted on unnecessary bureaucratic actions that are initially
extolled by higher-ups but later abandoned, simply becoming a pointless
recurring action. Failure to review and act on data totally undermines the rationale
behind implementing a time-tracking system in the first place.
Without
consistent application of time data to business operations, a company will leak
money and resources unnecessarily. Keep your system up to date and
well-monitored so actionable metrics are only a click away. When possible,
discuss relevant data used to make decisions with employees so that they will
understand the rationale behind any “game-changing” decisions from above.
Time,
money, and resources need to be precisely applied in order to achieve the best
results in any project setting. Fortunately, the tools exist to make the
determination of that amount relatively simple. This common-sense approach can
make the entry and application of project data seamless and simple.