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I work in the web development industry and we implement a time tracking system to log our time (Project/time/comment). In the beginning of a project, we create a contract, and decide upon a price based on our hourly rate x estimated hours.

We log out times to see if we go "over budget". Is time tracking in this industry the norm? Is it required? What are the pros and cons?

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Yes, time tracking is pretty wide spread in the industry. But how is this question related to programming? –  Giorgio Nov 13 '12 at 19:49
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closed as not constructive by gnat, Walter, Giorgio, StuperUser, Ryathal Nov 14 '12 at 16:52

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4 Answers

up vote 8 down vote accepted

Time tracking is a wonderful tool for:

  • making your estimates more accurate
  • managing the size of your team
  • justifying invoices when a client takes issue with what they are being billed
  • providing more data for performance bonuses (temporal efficiency is important, but only if it comes with quality)
  • finding the drag in your workflow so that you can become more efficient over time
  • choosing the types of work at which you can be more cost-effective/efficient than your competition
  • scheduling projects more effectively

The problem is that when done wrong (which is easier than doing it right) time tracking itself can be the drag on your workflow. I have a colleague who, in a very unscientific study of me sharing an office with him for two days during which I was curious enough to time him, spent 15% of his time documenting how he spends the other 85%!

To my mind (though I admit I'm a better technician than business strategist) that is way too much overhead for time tracking. In a small company, doing it this badly is, in my opinion, worse than not doing it at all.

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Time tracking is only useful if you use it properly. A good number of metrics are based on time spent doing certain activities. Otherwise, it's just a number that determines how much you get paid. –  Thomas Owens Sep 2 '11 at 21:34
    
Not just justyfying to the client what they were billed but actually figuring out the bill. Our clients pay per devloper hour, without time tracking we couldn't bill. –  HLGEM Jun 29 '12 at 22:51
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Yes, it's very common practice when operating a business or company that sells "Professional Services" or "Coders for Hire on a per-Project Basis."

It is less common for other types of business model, such as retail software development. In these spaces, if you are doing time tracking, it is usually for internal auditing of planning accuracy, estimation accuracy, and employee performance. Not for billing.

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If what you are selling is your services you have to have a cost basis to use to set your prices. Human resources hours are by far the largest component of cost so yes you must have some way of knowing what those costs actually are.

You also need to know this to know how healthy your project is. If you've used 75% of the planned hours but only developed 50% of the product then you already know you are behind and don't have to wait till you blow the deadline before you start managing that problem. Yes you could do this with the calendar too but that isn't so precise and doesn't really help you recalibrate your estimates like you need to do.

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The easiest way is to do tracking in software you already use, e.g. bug/task tracking. FogBugz and Redmine do this.

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