Actuals are the number of hours that someone worked to finish a task or project. Every time an employee or contractor fills in their timesheets they are recording their actuals.
Apart from using actuals to pay your waged employees, or correctly bill your clients for work done, it may seem unnecessary or even a waste of time for employees to fill in their timesheets.
But in fact, there are several reasons why recording actuals is important for the success of any business - and why tracking them is even more important. Let’s take a look:
Reviewing your employees’ actuals on a regular basis allows you to check-up on the progress and health of your projects which ensures you’ll be able to deliver within your budget and estimated timeframe.
Hours convert to dollars. Regardless of whether you are charging for your project on an hourly rate or using a fixed-price, every project has a budget that you’ll want to avoid crossing. For your hourly-rate projects, the more time you use than forecasted, the less time you have for your other projects. For your fixed-price projects, the more time you dedicate, the lower your profit margin.
Analysing actuals to predict when you may reach that limit is really valuable so you can adjust upcoming work accordingly.
In project-management speak, variance refers to the difference between the originally planned hours (and budget) and the hours (and budget) that were actually spent.
How much your actuals differ from the planned hours affects the timeframe for the project - potentially impacting its scope and quality. Regularly tracking actuals lets you measure the rate of progress so you can determine whether you’ll be able to achieve upcoming deliverables on-time.
In Runn, you can keep track of both non-billable and billable hours. By drilling deeper into your actuals you get a better understanding of the productivity of your team, individual employees and certain roles. It will also tell you if too much time is spent on non-billable tasks compared to revenue-earning work so you can make adjustments to current and future work.
Not only are actuals useful for measuring the health of, and adapting, your current projects, the insights you gain will also help you with estimating and forecasting the effort and budget of future projects:
Actuals provide you with a better understanding of how much work your employees can realistically get through for certain types of tasks or projects, and you can use that data and avoid selling yourself short when estimating and negotiating a price for your next project.
For example, say you and your client agree that you’ll charge for 100 hours of work. Your team ends up dedicating 120 hours to the project, meaning that you’ve undercharged by 20 hours. Where did the initial 100-hour estimation come from? Reviewing actuals for a similar-sized project of a similar nature will help you make a better plan and come up with the right price for your next project.
How did your team cope with the last project they worked on? Do their actuals indicate that there was a bottleneck in the process? Were they not as productive as you had predicted, maybe due to other work or internal meetings creeping in?
As you assess your team’s actuals, you come to know your team even better.
Consider allocating fewer hours per day and stretching-out assignments over longer periods of time, or adding additional people to your project. All this data is really useful to better plan the overall duration of your projects, set realistic delivery dates for milestones and manage expectations with your clients and internal stakeholders.
Recording and tracking your team’s actuals and comparing them to what you had planned is an important process for any business that wants to grow. It puts your assumptions to the test and helps you answer critical project delivery questions, such as:
Furthermore, the insights you gain will help you make better decisions when planning and pricing future work and fine-tune your forecasts.
Are you a freelancer or professional services business and need advice on how to set-up a retainer contract? Find out more about how retainers work and why they are great to generate predictable and stable revenue.
Resource allocation is a critical step in the project management process. In this guide, learn what resource allocation is and why it’s important, go over some of the challenges you might encounter, and then dive into a step-by-step guide.