“Time is money.” You’ve likely heard this dusty platitude on countless occasions. And if you’re like most people, you probably take it for granted. Slowly nodding in concession, you think to yourself, “yes, of course time is money.” But as with many aphorisms that ring true, the realities are more complex.
In this article, we’ll dive into the concept of time cost and its nuanced definition in project management, including billing variables and the time-cost relationship. We’ll also discover how monday.com can keep your projects flowing when “time is of the essence.” Let’s start off with a basic definition of time cost.
What is time cost?
Time cost broadly refers to the amount of time it takes to complete a project, from its planning to completion. While this description seems fairly intuitive, a few other variables lurk right beneath the surface. A quick look at the project management triangle provides a little more depth.
The project management triangle is a model used by many managers to balance the three competing but limited resources that govern all projects:
- Scope: Scope describes and establishes project deliverables, and it includes specifics that impact other variables, such as complexity and quality.
- Cost: Cost refers to both the monetary budget and the resources necessary to complete the project, such as tools, equipment, and labor.
- Time: Time encompasses the project’s deadline as well as the hours available to work on the project and the team’s internal timelines for each phase.
Within the context of the project management triangle, time cost refers to the time required for project-based billing, in which a team completes a project for a client and charges that client a flat fee.
For this type of billing, the team establishes scope and cost before the project begins, and they remain theoretically fixed throughout the project’s lifecycle. The only variable, then, is time. The time it takes to complete the work is how much it “costs” the project team. Of course, project-based pricing isn’t the only model available to teams.
“Time cost” is a part of our Project Management Glossary — check out the full list of terms and definitions!
Time cost vs. other billing variables
In the project management triangle, time and cost inversely correlate. In other words, one cannot change without causing an equal and opposite reaction in the other. If deadlines move up, it’ll cost more to complete the project. Or if the budget is cut in half, the project will take twice as long to complete.
For businesses that use a time-cost pricing model, every extra hour spent on a project raises production costs and lessens revenue. These businesses must work to minimize their time cost as much as possible to maximize profits.Teams that invoice hourly needn’t worry about time cost, since every hour worked is another hour billed.
That said, these same businesses need to ensure revenue covers overhead, labor, and material costs. A marketing agency might charge by the hour for client projects, but those rates should offset any direct or indirect costs the agency incurs. For example, it might need to hire a freelance specialist for the project, which qualifies as a direct cost. Meanwhile, it still needs to keep the lights burning, which is an indirect operating cost.
Other businesses pass resource and overhead costs directly on to their clients. Construction companies often use this model. They’ll quote clients a fixed rate while also billing them for materials they need to complete the project. Time cost does impact these kinds of projects, since they help to predict an accurate final project cost.
For teams working with internal projects, however, time is always a powerful variable. Of particular import is the balance between the ticking clock and project costs, otherwise known as time-cost optimization.
What is time-cost optimization?
Time cost optimization is a process that aims to reduce the time it takes to complete tasks or phases of a project. This process requires measuring the time and cost required to complete a task normally and as fast as possible. Once measured, stakeholders can determine the optimal resources to complete the task.
Optimally, time-cost optimization is about figuring out how much to spend on a specific task to speed it up, or how much to save by slowing it down. These two techniques are “task compression” and “task decompression,” respectively.
Conversely, project crashing occurs when project managers leverage these techniques to speed up an entire project. While crashing is a prime example of time-cost optimization, the method deserves due consideration before using it. It may be necessary for some projects, such as those with absolute deadlines. But in many cases, project crashing leads to inflated project costs.
The relationship between time and cost is fixed and unyielding. When you raise one, you inherently lower the other and vice versa. In other words, time-cost trade-off is inescapable in project management. But understanding this concept and using it to plan accordingly is a far better approach to crashing.
Why time-cost trade-off is necessary in project management
By definition, your project has a start and end date. And unless your team has unlimited resources, it also has a budget. Completing it successfully requires a careful balancing act between these two poles: time and cost.
Understanding this balance helps project managers and stakeholders know when and where to make trade-offs in workflows. It helps them determine how to allocate resources during project management planning and optimize projects throughout their lifecycles to keep tasks and activities on schedule. And when the need arises, insight into the time-cost trade-off allows project managers to speed up progress and deliver on time.
Here are a few examples of why time-cost trade-off in project management is necessary:
- Critical path management: In the critical path method of project management, the time-cost trade-off is crucial in overcoming budgetary limitations and finishing projects within a specified time frame.
- Project crashing: Project crashing may be necessary when dealing with hard deadlines. If projects are far behind schedule, crashing will require a substantial time-cost trade-off.
- Adjusting resource allocation: When projects lose key resources mid-lifecycle, time-cost trade-off is necessary for replacing and reintegrating those resources, and getting the project back on schedule.
Much of understanding time cost in project management comes with experience. But whether you’re just starting out on your project management journey or already a seasoned time-cost tightrope walker, the right tools can take you far.
Calculating time cost with monday.com
If you’re searching for help with time-cost optimization processes, monday.com has the tools you need. Our premade, customizable templates feature high-level dashboards so you can follow your team’s progress and allocate resources where they’re needed most. And when it’s crunch time, there’s no confusion — all team members can share access to our Work OS, so they know exactly what their responsibilities are.
Beneath monday.com’s intuitive boards lies a robust data collection machine of whatever metrics and KPIs you set up throughout your project’s lifecycle, allowing you to follow trends and adjust resources proactively. And with dozens of possible integrations, our Work OS can move data from all your team’s tools into a single, seamless place that makes work more manageable.
Frequently asked questions
What is the time-cost relationship?
The time-cost relationship is the inverse correlation between the time it takes to complete a project and the resulting cost. To complete a project faster, it’s necessary to raise costs. Conversely, completing the same project with lower a cost requires increasing the time it will take to complete.
What is time-cost trade-off in project management?
The time-cost trade-off is another way to describe the time-cost-relationship with project management. When a project manager must allocate resources, such as team members, that allocation is a way to increase efficiency based on the time-cost relationship.
Balancing time and cost to maximize project success
Deep comprehension of time cost and the time-cost trade-off enables you to make the right decisions before, during, and in the final stages of every project. For those working on client projects, time cost provides a new perspective on billing and invoicing. For internal projects, knowing how to govern the opposing poles of time and cost is key to project success. Time may or may not be money, but one thing’s for sure: Knowledge is power.