Michael Stewart, a member of one of our Trailblazer firms, sent me this email last month:
You’ll find a more eloquent and concise way of putting this I’m sure.
If firms have returned to timesheet because of scope creep…if you apply the same rationale in reverse, then firms would have abolished timesheet years ago because of write offs due to scope creep.
Ed Kless did suggest another way of putting it:
Some firms return to timesheet because they claim to experience scope creep. However, this is irrational because if that were the case then the converse would be true—they would have had to abandon timesheet when they experienced scope creep when originally tracking time.
Great points, no matter how you say it. The three defenses of timesheet are:
- We need them for pricing
- We need them for cost accounting, to determine if customers are profitable
- We need them for measuring the productivity of our team members
We’ve destroyed each of these arguments, especially #1 and #3.
Yet #2 persists. But how many firms have fired a client because they are unprofitable? Very few. That’s because even small customers are profitable, which is why even Top 100 firms are doing $500 tax returns.
If a customer is unprofitable, you’re a lousy pricer and a timesheet isn’t going to help.
If you don’t scope a job properly up-front, a timesheet is only going to inform you after the damage has been done—like timing your cookies with your smoke alarm.
The other defense is we need to have timesheets to learn how long jobs take for the future. But then when we preach Value Pricing, people say each and every job is unique and can’t estimated in advance. Which is it?
The defenses of timesheets are simply illogical given what they are actually used for, which is pricing. Price based on value, and timesheets are superfluous.