Customer Cost Tracker In Action
Improving Estimates
The fundamental trick to improving your estimates with Customer Cost Tracker lies in understanding the principle of Adherence To Estimate.
You can track your company's ability to adhere to any particular estimate with the following formula: Variance = (E-A)/E
In this formula, E = estimated hours for the project and A = actual hours used to complete the project, and your goal is to wind up with a number as close to zero as possible. Why zero? Because higher numbers reflect overbidding, which may lead to angry customers. And worse, negative numbers reflect underbidding, which is a great way to go out of business fast.
Just tracking this number is a great way to learn how you're doing at estimates. But there's more than can be done with this kind of data.
Exploiting Early Phases For Lower Variance & Better Estimates
Here's a little secret: Similar projects usually have a strikingly similar ratio of "early phase" cost to overall cost.
What that means is that it's possible to look at a group of similar completed projects, determine how much time was spent on the "early phases" (e.g., requirements, design, specification) and find a number that can be used to forecast how long a new project of the same type will take; provided you know how long the "early phases" of this new project have taken, of course.
Example: Project A took 12 months, and the early stages took 9% of that time. A very similar project, Project B, took 7 months to complete, with 11% of that time spent on early stages. You might now logically conclude that another similar project, Project C, which has taken 1.8 months for its early stages, will wind up taking 18 months total.
The above example is based on our discovery at Journyx that the early phases of our projects reflect about 10% of the total project time. Other percentages are possible, and even likely, depending upon the nature of any individual business and its types of projects. So after a little tracking you might determine that your magic number is really 7%. Or 14%. Or even 3% or 22%.
Regardless of what your number turns out to be, once you have it you have the key to improving your ability to make accurate estimates for future projects. Customer Cost Tracker will help you determine your number by making it easy to keep track of your customer costs, which means you can make smarter, more profitable bids and beat your competition. Not bad for just tracking your time, eh?
Brush Up Your Billing
Our users have reported revenue increases of up to 5% due to the more precise and timely billing achieved thanks to:
- More accurate entry of billable hours
- More complete entry of billable hours
- Better tracking of billable milestones
- Improved monitoring of actual costs
Your employees' billable time is the source of your revenue. Maximize your revenue by capturing time, expenses and other products or services accurately so no billable items are lost or under-represented. The simple process of automating the time collection will increase both the speed and accuracy of your billing.
