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Five surprising benefits of project accounting In addition to quantitative insights, some qualitative perks can boost profits.
Benefit 1: Cultivates employee accountability — When your staff has to track and analyze their project financials, they’ll have a much clearer understanding of how their actions affect profit margins. And with the visibility that project accounting offers, there’s no excuse for ignorance. The link between your employees’ efforts and project performance will become even more tangible if you tie incentives such as bonuses to the latter. Whether or not you choose to do this, you’re likely to see your team work harder thanks to this newfound accountability. Benefit 2: Enhances collaboration — Project accounting necessitates the sharing of information because all team members have to contrib- ute or monitor data. Plus, when people take greater responsibility for project outcomes, they’ll want to know all of the results of their work. With the right software, it’s also easy to share project accounting KPIs. Due to these factors, project accounting facilitates conversations be- tween and among departments. Sometimes it may be beneficial for a team to narrow its focus and not look at the big picture, but it’s often helpful for employees to have more context surrounding their work. When they understand more how what they do relates to the firm as a whole, they often have more motivation. Benefit 3: Eliminates confusion — Project accounting requires set processes and methodical tracking of KPIs. This means that it’s easi- est when there are routines and standard methods of working. These regimens aren’t just good for getting the data you need, they also make work less stressful for everyone involved. By breaking projects down into phases and tasks, and assigning them to specific team members, they’ll understand exactly what they need to do.
Project accounting is, simply put, the practice of accounting on a project-by-project basis. To do it right, you need to track all of the re- sources that go into each component of projects, as well as the resulting revenue. When you break each project down into its own profit center, you can assess successes and failures much more clearly and take the appropriate actions. To get the data you need, you have to involve every member of your team. Project managers and senior associates must take direct responsi- bility for the financials of their projects. They essentially become CEOs of their individual projects, as they have access to and control over the profits and losses of each project. Even entry-level employees need to enter their time and expenses (including if you only work on fixed-fee projects) and understand the key performance indicators (KPIs) related to their work. Project accounting has a variety of benefits that are directly related to the hard numbers it gives you. Insights into project profitability, bet- ter long-term planning, and steady cash flow are all undeniably great reasons to undertake this practice. However, there are also a number of more qualitative perks that still ultimately boost your profits. With this in mind, take a look at five surprising benefits of project ac- counting.
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csengineermag.com
june 2018
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