Today Is Value-Pricing Sunday

OK, not exactly, but if there were such a designation, today would be the day.

This is the Gospel read in all Roman Catholic Churches throughout the world.

Matthew 20

The Parable of the Workers in the Vineyard

1 "For the kingdom of heaven is like a landowner who went out early in the morning to hire workers for his vineyard. 2 He agreed to pay them a denarius for the day and sent them into his vineyard.

3 "About nine in the morning he went out and saw others standing in the marketplace doing nothing. 4 He told them, ‘You also go and work in my vineyard, and I will pay you whatever is right.’ 5 So they went.

"He went out again about noon and about three in the afternoon and did the same thing.6 About five in the afternoon he went out and found still others standing around. He asked them, ‘Why have you been standing here all day long doing nothing?’

7 “’Because no one has hired us,’ they answered. "He said to them, ‘You also go and work in my vineyard.’

8 "When evening came, the owner of the vineyard said to his foreman, ‘Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.’

9 "The workers who were hired about five in the afternoon came and each received a denarius. 10 So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. 11 When they received it, they began to grumble against the landowner. 12 ‘These who were hired last worked only one hour,’ they said, ‘and you have made them equal to us who have borne the burden of the work and the heat of the day.’

13 "But he answered one of them, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? 14 Take your pay and go. I want to give the one who was hired last the same as I gave you. 15 Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’

16 "So the last will be first, and the first will be last."

Most interpret this as demonstrating the generous nature of God (which it certainly is), but adding an assumption (which is clearly NOT in the text) offers a more economic exegesis.

Perhaps the owner of the vineyard believed there to be a frost coming that evening which would destroy the unharvested grapes. This would make the grapes gathered later in the day of much greater value to him. Value is subjective!

What I find fascinating is that it is one of the few economics lessons in the Christian Bible – only appearing in the Gospel of Matthew. It is clearly a refutation of Marx’ Labor Theory of Value written 18 centuries early. Lastly, it is certainly classically liberal in that the owner is free to do with his money as he sees fit.

ET HORA LIBELLUM DELENDA EST

Your Vote Needed – Best Timesheet Video

Below is a list of videos I found on youtube that are related to the timesheet with a link to a playlist I created if you want to view them consecutively. Please view them and let me know which is your favorite.

  1. Do your timesheet by joebeegnish – This would be funny if it were not serious.
  2. Time Sheet Song by liltam21 – There is even a song about this…
  3. Time After Timesheets – by PaulDesRosiers – …and a cover/parody of a real song…
  4. Time sheet drama by pumpkin1017 – …and a cartoon version…
  • timesheet by manuviora – …and even one en Española!?
  • May Timesheet Reminder by tracywald – Yes, Godfather parody…
  • June Timesheet Reminder by tracywald – …and a Matrix parody. This is a whole series from one person. I wonder what she puts on her timesheet when producing these.
  • Gordon filling out his Timesheet by 94WYSP – An absurdist drama…
  • Saw Timesheets by hordeman70 – …and a horror flick.
  • How to Create Stickies Timesheet Reminders by tsgvids – Funny for its unintentional earnestness.
  • Workamajig Creative Management: Angry Men by workamijig – Because “creatives” love filling out timesheets online.
  • Timesheets by BereaCollegium – Finally, the truth!!!

    So which one is your favorite?

    Bonus question: If you fill out a timesheet, what did you code watching these to?

    Ed Kless Is Wrong

    Once again, the self-proclaimed Defender of the Timesheet and Champion of the Dissenters, Greg Kyte, is at it again. This time he takes me on rather than Ron Baker of VeraSage.

    Dear Ron,

    Quite awhile ago, I sent the following letter to the Journal of Accountancy, but apparently they were too scared to print the truth. Enjoy as I expose the falsehood of your co-conspirator, Ed Kless.

    In April 2010 the Journal of Accountancy published the article, Project Management for Accountants by Ed Kless. Although the article contained a significant number of words, many of those words created lines, and if one reads between those fabricated lines, one may find the same offensive subtext that I found. The author is waging a guerilla war – not against gorillas, but against the accounting profession. Project management is for ignoble professions such as contractors, engineers, and doctorate-level pharmacology researchers. Project management may be good enough for those and other financial Cro-Magnons. We accountants, however, are the progeny of a dignified tradition, and our collective pecuniary prowess has led us as a community to a near-universal acceptance and usage of the financially sophisticated and elegantly simple concepts of the billable hour and the timesheet.

    Mr. Kless’ approach to project management is his attempt to rob our profession of the fringe benefits that accompany the billable hour and the timesheet. In his article, Fast Eddie lists eleven essential components of a scope statement. He advocates the use of a scope statement because it is designed to limit “scope creep”; however, he ignores that fact that under the billable hour paradigm, scope creep creates revenue. Ergo, Fast Eddie is trying to decrease your firm’s revenue, and if you consult your accountant, she’ll verify that revenue is a good thing.

    In his opinion, all assumptions between a firm and a client are to be clearly enumerated. Mr. Kless exhorts us to “answer the question, ‘What should we not leave unsaid?’” But since I bill by the hour, there is only one assumption that I can’t leave unsaid—the assumption that if I work on an engagement for an hour, the client is going to pay me for an hour.

    I actually liked his idea of maintaining a “future project list.” It’s a list of possible projects and major tasks that will be deferred until the future … like when I need more billable hours.

    He argues that constraints need to be brainstormed and specified. Constraints are limitations and restrictions that could hinder the efficiency of an engagement. The article states that constraints are “risks in waiting.” Don’t look at constraints as risks in waiting; look at them as semi-avoidable wellsprings of cash flow.

    Possibly the most offensive part of this article was the following assertion made while discussing how to calculate percentage of completion: “Measuring the completeness of your projects by hours billed is akin to listening for the smoke detector to determine when your cookies are done. The alarm only goes off when it’s too late.” This is blatantly invalid. The beauty of using billable hours is that we don’t need to measure completeness. Billable hours and timesheets are actually like cooking with the Ronco Rotisserie and BBQ Oven: “Just set it and forget it!”

    Once again, Greg demonstrates that he is quite deserving of his self-developed moniker.

    On Timesheets and Cost Allocation

    Earlier this week I received an email from friend of VeraSage, Kirk Bowman of Mighty Data, who, by the way, his given himself the great title of Visionary of Value in his email signature and on his business card. He writes:

    At the most recent meeting of our FileMaker Business Group this week, I got a question for which I did not have a good answer. The question is, if we are not tracking time, how do I know if a specific project is profitable? They were asking for a metric to measure financial success or failure on a project by project basis. I’m going to review the slides from August but I thought I would ask your input also.

    The short answer is, “If overall profit is up xx percent, who cares?”

    The more detailed answer: You allocate your costs ahead of time, like Toyota does as they do not have a traditional cost accounting system. They use what is called targeted costing.

    Say you plan to do 12 major projects a year and $1.2 million in overall cost. You would start by allocating $100,000 to each. Now some would argue that some projects are bigger than others. OK, fine. Let’s allocate $200,000 to two of them, $50,000 to four of them, and leave the remaining six at $100,000. Of course, you can adjust them based on your judgment, so long as the total remains $1.2 million.

    Project Straight Adjusted
    A 100,000 200,000
    B 100,000 200,000
    C 100,000 100,000
    D 100,000 100,000
    E 100,000 100,000
    F 100,000 100,000
    G 100,000 100,000
    H 100,000 100,000
    I 100,000 50,000
    J 100,000 50,000
    K 100,000 50,000
    L 100,000 50,000
    Total 1,200,000 1,200,000

    Is it perfect? No, but allocating costs based on a time unit is just as flawed as assigning value to the customer based on a time unit. It is the same false premise: value or cost does not equal rate times hours.

    Is an hour billed on a project a good thing or a bad thing? No one knows, some hours might be good others bad. It is a judgment and therefore there is no reason to measure it. Allocating costs as above will make you approximately correct, rather than precisely wrong!

    Tracking time might make you a better cost accountant, but cost accountants make lousy pricers. I would rather be a better pricer.

    Lastly, timesheets are the cancer of the professions. They cause us to focus on the wrong things, the inputs. Professionals should focus on the right things, the outputs to the customer: deliverables, objectives, overcoming risks, solving issues, etc.

    TIMESHEETS DELENDA EST!

    Killing the timesheet in seven minutes

    On August 5, 2010, my friend and mentor, Ron Baker  participated in the American Bar Association’s Journal’s program, 10 Ways to Build Your Perfect Practice & Career, as part of the 2010 Legal Rebels project during the ABA’s Annual Meeting in San Francisco.

    The presentation is entitled Escaping the Tyranny of Time. He had seven minutes to make his point. I think he did an outstanding job!

    Here We Go Again!

    More drivel from WebCPA! In an article entitled In search of lost time: Five ways CPAs can increase their billable hours – and their profitability, Brett Owens (who I am sure is a very nice person) states:

    The numbers tell the story and it all boils down to time management. If you bill for your time directly or on an hourly basis, diligent timekeeping is something you must do in order to get paid for all of the work you perform for clients. If you bill on a fixed-fee basis, accurate time records help determine how profitable specific clients and projects really are – and if they’re unprofitable, time records help us realize the viability of a client for the long term.

    No, no, a thousand times no! Oh, when will this obsession with Marxism end!

    Value (or cost) does not equal rate times hours. It never has and it never will.

    Reason to kill time sheets #17

    In reply to a conversation with a member of VeraSage I wrote a really good paragraph and I thought I would share since it is TLFT (too long for Twitter).

    One of the issues (with tracking time) is vagueness which is the enemy of accountability. Getting people to define the results is hard work; time sheets allow managers to be precise about the effort expected while leaving the results entirely vague. Thus someone who bills many hours can be considered a hero or an idiot depending on what the manager thinks of them.

    Highlights from Issues List Management Session

    On May 12, 2009, I presented a session at Sage’s annual partner conference, Insights. The session was entitled Issue List Management (or how to replace your time sheets with something that actually matters to your customers).

    First up are the slides from the session.

    Next, here are the video highlights and the document for downloading.

     

    And finally, the big finale! This is only for those of you who are radicals (like me) – a song which I believe demonstrates the immorality of tracking your time.

    Peter Drucker and Time Sheets

    Recently, I have been plagued by people who claim Peter Drucker said, “If you can’t measure it, you can’t manage it.”

    First, let me say that I cannot find this as a direct quote of Drucker’s other than continuous and unsubstantiated citations in many articles, blog posts, and PowerPoint presentations all over the Internet. If anyone has the direct knowledge of the book or published article wherein Drucker says these exact words, please let me know. Until such time, please do not attribute this quote to Drucker.

    Second, in my research looking for this quote, I found the following:

    Reports and procedures should be the tool of the man who fills them out. They must never themselves become the measure of his performance. A man must never be judged by the quality of the production forms he fills out – unless he be the clerk in change of these forms. He must always be judged by his production performance. And the only way to make sure of this it by have him fill out no forms, make no reports, expect those he need himself to achieve performance. – Peter Ferdinand Drucker, The Practice of Management, 1954, page 135.

    All emphasis mine.

    Does anyone now want to say that Peter Drucker would be in favor of submitted time sheets to measure productivity? I rest my case.