Do you really have a good handle on the profitability of the projects that you take on? Whether it’s tracking all the costs related to your membership event or the hours your team spends on delivering the services of a contract, you may not be charging enough. If you are “estimating” expenses allocated to a project to cover salaries, sales time, travel time and other hidden expenses you may be undercharging your customers and losing money.
You can take the guesswork away by making it easier for your team to
- Define your “projects”. Projects take different forms for different organizations. For a membership organization, a quarterly member event could be defined as a project. An advertising company could define each project as a marketing campaign. Each wedding would be set up as a project for a caterer.
- Define the costs that should be allocated. Direct costs, like materials, are easy to allocate to projects, but think through all the steps of your project activities to assign the full cost of delivering that project.
- Determine how to track time, costs and expenses. Keep it simple. Consider how much detail you really need to capture to accurately track costs. Make it easy for your employees to enter and assign time and expense to each project no matter where they are.
- Monitor. Check the results of your project costing regularly to make sure that your employees are using the system consistently. Use reports to monitor the profitability of each project and adjust your prices accordingly.
by BroadPoint Technologies, a