In managerial accounting, Time-driven Activity-based Costing (TDABC) is a concept in measuring the cost of various sectional activities with time as the only variable to be based on. The capacity required for any business as a whole is calculated as the time required to perform each activity or transaction.

Many MNCs across different industries have implemented this concept in their management process and use TDABC to calculate the operational cost for their businesses. It is also the top choice of costing method recommended by many business consultants and advisers.

Here are few time management lessons that we can learn from this accounting concept. You will be surprised how relevant is this technical concept in our daily life.

1. Cut the waste of time

In TDABC model, time is the baseline for all calculations. Unlike some other resources, time is limited. No matter how rich you are or how powerful you may be as a political figure, you still have 24 hours a day and there is no way for you to get any extra time as compared to many others.

So, if everyone’s full capacity is fixed, how are we going to stand out from others?

Firstly, you can simply cut down the waste of time in your life.

In many situations, you probably haven’t gain your full capacity of time. So right now, start to think of areas of ‘waste’ in your time usage and try to minimize those areas wherever possible. By cutting down the waste, you will realize actually there is still plenty capacity for you to do many other things.

2. Make good time investment

After gaining the full capacity of your time, now we are trying to focus on the ‘efficiency’ part.

In TDABC, each activity or transaction has its required capacity or required time to complete the task. Assuming there are two activities (A and B) to be completed, the budget time required (i.e. the budget cost required) is calculated by

Budget time required = Unit time required for A × Number of repetition (A) + Unit time required for B × Number of repetition (B)

If there is a fixed requirement for the number of repetition, the only way for us to reduce budget time required is to lower down the unit time required for each activity.

So how can we complete our task within a shorter time and with more efficiency? We can do things in a better and faster way by investing our time in learning.

Many people feel learning is a very tedious process and why not just use this period of time to complete more work. It is true that learning takes patience and in order to master the skills, you also need to put in efforts. However, investing your time in learning will provide you far more benefits in the long run.

ROI of time can also improve by using a software. Time Doctor is one of them which is able to track your web and app usage and monitor daily activities. You will be able to have a better idea how to improve your time management by referring to the insights generated from the time sheets and detailed reports. Most importantly, it is totally FREE to start a Time Doctor account which you can access it via all your computers and mobile devices.

Let’s come back to the formula mentioned previously. After learning the relevant skills, now unit time required for A and B decreases. If the number of repetition remains the same, our budget time required will be lower. Summing up the capacity saved from performing the works, the time spent on learning actually pay back in exponential amount and will bring your total level of productivity to the next level!

3. Focus on applying time management model on one type of activity first, then duplicate it

In TDABC, building an accurate time-based algorithm in one facility will serve as a template for many others to apply and customize based on their characteristics. This is true even in terms of company level, whereby many other companies across different industries may try to follow or duplicate a successful model that a company has come out for TDABC.

In our daily life, there are many good time management skills for us to consider. However, the main issue is often that how to interpret and apply these theories to our daily activities.

For example, even though Time Management Matrix is a good tool to manage our work, but how to rank the importance and urgency of different activities is always confusing. In this case, we may try to build our time management system from one type of activities first. Let’s say it’s a specific type of work that you do regularly, then maybe you can start applying the model on this work before trying out for other daily activities.

Hence, the trick for time management is often not about the skills, but instead how to interpret the skills and the model. To overcome this issue and better manage our time, we can learn from the MNCs about how they try to apply TDABCs to their businesses.

In this series, there are also other articles discussing about how to improve efficiency and time management with different tools such as lean thinking, Six Sigma, as well as Kaizen philosophy. Feel free to check them out!

What are the time management skills? Time management skills can summarized as: Organization, Prioritization, Goal-setting, Communication, Planning, Delegation, and Stress management.