What Is the Time Cost & How to Optimize It Effectively

In business, one of your most precious commodities is time. Back in 2022, CBS News reported some eye-watering news: approximately $100 million is squandered on “unnecessary meetings” every year. Superfluous meetings are just one-way time is unnecessarily siphoned from businesses. Other significant time drains include:

• Repetitive tasks
• Multitasking
• Being micromanaged
• Overly talkative colleagues
• Your phone taking your eyeballs hostage
• Procrastination in general

Needless to say, project managers and business owners – especially those in service companies – are continuously looking to improve profitability and efficiency. Employees and their efficiency are likely the biggest time costs, so it’s crucial to optimize in a way that ensures team buy-in.

After all, failing to implement your optimization strategies correctly from the start will inevitably result in additional time costs…

What is the time cost?

We're all about breaking down complex topics to make them more accessible. With that in mind, the essence of the 'time cost' is the amount of time required to complete a task or project – which can significantly impact both the budget and the overall timeline. In project management, the ‘time cost’ is one of the three key constraints in the project management triangle – the other two being ‘scope’ and ‘cost’.

Juggling the time cost with these two other project constraints is key for successful project management. So, here’s a basic breakdown of how the time cost can affect a project.

Project period: Unsurprisingly, if your project takes longer than expected then your time cost will be higher. This snowballing effect can lead to increased labor costs alongside other almost inevitable potential delays in project delivery.

Budget impact: The time cost can (and will) affect your budget. If a project takes longer than expected, it may require additional resources, which leads to higher expenses. Time is (literally) money, so how much of it are you wasting?

Opportunity cost: The time cost also includes the ‘what ifs’ – the intangible costs of lost opportunities. For example, if a project takes far longer than initially anticipated, you might miss a pivotal market opportunity. Moreover, it could delay the start of another project that could be pivotal for progressing your business.

How the time cost looks in everyday life

The time cost is insidious. It sneaks into our daily lives in all manner of ways. The following offerings are five common and (very) familiar examples.

1. Commuting: The daily commute to and from work is a huge source of time suck. Depending on the traffic congestion and the distance traveled this time cost can grow exponentially.
2. Meetings: Again, meeting creep is the death knell for getting things done.
3. Waiting for things: Be it waiting in line or for someone to return a call or email – all these seemingly incidental moments accumulate accordingly.
4. Household chores: The daily mundanities of cooking, cleaning, and laundry take up a significant wedge of everyone's week.
5. Procrastination: Who doesn’t put things off until the last minute? While I tell myself I need the rush of a rapidly impending deadline to get something done, it’s really procrastination in action. It’s not a very efficient way of doing things.

Calculating the time cost – a (very basic) formula

We’re not about to dig into the minutia of project management formulas, like PERT (Program Evaluation and Review Technique), CPM (Critical Path Method), EVM (Earned Value Management) or the Schedule Variance formula. For the purposes of this article, we’re keeping it simple.

Firstly, it won't come as a surprise to learn that how you calculate the time cost can and will change depending on your specific situation. With that in mind, let's cobble together a typical scenario featuring the freelancer's perennial plight.

A freelance copywriter, like myself, would use a time clock calculator to determine how long a project will take based on a flat rate. The (very) basic formula you would use is:

Yep, it’s that basic. That said, employing it will give you a clear sense of where you need to be in terms of the time cost.

In the event you end up spending more time than first estimated, you're clearly miscalculating the time required. Repeatedly doing this will lead to financial loss.

Understanding how to manage your time effectively is important for two reasons: professional success and, more broadly, personal happiness. Let's face it, who doesn't want more free time to focus on things that bring you joy!

The potential impact of the time cost on your business

A business's most vital resource is time. So, any time mismanagement can have wide-reaching repercussions. With that said, let's break down the potential impact of the time cost on your business:

Financial ramifications: Wasted time can lead to financial losses, especially if it affects billable hours and/or project deadlines. Time mismanagement can inflate labor costs through overtime and ongoing inefficiencies. Moreover, time spent on less important tasks means missing out on more valuable opportunities.

Operational efficiency: Like we said, time spent on non-essential tasks leads to lower output. This, in turn, often means misguided and lost deadlines. A lack of automation and reduction in productivity can be a huge source of employee frustration which – over time – results in apathy. This brings us seamlessly to...

Employee morale and retention: Excessive workloads coupled with the inevitable lengthy hours can cause employee burnout. When employees feel their time isn’t valued, they experience decreased job satisfaction, disengagement, and diminished productivity. Ultimately, this results in higher churn. Additionally, being known for second-rate time management can make it tricky to not just retain key talent, but attract it in the first place.

Your business name: Reputation is everything. One surefire way to sully your brand is to provide an unreliable service, complete with missed deadlines and inferior deliverables. Bear in mind, if your competitors are optimizing time costs with aplomb they'll gain the competitive edge in quick time.

Strategies to optimize your time cost

Now that we know what the time cost is, and how to calculate it, how do we optimize it for better productivity?

Setting benchmarks for ideal time allocation helps teams manage project costs and improve performance. While these benchmarks can be tricky to stick to stringently, they serve as handy reference points for continuous improvement.

We’re all about efficiency, transparency, and plain speaking – so we’re going to distill it down to five key aspects.

1. Boost your employees’ time management prowess

Obviously, this should be the very first port of call when trying to bolster your team's time management. In tandem with prioritizing tasks effectively, be sure to set realistic deadlines and offer training on project management tools. It will be worth it in the long run.

2. Evaluate team culture for productivity

Now that you've considered the individual team member, it's time to look into your team culture. This way, you can spot, mitigate, or remove any barriers to productivity. For instance (bringing it to my bugbear) are superfluous meetings siphoning too much time? Are constant interruptions disrupting workflow? Tackling these issues can reduce time wasted on non-essential activities.

3. Apply the ‘Triple Constraint’ or the Project Management Triangle

At the risk of preaching to the converted; you need to adopt the triple constraints of project management – that being cost, scope, and time – to bring about consistent project delivery. By prioritizing tasks based on budget and creating realistic schedules, you can manage your time costs efficiently while completing projects in a timely fashion.

4. Limit multitasking

Trust us when we say that focusing on one task at a time improves efficiency and reduces errors. Multitasking might make you feel more productive in the short term, but it's not a sustainable work model – for many reasons.

5. Use technology to maximize efficiency

If you're still dealing with manual repeatable and therefore time-siphoning tasks, you (really) need to consider leveraging technology to bring about automation. Your future self will thank you. Tools like Memtime can help you to streamline workflows, reduce errors, and help keep track of time spent across all of your projects.

Tactics to ensure team buy-in for your time cost optimization

Now that you know how best to start mitigating the time cost across your business and/or projects, let’s touch off the trickiest but most essential part – team buy-in.

Given employee buy-in is something we’ve addressed extensively before (particularly in terms of project time tracking), here’s a quick recap of some proven methods to engage your team in optimizing time costs.

As we said in the intro; it’s best to get this right from the outset otherwise it could itself become a time cost factor.

Wrapping up

As a company leader, having access to data is crucial. It allows you to better estimate costs, identify bottlenecks, determine tasks that are taking longer than expected, and recognize those that are more efficient. This insight ultimately helps you gain a clearer understanding of your company’s profitability.

With Memtime, your employees have a simple-to-use tool that provides valuable insights into project realities. It helps identify which activities consume the most time and how the overall project unfolds. Employees can independently review these records and transfer the realistic times to your company’s project management software, thanks to our slew of integrations.

So, if you’re ready to see how Memtime can help you navigate the time cost, download our 14-day risk-free trial that doesn’t require any card details to activate. Get started today!