Have you been thinking about implementing a timesheet system in your company? Here are 7 good reasons why you should (and a BAD reason why you should not do it).
1. Bill your clients
One of the main reasons for a company to track what their employees are spending their time on is simply to bill their clients: service companies, consulting companies, or, more generally, companies that bill time and materials— all of them need to track their time precisely to know what to bill to what client.
2. Track your project costs
The time spent by your employees on different activities has a cost, equivalent to their hourly wage and overhead. Project costs can include things like the money spent buying (raw) materials, anything else you've bought from your suppliers, but also your internal costs.
That last category is often harder to track, because employees can work on several projects, and often have other types of activities, like training or taking care of administrative tasks.
Whether your projects are internal or external, you still must be able to track their costs. If your projects are external and not billed with time and materials, you will still want to know how profitable your projects are and when they're going to break even.
If your projects are internal, you will want to know what the real cost of those projects is. Without a timesheet system, it's hard to know the precise costs of your project, and thus to know where your money is going.
3. Compare planned with actual efforts
By recording how much time you're spending on all your activities, you can easily compare your planning with reality. You will then be able to analyse the discrepancy between the two to better understand what causes it, and learn valuable lessons that will help you become more efficient for your next projects.
4. Make better time estimates for your next projects
As you get used to track your time, you will be able to make more reliable estimates. By looking at the actual time you've spent on projects of a certain type, you will be able to guess more accurately what time will be taken by the next projects of the same kind.
Of course, many other factors come into play (experience of the employees assigned to the project, technological changes that could happen between the projects), but information about the time you've spent on each project will be crucial in getting better insights about future estimates.⁂