What’s the point of reporting work time?

IC Project , 14 April, 2017

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It is still said that keeping track of employees’ working time is a key aspect of taking care of the functional condition of a company. Is this true, and what is it really necessary for?

Since the dawn of time, employers wanted to know how much time their employees spend on their work, not to count that time, but to ensure the amount of hours get worked, consistent with the contract, employment, or otherwise written agreement. An employer who pays for a 40-hour work week expects that an employee spends 40hrs on the job that week. Most often in a small company, where the boss starts working every day along with his employees, that becomes an art of pretending. When aware that the company’s CEO is not present because he/she is on vacation, one might come a bit later (risking a phone check from the supervisor) or leave a bit earlier. In larger, wealthier companies, an electronic entry card system may be installed to register each worker’s morning starting and afternoon ending time. These systems automatically keep track of employee hours. However, methods to circumvent them are inevitable. For example, a coworker friend can swipe your card at 8am, allowing you to take care of other errands, and sneak in later at 9am.

Nevertheless, all of these approaches lead to the same thing. The employee has to be present at work during the hours arranged with the employer. Unfortunately, these reporting systems are unable to assess the employee’s actual job efficiency. In the end, the presence of an employee does not guarantee high profits for the company, but only the costs of the individual’s contract. So how can something so unmeasurable be measured? Just like in any company that runs several larger and smaller projects simultaneously, there are indicators which one is the hen laying golden eggs, and which ones drag the company down.

If month to month the budget is robust, then that can be considered not bad. The CEO, salesperson or customer agent secures more “business”; the employees do the work; the company invoices the customer from time to time. So all is good? Well no, not quite. Kudos to the company for making ends meet, but in the absence of risk analysis, it is difficult to navigate the troubled waters that will come, and these will always come sooner or later.
For example, Company X has a monthly operating cost of 64,000€ and revenue of 80,000€. The numbers add up, and the CEO clasps his/her hands with satisfaction. After all, the 16,000€ difference per month is reason to be content. But let’s look at it deeper and do a cost analysis. Each month, the company does five cyclic and an average of five one-off projects. Additional orders give the company a profit of 10,000€ per month at a cost of 8,000€. We will focus on regular customers, since as you know, they are harder to win than to keep a steady customer.

Among five projects of different types, two are large and together bring 20,000.00€ monthly. The remaining three yield a profit of 10,000€ per month at a cost of 6,000€. The costs that employees incur on these two large orders are 30,000€ and 8,000€, respectively. These are solid, long-time customers for which the company does beyond the paid agreement, since one should take care of such a large customers. As you can see, the single largest one is a very demanding customer.

What does this mean? Probably that the company will do everything to take care of the biggest customer at the expense of others. And if it knew the actual costs of rendering its big project, it could stand to negotiate the contract with that customer, which costs it most, or end that contract altogether, which would effectively mean:
a lower overall monthly income (i.e. 20,000€)
lower overall monthly costs (i.e. 20,000€)
The net revenue would be 60,000€, net cost 44,000€, and net profit 16,000€.
What did the company gain? Free human resources that can be applied.

Of course, this is an extreme case, fabricated for the sake of discussion, but when dealing with a large number of projects, it is not known whether the company is wasting money unnecessarily or not. Knowledge of project-handling expenses also offers a company another crucial value: it allows one to assess the value of its business services portfolio. Thus, in turn, the company can be competitive in the market.
Measuring work time on a project is not as complicated as it might seem. It is enough for each employee to report his or her own time spent on each task. This can be done in three ways. Firstly, on the Task card, under the Working time tab:

 

 

Alternatively, a special side panel available from anywhere within the system, by clicking on the watch icon:

 

 

Or also on the list of all working times in the Tasks section:

 

 

How the Project Manager sees it in the Project Finance view:

 

 

This also readable on the chart in the dashboard:

 

 

If more accuracy is desired, then each product can be viewed separately from the point of view of allocated budget vs. actual consumption of human resources or external costs linked to the project.
To summarize, reporting work time on tasks (projects) is an extremely important element, yielding the knowledge necessary for effective business management. This makes it easier to maintain a diverse portfolio of business customers and be aware of your company’s capabilities. A company that is aware is a company that is prepared for the worst, which can strike at any time. Let’s get ready for it. With IC Project, it is easy and enjoyable.

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