What should you measure if what you’re selling is time?

When I’m talking to potential customers about time@work they’ll often dismiss the idea of timesheets on the grounds that they don’t charge for their time. What they mean is that the fees they charge aren’t directly related to the minutes, hours, days, weeks, months or years they spend on their clients’ projects. Their projects are fixed price, or success based, and so on.

 

Nevertheless, I say to them, they must measure time if they want some idea of the profitability of their work. Professional services organisations are just like any other organisation: they earn revenues and incur costs, and they take home the difference as profit. It’s true that some professional services organisations obtain a margin on the commodities or products they sell (software is a good example) but this isn’t usually the core of their business. If they’re selling services then they’re selling time. Time has a cost (it must be bought) and a value (when it’s sold), whether staff are external freelances or employees, and whether time is spent on direct project work, support work, account management or even sales. site whois . It is essential that a professional services organisation should be able to judge the profitability of their work.

 

But of course, it isn’t enough just to look at the profitability of projects and clients. An organisation may run its projects profitably whilst still losing money as long as its staff aren’t busy enough. Employees’ costs, if they are not freelances, are more or less fixed (though there may often be a variable bonus-based element) so it’s not only a matter of project profitability but employee profitability too.

 

And then, again, you may run profitable projects, and profitable employees, but still be brought down by excessive overheads, excessive work in progress and cash-flow problems arising from unpaid debts.

 

Measuring time is just the start!

 

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