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Cetrus Blog

Let’s Talk Dollars - Project Association Brings Home the Bacon

Posted by Erik Hoogerhuis on Dec 6, 2017 7:36:57 PM

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Associating application use to projects provides data that generates many benefits (see our Expense-2-Project At-A-Glance HERE). The benefit which resonates most strongly is the positive impact to revenue and margins. Project association’s impact on revenue is not a one-time savings: it’s an ongoing, high margin boost to your bottom line. Below are 2 ways project association brings home the bacon.

  1. Billing for Application Use

The idea of billing for application use is a new one in the AEC space, but is quickly becoming a major area of interest. Short term subscriptions, pay-per-use software, and increased need of pricy, compute-intensive applications is causing many firms reconsider the idea. By treating software costs as a project-specific out-of-pocket expense, or as a billable asset, you can convert these costs to revenue.

Project association data allows our customer ENGEO to bill for application use on its Time and Materials projects. Dave Borde, Drafting Manager of ENGEO explains, “With E2P we recover the cost of one AutoCAD yearly subscription license in under 100 hours of billable use time. When licenses are in high demand, buying more becomes a no-brainer. We easily pay for the licenses just by using them.”

 (Check out the full ENGEO case study HERE)

You should be able to bill for that application use because it’s a project-specific expense.  You might say, “We own these assets, so we can’t bill for them, just like how we don’t bill for the use of a conference room.”  Here’s the difference: if your conference room’s cost was increasing every year, if it had a lot of additional infrastructure costs associated with it (like your IT staff), and you could accurately charge conference use hours to a project, you likely would.  Similarly, if you know the hourly cost of running the simulation software, and can prove that use on a project, you can improve your bottom line. (Hello $$$).

  1. More Accurate Timesheets

For T&M projects, maximizing both revenue and profitability requires that you:

  1. Bill for all assets used, and
  2. Accurately bill for the time each asset is used.

Your staff self-reports the hours they work on a project.  But do they remember to log the extra 10, or 15 minutes here and there?  When they fill in their time cards Friday afternoon, do they recall how many additional minutes they worked on Monday to meet a project milestone?  Every minute worked but not billed, is revenue lost. Under-reporting 15 minutes a day for a person billing at $100/hour means an extra $25 per day in revenue. Multiply that by however many employees you have, and the number becomes substantial. It’s also pure profit.

Using a monitoring solution to associate application use to projects gives you a more accurate capture of the hours your engineers and designers worked. Accurate timesheets lead to improved billing. Improved billing means bigger margins. 

Conclusion – Don’t Leave Money on the Table.

By associating software use to projects you can add application use billing to your T&M projects, increase your personnel billable hours, and improve overall project analysis. Not having the data means you’re most likely leaving money on the table. 

 

The technology now exists to provide you that data. Click here to learn more about our Expense-2-Project solution provides project association. Or send an email to sales@cetrus.com to schedule a call or demo.

 

Topics: Trending, Project Management