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Consulting Engineering Time Tracking

Project Tracking

One of the very most important aspects of any Consulting Engineering business is carefully keeping track of your time. On “hourly” projects you need this information for billing; on “fixed fee” projects you don’t. However, if you don’t keep track of time or if you don’t eventually add it up, you won’t know the winners from the losers. Why is this important?

The type of project may require more time; knowing this would allow you to increase your fee on the next similar project or to pass-up the project.

Your project manager may be inefficient; knowing this allows you to give him more training, assign him to less complicated projects or to replace him with someone else.

The client may be too difficult or demanding; knowing this allows you to negotiate both scope and fee on the next project. It is surprising how less demanding a client can become when faced with the added costs. This problem can also be handled with “Assumptions & Exceptions” in your contract. I.e.: “We assume 4 meetings with you during design; add $XXX for each additional”. Also, remember that you just can’t make money working for some clients; if you can’t correct the problem, let your competitor deal with it.

The project owner/manager may be too difficult or demanding; the solution is the same as described above.

The scope may “creep”; knowing this, it may not be too late to bill. (But, don’t do so without discussing extra charges with the client, beforehand). In any case, it may be time to have a talk with your project manager, so this problem can be avoided in the future.

Manual Tracking

Have your secretary/clerical start a TIME SHEET for each “project” and each “non-project” category of time. List week ending dates on the left and a column for each employee across the top and transfer the “Time Card” information weekly. Close-out the month at the end of the week closest to the completion of the calendar month and add up the hours for the month and the hours to date. Try to bill, so that your client will have the bill by the 1st of the next month, to avoid waiting an extra month for payment.

Also, at the close of the month, each project manager should estimate the “% complete” of the project “phase” for each project that time was charged to during that month. The “Partner in Charge” of that project should verify the % complete. On “fixed fee” projects, monthly billing should be based on this %. Of course in “multi-discipline” firms, each trade is estimated and billed on its own % complete. Spread sheets, (like Excel), now make this process simpler and more accurate.

It is also important for you to compare the billing to the budget of hours, monthly. If a project has expended more hours than you can be billed, it is losing money. Try to find out why. Was there an increase in scope; maybe it is not too late to bill? Make sure that your project manager knows to bring scope changes to your attention, before doing the work. Whatever the reason, knowing about it allows you to account for it on the next similar project.

Off-the-shelf Accounting Software

The above described “manual” system works well for very small firms. But, once you are billing for three or more people it is time to consider getting Accounting Software. The most common “starter systems” are inexpensive. Review options with your accountant, before buying the software.

QuickBooks and Sage 50 (formerly Peach Tree) are two of the most popular accounting software systems. They are off-the shelf packages for only a few hundred dollars. Both are “single” entry systems; the programs do the double entry. Both can do “accrual method” and “cash method” reporting and have integrated accounts receivable, accounts payable, and general ledger functions. These are not as flexible as the more expensive systems and your bookkeeper can make changes to data that is not “tracked” and can cause heartburn for your accountant. If you trust your bookkeeper, you will find these systems to be a leap past manual billing.

Customizable Accounting Software

The previously described systems will serve the needs of most small firms; but, if your firm has special needs, you may want to consider a more customizable system. Examples of special needs are unique situations such as: progress billing, calculations, and special billing rate situations (i.e. for government work), or prevailing wage tracking.

As your firm grows, you may want to consider an industry software package with “all the bells and whistles”; more reports with more details. But, you may need a software consultant to set-it-up and customize the system and to provide on-going support. Also, you may need a full time bookkeeper to enter the data and to print reports. If someone actually reads these reports, interoperates them correctly and implements policies to make improvements, these systems can be worthwhile, especially for larger firms. Unless you have special needs, wait until you outgrow the inexpensive options. I found the “Ageing of Receivables” and the “Budgeted vs. Actual hours” reports to be the most useful.

Excerpted from The “Complete Guide” to CONSULTING ENGINEERING © 2015 John D. Gaskell. Used with permission of Professional Value Books, Inc. All rights reserved. See DISCLAIMER and order at http://www.TheEngineersResource.com. Use discount code “paperback” and save.