Often we hear from our customers in the service industry that project teams just focus on getting the job done no matter what. After all a happy client or project sponsor is the most important thing right! Well we at bcToolkit would say “only half right” because if your client is happy but as a result you are losing money by spending too much time on projects then you will be seriously under billing and putting your business at risk.
It is the team leader’s role to make the connection between time and money and have that real-time information to hand so that decisions can be made regarding delivery resources. The folks actually delivering the project are often not interested in the money side. Their currency, if you like, is time. Their thought process is I have a job to do and I have a day to do it in. Often though there is another mindset which is, if I am an hour over it doesn’t really matter. Well scale that 15% over spend up to a 50 day project and you are talking serious money.
If you use Basecamp from 37signals as a project management tool, and we strongly recommend you give it a go, then we would like to plant a couple of questions in your mind.
- Why should you connect the time you and your team are spending on projects to the monetary budgets set?
- Why do you need to know whether you are over or under budget?
Using bcToolkit as a Basecamp reporting tool gives you the answers to both these questions above but why do you need this information?
As far as Q1 is concerned in an environment where you sell only your time then the easiest habit to slip into is over delivering to keep your customer satisfied. There is a stage before this though and that is actually knowing that you are over delivering in the first place and then understanding by how much. Only then can you do something about it. bcToolkit gives you that information by allowing you to assign budgets to Basecamp todos and projects and then analysing the time entered against each to do and comparing it in real time, to the budget you allocated. This performs a fundamental connection. It gives you a progress report in terms of money not just time. So for example bcToolkit will tell you that you have used 80% of you monetary budget but you are on 50% through the project in terms of time. Now it maybe that the budget is front loaded in the project but at least you have the data instantly to evaluate this. In complex projects with many todos in Basecamp you can also see which todos are on schedule and which are not. You can also track an individual’s efficiency at delivering todos within budget.
In answering Q2, we will only discuss being over budget because that is where losses result. If you are under budget the time and therefore money not spent just drops to profit. Firstly, finding out you are over budget at the end of a project is not really any good as it is difficult to go back to your customer and try to sell extra time after the fact. Using bcToolkit gives you daily Basecamp reports that will alert you to the fact that you are about to go over budget, this gives you more time to negotiate more budget from you client while the project is ongoing. Secondly, you will get a view on why you went over for future reference. So for example, it maybe that one person is a slower worker and in future you will have to build in more cost to similar projects to allow for that. Or it may be that certain tasks simply take more time than you allowed so the next time you will know to allocate more time to these particular tasks.
Overall, linking time to money in a service-based business is fundamental to understanding job costing and has a direct impact on profitability. Using bcToolkit as your Basecamp reporting tool will enable you to get so much more information from your Basecamp data enabling you to make business-changing decisions towards increased profitability.
