Timekeeping is at the Root of any Successful Resourcing System
March 19, 2008 at 4:00 pm by ChrisIn my last two posts about Resourcing, you might have noticed a recurring theme: data. Proper Resourcing just would not be possible without the availability of reliable and consistent data. In our case, we have two types of data that are necessary to make sense of where we stand at any point in time, time and pricing. 
Because we are a service company, our pricing is contingent upon the time we spend on projects. This means that our time data is central to our understanding of our utilization, and any improvements we could make to how we work. Each of our employees enters their time on a daily basis categorized by date, project type, project name, task description and time spent. We call this record a timesheet. We ensure that the categories directly relate to billing phases and terms so that when we evaluate the data it can be understood in terms of the financial picture as well as the schedule. After all, time is money, right? Once we had a large enough sample of data, we were able to look at it in order to evaluate our utilization picture. Overall, we can assess our utilization by looking at the total number of hours our employees will work in a particular time period. For example, in a company of 15 full-time employees (close to our size), the total work hours per week would be roughly 560 hours (7.5 hours x 5 days x 15 employees = 562.5 hours/week). This number of hours in a typical work year would amount to about 26,000 hours a year (562.5 hours/week X 47 weeks = 26,437.5 hours/year). If we were to bill at 100% utilization, we would capture our full hourly rate multiplied by that total number of hours and the result would be equivalent to our gross income. However, 100% utilization is not realistic. Some employees' time is going to be more billable than others, and some time spent in any given project will not be billable if initial pricing was inaccurate. A more likely goal would be 60%. With a goal like 60%, a more realistic amount of billable hours would be around 15,600. In any case, according to David Baker, if Resourcing is being done properly with good time data at its disposal, utilization could be expected to improve by 1.5% a month. In the same manner, individual projects can be evaluated in terms of meeting or exceeding budgets using our time data. We typically assemble budgets based upon the various roles taken by employees within the different phases of a project. Each role in each phase will have a budget value. While we usually don't itemize these budgets in our proposals, we keep the itemization internally so that we can match time data with it in order to track projects as they are happening or determine exactly where a budget was or was not accurate later on. Because we record detailed descriptions with every time entry, we can even get a sense for why something went wrong if it isn't immediately obvious (for example, seeing a developer log like "data import took longer than expected due to corruption and mismatches") or recognize patterns and account for them in future schedule or budget planning. Having a realistic picture of utilization allows us to be able to determine time standards for certain types of tasks, which in turn helps us to establish good pricing for projects. As we increase in efficiency, time spent in implementation should decrease (if our utilization is not great) or level out (due to lack of standardization) allowing for a reasonable profit margin. We can also plan project timelines in advance and more reliably by knowing how long comparable tasks took given comparable circumstances. This is all based upon having a large pool of data and having taken the time to measure utilization, diagnose the areas where we over-service and/or under-price, and made adjustments incrementally. As you can see, timekeeping is essential to any method of achieving optimal utilization! |
Tags: project-management resourcing
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