The Value-of-Work-Done is a great way to look at the financial productivity of your team. It is a simple calculation of time-worked multiplied by rate-per-hour that can be billed, but it is a very important in time based billing businesses.
The value of work done is different from what has been invoiced (billed to clients) but is a valuable concept that allows you to know if your team is being profitably-productive on a daily basis.
Value-of-Work-Done is a measure of productivity in financial terms.
Because all business bill differently for different work, with some billing up front, others billing on completion and some in between, knowing the Value-of-Work-Done daily, weekly, fortnightly by your team is a valuable key performance indicator and management tool.
Calculating the value of work done where every hour worked directly relates to an hourly rate is simple with a (time X rate) calculation. E.g. 5 hrs work at $100 an hour = $500 of work done. But calculating the Value-of-Work for fixed quote projects requires more thought.
For example, consider a simple example of a fixed quote to build a web site for $5000 based on the businesses estimates of 50 hours’ work who charge $100 per hour.
Every hour worked by a team member on the project is considered by the system to be worth $100 an hour as the project is worked on.
So if a staff member spent 3 hours on the project today, the Value-of-Work-Done is 3 x $100 = $300.
Now the value of work calculation gets interesting as the rate at which it is calculated will change in the following two scenarios.
The project is finished early. Consider that the project above is completed in 25 hours or half the time. When the project is marked as completed, the real Value-of–Work-Done for every hour worked is now $200 per hour, not $100 per hour. Because $5000 divide 25hrs is $200 per hour.
The GTP hub platform will recalculate the value-of-work-done by that team member for their previously worked time and increase it up to $200 per hour.
The project takes longer than budgeted. Consider that the project takes double the estimated time, e.g. 100 hours, with no increase in billing. The value of work done per hour is now only $50 per hour. ($5000 divide 100hrs). You can now see over previous time periods that the value of work done by the team is much less as a result of going over time estimates. This could turn a previously thought-to-be profitable time period into a loss…ouch.
What this means, is that for fixed price projects you cannot truly know today or this week the real value of what has been done, as you do not yet know whether the project will be completed ahead of time or over time. But it does mean you can get a good estimated value based on the accuracy of your project time-requirement estimates.
You can, and it is recommended to, go back a month or two for review and analysis and get an actual Value-of-Work-Done for that time period. By then many projects should have been finalised allowing the system to calculate the final Value-of-Work-Done per hour worked.
The ability of the software to calculate the value of work done for fixed priced projects is reliant on the accuracy of the time estimates. Your estimating and quoting staff can use the information for each project to improve time estimates for future projects.
GTP Hub provides a summary of the value of work done for any time period you set when reviewing time records across many projects, or if you are examining the profitability of a project individually.
So please try tracking and reviewing the Value-of-Work-Done using the GTP Hub’s cloud time tracking, project management, and billing software. This will mean that you can as a manager/owner
a) See if your staff are are running at at a productivity profit or a loss on a daily, weekly, monthly basis, based on your staffs efforts. (Fixed non-staff expenses are not included in this information)
b) Educate you about the accuracy of your teams project estimation and sales capability to get the right values for each project on future quotes.
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