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Tuesday, 18 December 2012 23:15

Do You Use Project Accounting to Track your Project Costs?

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PMProject accounting is a critical concept for today’s business world, yet most businesspeople do not know their project accounting data. 

For the last 30,000 years, our hunter/gatherer and farmer ancestors have always understood their costs of production. Why is it okay that in the last 50 years, nobody does anymore? It’s not. 

Project accounting for the hunter/gatherer is easy. The ROI is simple to calculate and it's intuitive.  And if the ROI isn't good enough, a harsh environment would make sure you didn't make that mistake very long because you'd be dead. Farmers invented accounting – eventually double-entry bookkeeping - which many people argue is the basis for civilization. It enabled the measurement of and accumulation of capital, without which no progress is possible. Today, knowledge workers work with knowledge and information instead of with "stuff". Accounting for knowledge work is different. 

How is accounting for knowledge work different?  For a hunter, he can count how many fish he caught. For a farmer, he can count how much corn he produced. For a manufacturer, he can count how many cars came off the line.  But for a knowledge worker, the production is much more cloudy.  

Time spent is one of the metrics you can use.  It’s not perfect but it is universal.  It is one proxy for production.  And it’s a very relevant one. 

People businesses, like software companies and architecture firms, don't track employee time to minimize break times, if they track time at all. They do it to understand costs and automate billing, and to a lesser extent, to track salary, paid time-off, or to pay hourly knowledge workers correctly. These areas are rife with potential SOX compliance issues. The rise of the people business is challenging news for payroll and HR executives - and it makes their function more critical than ever.  

The future is about innovation.  It's all about finding new ideas. The past was about counting your chickens, or your catch for the day.


 

About Curt Finch

 

Curt Finch is the CEO of Journyx. Founded in 1996, Journyx automates payroll, billing and cost accounting while easing management of employee time and expenses, and provides confidence that all resources are utilized correctly and completely. Curt can be found on Twitter at @CurtFinch and on Google+ at +CurtFinch.


Read 7404 times Last modified on Monday, 21 January 2013 13:46

Curt Finch is the CEO of Journyx. Founded in 1996, Journyx automates payroll, billing and cost accounting while easing management of employee time and expenses, and provides confidence that all resources are utilized correctly and completely. Curt can be found on Twitter at @CurtFinch and on Google+ at +CurtFinch.

Website: journyx.com/company/curtfinch
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