Time records

Time records provide a practice with historical benchmarks, a basis for budgeting and setting fees and for establishing project costs and profitability. The proportion of project time to non-project time will depend on the role and duties of each member of staff. A principal involved in marketing and administration may spend as little as 20% of working time on projects, yet someone engaged on contract work may spend 100% of their time on projects.

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Timesheets

In order to calculate the cost of time, and project costs, it is essential for all staff to record the time spent actually generating income and to distinguish this project-related time from time spent on other essential activities such as administration, marketing, accounting and other non-project-specific tasks.

Timesheets can be used to calculate the proportion of project time to non-project time for each member of staff. The discipline of maintaining timesheets is also useful to ensure that appropriate fees are charged, correct salary payments are made and in accounting for annual and personal (sick)/carers leave, continuing professional development and training, and other entitlements.

Timesheets should be used to evaluate profitability of projects as the projects progress, to measure if they stay on budget.

Timesheets can be:

• a tool for future fee proposals
• used to verify the costs to do a particular project
• tools for staff evaluation - how much time are they spending documenting vs expanding their role towards registration
• essential for graduates looking to register.

Most timesheets allow for recording of time on a daily basis in quarter-hour or half-hour time units and are usually collated in weekly basis to allow for close monitoring. Project working files or day diaries provide a convenient way for staff working on multiple projects to keep a record of their telephone calls.

Staff timesheets should be regularly checked for accuracy and administration purposes by the principal or senior person responsible for the member of staff concerned.

Timesheets should show:

• phases that generate income: schematic design, design development, contract documentation, contract administration, post contract (defects liability period) etc
• tasks that do not generate income, either noted as “Office” or divided into multiple, eg management meetings, marketing and promotion, seminars, continuing professional development, pro bono work etc
• non-working time (eg public holidays, carers leave, sick, parental unpaid and other forms of leave).

Minor interruptions to work, such as breaks, may either be accounted for in the time spent on the work during which they occur, or estimated each day and shown as a separate heading, eg 'non-working time'. The former is more common.

An example of a timesheet

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Determining hours worked

The number of normal work hours per year will vary from person to person. A principal may work 50 hours per week, an assistant may work 40 or 37.5 hours and a person on contract may work a different number. The number of hours per year for each person must be established.

In determining the hours worked by principals and senior staff, consideration should be given to the number of hours that the practice expects them to work, as distinct from the number of hours they actually work. For example, it might be reasonable to expect that a principal will work 50 hours a week, whereas his or her actual hours are more like 70 hours a week for a substantial part of the year. It is recommended that in these circumstances the expected hours (50 in this example) should be used. Principals and senior staff should not bind themselves to working excessively long hours.

Regardless of the hours used in undertaking the calculations, timesheets should be filled in to reflect the actual hours worked so that, in estimating the time required to carry out work on future projects, accurate records will be available.

The following example uses time records to divide the salary of a technical staff person into project-related staff costs and overheads:

• Salary, say, $85,000.
• Records from the previous twelve months show that 78% of time was spent on projects, therefore project salary (P) = $66,300.
• Non-project activities salary (NP) was $18,700.
• The figure of $18,700 becomes part of overheads.

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Purpose

There are four main functions for which time records are used.

1. Provide historical data on completed projects for future fee proposals: accurate and realistic record keeping on projects assists in preparing fee proposals for similar projects and insights into which architectural services outlining profitable or most costly areas for the practice. This allows greater efficiencies and confidence when setting project budgets and programs.
2. Set project budgets and programs: these are set prior to the commencement of any architectural service but based on records kept of previous experience, similar projects. Pre-determined rates (including fixed costs such as rent, and variable costs such as labour and profit) assist in determining the fee, and consequently the overall time available to complete the work. Together with the availability of resources it is possible to anticipate the project cash flow and program. The total of all projects within the practice will give the anticipated cash flow for the practice.
3. Compare and monitor actual cash flow against predicted cash flow: time records allow the actual progressive costs incurred by the office to be compared to the budgeted predictions and, more importantly, the actual cost generated by the project can then be compared to the revenue generated. Continued monitoring of timesheets will highlight discrepancies and allow appropriate corrective action to be taken before financial problems arise.
4. Provide accurate invoicing on time charge contracts: Tracking actual time spent on projects is essential for invoicing and accurate records provide assurance to both client and architect. Often additional care should be taken to describe work done on an ongoing basis to assist in the compilation of detailed invoices and to minimise disputes on invoiced amounts.

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Historical records

The historical record of the cost and profitability of projects provides key inputs when developing a fee proposal for a new project. At the conclusion of each project, when all work is finished and all costs are known, a summary of the cost of the project to the practice should be prepared.

Timesheets for all staff including directors or principals involved in the project should be used to determine the time that each staff member spent on the project. The total of the hours multiplied by the individual charge out rates will give the staff cost for the project. To this figure all other direct project costs should be added to give the total cost of the project to the practice. The total cost can be compared to the fees for the project to determine the profitability or expense of the project.

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Further resources

• The Association of Consulting Architects Australia (ACA) provide an architect’s time/cost calculator which may be of assistance. Note that separate membership to the ACA is required.
• More information about keeping records and a sample timesheet template is available via the Institute's online HR Hub: