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IT-service providers live by selling their employees' time who work with customer on their projects. Therefore, tracking the hours spent on a customer's project (project-base time tracking) is crucial. However, project-based time tracking is often not implemented easily. Here are five tips we consider being essential when introducing project-based time tracking.

What is the use of project-based time tracking? Communicate your goals.

The best software does not support a business process if users who should use the software do not see its benefits. That also applies to time tracking. If no clearly defined goals are communicated, people will jump to the conclusion that their employer only wants to monitor their work. Everyone should be aware why project-based time sheets are important.

• IT-service providers generate over 70% of revenue from consulting services. At the same time, the cost-driver of an IT-service provider is usually personnel costs. Both, revenue and personnel costs are driven by the hours employees are working. Employees should be aware of how project-based time tracking influences key figures like revenue or personnel costs.


• The intention of a project-based time tracking software is not to monitor employees. Explain what time tracking data is used for and how it influences the organization. Time tracking data is used for billing, project post calculation, project controlling and management. Besides explaining what the data is used, it is also important to be clear about what the data is not used for. It goes without saying that you have to be true to your own word.


• As an entrepreneur you need to define a set of minimum requirements. Together with your team you should specify the details everybody commits on (e.g. to book each day or each week).


• Management often tends to not following its own rules. You as a manager should lead by example and keep your time sheet up-to-date. You should serve as a prime example.

Time tracking for the sake of time tracking.

Your employees' prime task is to focus on your customers and deliver business value. Time recording is just an operational necessity to run your business. Your business goals should drive the granularity and content of your time recording policy. If you demand to track tasks exactly to the minute you will end up with "creative" time sheet entries at best.

It is important to have a set of rules to gain the most of your time tracking solution. For us, the following rules proved useful and practicable:

• Track your time exact to 15 minutes.
• Time sheet entries must be tracked by the last day of the work week. Ideally, employees should track their time daily.
• Breaks, private phone calls, etc. shorter than 15 minutes do not have to be tracked.
• Work which is not done at the office counts as normal work time (e.g. phone call with customer on private mobile phone). However, it proves useful to mark those hours as "Work done at home".
• There should be a common understanding on how to track travel time.

Be consistent in your time tracking! Track your time continuously.

In Austria, tracking the attendance time of your employees is mandatory. If you decide to introduce project-based time tracking, you should go the full distance and do not only track billable hours but also administrative hours. If you treat administrative hours differently from billable ones, you risk losing billable hours cloaked as administrative work. We agreed on the following rules:

• All time sheet entries need to have begin and end time. Further, input an informative text for your time sheet entries. Descriptions like "administrative tasks" do not allow conclusions whether the task hides billable hours.


• Think of your administrative work as a conventional project and create specific projects and tasks accordingly. Then you are able to discover extensive administrative effort.


• Internal projects are to be treated as customer projects. Employees should be able to track their effort on those internal projects. Then you can compare if the actual effort spent on an internal project exceeds the budget you have set.

Automation over manual processes.

No matter how big your company is, automation of manual processes is a critical success factor. Automation helps you to avoid errors, saves you time and is an enabler for growth.

• Neither you nor your management team should be occupied with consolidating time sheet entries scattered over different Excel sheets at the end of each month. Make sure that your time tracking software supports the rules you and your team have agreed on. Time tracking should be done in one single integrated solution. For us it has not proved applicable to allow various different time tracking solutions and consolidate the data afterwards.


• Automate your reporting and run it regularly. A good time tracking software will provide some reporting capabilities or offer interfaces to exchange data with specialized reporting tool conveniently.


• Standardize and automate your billing process. No matter if it's invoicing or sending the invoice to its recipients. There exist specialized tools and services for each step of the billing process. Most of the time these tools are reasonably cheap and you are freeing precious resources that are better spent otherwise. Do not fall for the "not invented here" syndrome.

Gamification: Celebrate the goals of your teams.

Introduce key figures that represent the achievement of objectives and gamify getting there. Everybody in your team should know how the company is doing in terms of revenue, ratio of billable hours, administrative effort etc. Admittedly, this is a very transparent approach. For us, it proved quite rewarding, because employees are more committed to contributing to the company's success.

Agree on ambitious but realistic objectives and provide reports and dashboards in your time tracking solution that allows the team to monitor its progress. Take the time and celebrate if you achieve your objectives. You will notice a positive momentum, especially when it comes to small businesses. Each time sheet entry contributes to achieving your objectives.