When it comes to managing client work, time tracking has become a standard tool in budget management. The benefits extend far beyond that, from providing insights into project timeline and resource management risks to better project planning.
Rolling out time tracking within an organization can feel daunting, and can elicit a range of emotions among staff, but when we take a step back and understand why it is necessary and the benefits in both the short and long term, it allows us to see the value against the effort and energy spent.
Let’s take a look at why it is worth it to track time, and how better tracking can provide more meaningful insights for future project planning.
Why Track Time?
Time tracking can support how you manage your current projects and people. As you navigate a project, you are assessing your projection (project estimate) against the reality (tracked time) to see if you are on track with your original forecasted trajectory.
By tracking time throughout the course of the project, you will have data to track project progress and gauge if you are trending towards your target and milestones or if there is risk of an overage. If an overage does occur, that not only impacts project budget and project costs, but also the timeline at hand since it requires more working time to accomplish than planned.
This could also have a cascading impact on other projects if a resource is shared and an overage delays the work of the other project (and the next project, and the next…) By seeing the trajectory early on, it allows for risk mitigation to happen earlier in the process which potentially could lessen the impact to the larger portfolio of work.
How Time Tracking Benefits Future Project Planning
1. It allows for real project data to speak to forecasting for accurate time estimation and budget planning
Projects are scoped and estimated making a variety of assumptions, and time tracking allows for those assumptions to be tested and adjusted for future work. We might think that a deliverable takes x hours to complete, but is that true?
Tracking gives us real, actionable time tracking data to ensure that projects are not under-estimated when it comes to costs and project scheduling, and to ensure that resource allocation is efficient (ie. people are not overallocated.)
2. It gives more accurate insights into the team’s availability for future work
We often overestimate the amount of project work a resource is capable of doing, because we underestimate the volume of internal work/communication. Leadership might assume that the utilization rate (the percentage of employee time that is dedicated to project work) would be near 100%. This doesn’t account for things like a weekly team meeting, internal emails about benefits, internal comms, etc, and can actually have negative impacts on employee productivity.
By tracking time in a time tracking app (or some other way), we have more accurate information on each person’s utilization rate and therefore can make better assumptions about projected utilization for future work.
Typically, we want to aim for between 70-80% utilization on project work. This can differ role to role or if someone is also working on internal projects, but an 80% cap is a good approach when forecasting. This also provides a bit of a buffer for unexpected risks like a critical project team member being out unexpectedly.
And here's where you can change hearts and minds on your team: Show them how you're using time tracking and how it actually benefits them. By taking into account all of the things that they're doing, you can help ensure they have reasonable workload.
How To Track Time On Your Projects
Time tracking can be daunting the first time it is required. How granular should you get with the exact time spent? How granular should you get with what you are tracking against?
Everything you do for a project should be tracked. A great question to ask yourself is: “would this need to happen if this project didn’t exist?” If not, then it should be tracked to the project.
This goes beyond just accounting for the time spent performing the work to accomplish deliverables. This also includes internal meetings to strategize about the project, internal comms/reviews, client meetings, etc.
By not accounting for these more ambiguous areas, you run the risk of underestimating the amount of time it takes to accomplish a project which not only puts that project at risk, but potentially has a larger cascading impact to your portfolio of work.
When it comes to granularity of tracking, some of that can depend on the time report needs of the organization/client.
A good rule of thumb is to track at the individual task or work effort level. Sometimes this might be the deliverable as a whole, sometimes this could be a round of a deliverable. It can feel cumbersome to track down to that level, but it also gives you incredible insight into where the team’s time is being spent and how to adjust accordingly.
For instance, if you track at the deliverable level and you find that you are consistently tracking more billable hours than originally estimated, it doesn’t give you enough insight into the why. By tracking one level down, you can see that too many work hours are being spent in the final round of feedback which could be due to ambiguous requirements at the start of work or a client bringing in too many stakeholders late in the game.
Just as estimates are never going to be 100% accurate, the time tracked will also not be accurate down to the minute. Typically we see rounded tracking in time tracking tools, such as at the 15 minute mark, to balance the amount of time spent tracking vs. the realities of imperfect people.
Someone might plan to spend the afternoon working on a particular deliverable, only to have a colleague ping them with a question about another project so they dedicate a few minutes to answering that, another client emails them with an urgent need so they switch to that for an hour, etc.
This is why daily tracking (or adding to your timesheets or spreadsheets at the end of major work blocks) is so helpful. When we reach the end of the week, it is nearly impossible to remember how much time was dedicated to each specific task, and the level of accuracy of your time logs steeply declines.
Remember: Creating time entries in and of itself takes time. This needs to be baked into daily work and accounted for when it comes to capacity.
By taking the time tracking plunge, and reinforcing time tracking best practices, the benefits will extend far beyond the current projects at hand.
From better budget estimates to more realistic capacity planning, there will be a continual loop of current project data informing future project planning that will allow your staff to manage their workload more realistically and set up your projects for success.
Check out our list of the best time tracking software and subscribe to The Digital Project Manager newsletter for more on time management best practices in project management.