The No-lose Way to Dramatically Boost Profits with Accurate Project Costing

Costing projects is arguably the most important part of your project lifecycle. Being able to accurately track the cost of labor and expenses is necessary to determine which projects are profitable, both historically and moving forward. Having the ability to peer into this historical data also allows you to craft more accurate budgets and proposals for future projects. And you can forecast and mitigate cost overruns. But many business owners struggle to capture the true value of time in cost tracking.

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Gain Control of Your Labor Costs

The role of time in determining labor costs should be obvious – the more hours put into the project, the higher the labor cost. However, the factors that contribute to labor hours often aren’t visible. This is simply because the method for capturing time isn’t sophisticated enough to provide that visibility.

Many service-based firms have a big hole in their time capture systems, as they rely on paper timesheets or tools that just aren’t user friendly. If the process is too difficult or inconvenient for your team, they will put off completing their time sheets. Even if they enter time once a week, enough time has gone by from Monday to Friday that they won’t accurately recall how many hours they spent on each project. Not to mention that these systems typically don’t allow you to easily track time against specific activities within a project.

While these systems will meet payroll needs, they fall short when it comes to costing your projects.

  • They lack the granularity required to allocate time to specific project activities.
  • Highly manual processes lead to delays in project billing.
  • They slow down your team, requiring additional time to manually enter and verify the data.
  • Data errors are increased, as information is copied from timesheets, to your accounting and payroll systems.

Visibility into labor data starts by running a system that integrates all your business data. This allows your staff to enter their time once, directly against project activities. Then the information automatically flows through to your other business processes. With this level of integration, you have real-time comparisons for projected vs. actual labor costs.

Track Materials and Expenses More Efficiently

Depending on the type of project you’re delivering, you might have a few expenses or you might have a lot. Perhaps not all these expenses are eligible to be billed to the client, according to your contract. With so many variables, managing project expenses can be cumbersome.

Like time tracking, many service firms still use paper or Excel-based expense forms. Without a direct link to your active project list, it’s difficult for employees to tag their expenses to the applicable project. This is a common place for costs to be missed. The expense form is processed, the employee is reimbursed, but the costs aren’t tracked against the project for billing.

A system that integrates your expense records, project budgets, billing and payroll alleviates this pain. Once again, you have a single point of entry for expenses that are allocated directly to a project activity. The minute the expense has been approved, you can see the impact on your budget. For those cases where you have non-billable expenses per your contract, you can indicate that on the project activity. This allows you to still capture the cost and streamline billing down the line.

The Cost of Poor Cost Visibility

The bottom line – accurately tracking costs is the key to delivering profitable projects. Every lost billable opportunity has an impact on your margins. And so does the overall efficiency of your team, for that matter.

Gain insight into your project costs with Eralis Project, based on SAP Business One. A complete project and business management system, the solution enables you to:

  • Capture costs more accurately.
  • Reduce overhead by streamlining processes.
  • Recapture billable opportunities.
  • Get real-time visibility into your costs at the project or activity level.

Don’t let poor project costing limit your growth potential. Contact us to learn more about the potential of Eralis Project for your firm.

Set your business up for unprecedented growth and stay competitive with our 7 growth hacks. Get your copy of the Growth Hacks guide.

2017-12-12T14:42:23-06:00 Project Management|0 Comments

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