It is not actually essential an agency having a clear process on managing resources man-hour, which shaped the project budget, incurred cost and even resource management. Here, I would like to talk about my view on how an agency could have a better tracking on resources, which could lead to a better calculation on gross profit.
Define human project costs
First of all, we have to define what shall be included under projects. It depends according to company policy while it shall be clearly defined and we shall make sure everyone in the team understand for estimation and time log.
- Implementation tasks
Take IT projects as example, it may involve development work from developers, design work from UI/UX designers, documents creation, etc. It is quite straightforward that I believe no one would miss this. - Communications
Typically, we may have regular and ad-hoc meetings with clients and internal teams. All these communications shall be considered as project tasks. - Arrangements
Throughout the projects, the project manager or senior management may have to coordinate and arrange required tasks for the team. The incurred time shall be logged under the project. - Project Management
Apart from documentations and arrangements, project managers have to review project status, determine and mitigate risks and offer issue reaction plan. All these shall also be consider as project cost. - Research
Sometimes, we have to conduct research on something we may not familiar with to complete specific project deliverables. Since the research is correlated to a project, it shall be identified as project cost.
Define non-project activities
So, in order to have a holistic view for managing the resources, we also have to take a look on non-project activities.
- Holidays and time-offs
To get a better planning on the resources, we shall note the holidays and time-offs individual requested. - Internal meetings
It is quite often that we may have some internal meetings on performance review, individual retrospective or team building. We may not classify under specific project. - On-boarding
For a new staff on-boarding, the individual may have to get familiar with the company process and the team. - Training
We may provide internal or external training to staff so that the individual would be better equipped contributing to the company. - Sales activities
Personally I tend to define sales activities as non-project activities. Sales and supporting tasks normally occur before contract is signed, where a project is not yet created. There is no guarantee that an opportunity would always be converted. Even we may identify the sales process is under project initiation stage, it would be better organized and tracked to exclude from project cost. - Other internal tasks
Any tasks that could not be classified under a specific projects. For example, a project manager updates company project management guidelines; a technical lead drafts the general versioning control document for the team.
Principles of definition
The above indicates some major project and non-project activities, while the most critical is to create an exhaustive list based on a common understanding among the team. Sometimes, we may even break down a specific general task into several project tasks, when it is contributing to multiple projects. From my point of view, it is legitimate as long as it is considered during project cost estimation and understood by the project team.
Resource plan and monitoring
So, here it comes to the key of resource management. When we have the comprehensive project man-hour estimations, we may assign the corresponding hours to assigned resources at the resource plan. At the same time, the assigned individual can refer to the planned time in completing the tasks. Since the definition is common understood by the team for both estimation and time logging, once there is a huge gap between the planned time and burnt time, we shall take a look on the reason behind which is actually a potential project risk of out-of-budget.
Utilizations
For each role, we may consider a different utilization rate. Depends on the role, the individual may spend time on non-project activities. And, when we created the resource plan by assigning the upcoming project activities to individuals, we shall then clearly understand the planned utilization rate of each team member. If there are not sufficient projects activities assigned to a member, we may consider to assign internal tasks to the person.
Final words
From agency perspective, the resource hours is always the primary cost of a client project. It is really critical to understand the relationship between the resource estimations (primary project cost), resource plan, incurred cost (brought by time log). Hope it shows a clear picture on what we shall do with man-hours management.