Improving your project management methods begins with defining what constitutes a project, identifying the types of work you perform, and understanding which data matters most. This foundation streamlines time tracking and clarifies task management, enabling you to plan projects more effectively. If your organization manages multiple projects, you may benefit from both scheduling mechanisms and a project management software solution that consolidates tasks, synchronizes records, monitors project progress, and enhances resource planning.
The three major categories of projects you should track are:
- Internal projects (for your own business)
- Billable external (customer) projects
- Non-billable and fixed-fee external projects (where costs need to be monitored)
All three project types share essential core elements: the task types or categories to be performed and the staff or contractors who deliver the work. A robust project service management (PSM) system enables you to track time, schedule work, generate accurate accounting data, and provide reporting mechanisms. This can be expanded with additional project management tools—such as systems offering time tracking, resource management, and streamlined task management. Many project management apps now feature Gantt charts, Google Calendar integrations, and management software capabilities that optimize project workflows. Whether you use Zoho Projects, Jira Software, or seek a simple solution with real-time data, the right system keeps project progress visible and the entire team engaged.
Internal Projects
An internal project is work performed for your organization rather than a customer. These projects involve tracking personnel costs and out-of-pocket expenses, but there are no cost markups or revenue calculations, as they serve your own business. Nonetheless, tracking project progress and utilizing project templates helps ensure internal deadlines are met.
Examples of internal projects include preparing for a tradeshow event, where staff spend salaried time on artwork or logistics, and product development for items you intend to sell, such as a software application or project management app. Because these products are not developed for a specific customer, their costs are not directly tied to ongoing development and are undertaken at your own risk until sales begin. If you manufacture multiple products, tracking time investments across different work types (development, Q&A, documentation, etc.)—both in aggregate and by module—is essential. Without structured projects and linked tasks, this level of oversight is not possible. Incorporating project planning and portfolio management to oversee multiple internal initiatives reveals how your team’s schedule impacts resource planning and daily operations.
External Projects
External projects are more complex than internal ones. Successful delivery requires completing tasks within quoted budgets and timeframes, ensuring customer satisfaction and predictable costs for profitability. These projects introduce variable costs (salaries and contractors) and revenues that may fluctuate based on work type, location, consultant skills, and more. A comprehensive project management software platform often provides features like team collaboration, integrated project plan views, and management tools to keep these factors transparent for project managers.
Billable external projects typically fall into two categories: fixed-fee and time-and-materials (T&M), though combinations often occur. Fixed-fee projects may include T&M activities for items like travel time, and T&M tasks may have billing rates that vary by customer. Using a comprehensive management tool helps you handle unlimited projects and maintain smooth project plans. Some management apps offer month billed annually pricing, which can aid budgeting for software projects.
Some deliverables may not be billable, such as goodwill efforts or technical work done to secure a deal. In all cases, tracking costs by staff member or subcontractor strengthens your project portfolio management and provides real-time data on project performance.
Managing external projects becomes even more complex when internal project management or oversight is required, such as when specific staff time cannot be billed even though the overall project is billable. This scenario benefits from solutions supporting Jira Software cloud connections or integrations with other project management tools.
For example, true project management always involves behind-the-scenes non-billable costs—calls, emails, timesheet approvals, and meetings. These may be considered overhead or factored into pricing, but understanding the time and staff costs invested is crucial, especially for large projects where time consumption can affect delivery schedules. Insights gained from tracking these costs inform future quotes and project templates.
External projects frequently accumulate change orders during delivery. When project elements change, the work originally proposed must be re-evaluated, rescheduled, and requoted for approval, consuming additional time beyond the change order itself. Tracking these changes is essential, as they can occur multiple times within a single project. Failing to manage them leads to unseen costs. Project management tools with portfolio management views help project managers stay on top of changes, track progress, and adapt scheduling efficiently.
External projects also incur out-of-pocket expenses (airfare, travel, mileage, parking, meals, etc.). Are these expenses tracked accurately, or are estimates made due to difficulty? Building historical data for future quotes is vital. Both costs and revenue (if billable) accumulate daily, impacting project profitability. Equipment rentals or materials may be managed in separate applications, but without direct integration, project control and profitability suffer. A unified project management tool ensures team collaboration and accountability, supporting effective project management.
Fixed-fee Projects
Subcontractor costs are particularly complex, as they may be T&M or fixed-fee from the vendor and billable or non-billable depending on the arrangement. When dealing with a fixed-fee vendor cost, how does your accounting department match the vendor’s invoice to the agreed price before payment? This often leads to wasted time verifying amounts with project staff, sometimes across time zones. Implementing a robust software project management system centralizes resource management, billing, and customer support, saving time and reducing confusion for project managers.
None of the topics discussed can be addressed with a standalone time and billing tool, or even Microsoft Project, which focuses solely on scheduling and task progress. Expenses, time records, and vendor invoices are not managed in MS Project. Many businesses therefore seek management apps with advanced project management features or use tools like Zoho Projects, Jira Software, or solutions with integrated Google Calendar functions. These platforms can support everything from month billed annually pricing models to managing unlimited projects in your portfolio.
If you have questions about tracking internal, external, and non-billable or fixed-fee projects, TimeLinx can help. Contact us today for more information. Whether you want to explore customer stories about others managing similar projects or need specific project plans, our experienced team is ready to guide you.
