What Is Project-Based Time Tracking?
A Practical Guide for Project Teams
When employees work on projects, knowing how many hours they worked is only part of the picture.
Project teams also need to know where those hours were spent.
An employee may work eight hours in a day, but those hours could be divided between several projects, tasks, meetings, research, documentation, and other activities.
This is where project-based time tracking becomes useful.
Project-based time tracking connects employee hours to specific projects and tasks, giving organizations a clearer view of how time is being spent.
For project-driven organizations, this information can support timesheet management, approvals, project reporting, resource planning, and business analysis.
In this guide, we’ll explain what project-based time tracking is, how it works, what information should be captured, and what to consider when choosing a project time-tracking solution.
What Is Project-Based Time Tracking?
Project-based time tracking is the process of recording the time employees spend working on specific projects, tasks, or activities.
Instead of recording only:
Employee → 8 hours
the organization records:
Employee → Project → Task → Hours
For example:
| Employee | Project | Task | Hours |
|---|---|---|---|
| Employee A | Project Alpha | Design | 4 |
| Employee A | Project Alpha | Documentation | 1 |
| Employee A | Project Beta | Client meeting | 2 |
| Employee A | Internal | Administration | 1 |
The employee still worked eight hours.
But the organization now has additional context about where those eight hours were spent.
That context is what makes project-based time tracking valuable for project teams.
Why Is Project-Based Time Tracking Important?
For many organizations, employee time is directly connected to project effort.
If hours aren’t associated with projects and tasks, it becomes difficult to understand how resources are actually being used.
Project-based time tracking can help organizations answer questions such as:
- How many hours have employees spent on a project?
- Which tasks are consuming the most time?
- Which employees are working on a particular project?
- How much time is billable versus non-billable?
- How much effort is being spent across multiple projects?
- Are managers receiving complete timesheets?
- What project time data is available for reporting?
Without this information, project reporting may depend on estimates, separate spreadsheets, or manual follow-up.
The objective isn’t simply to record more information.
It’s to collect the right information at the point where work happens.
How Does Project-Based Time Tracking Work?
A project-based time-tracking process typically follows a simple workflow.
1. Set up projects
The organization creates the projects that employees will work on.
Each project should have a clear name and structure so employees can easily identify the correct project.
2. Define tasks
Projects can then be divided into relevant tasks or activities.
For example:
Project Alpha
- Planning
- Design
- Development
- Testing
- Documentation
- Client meetings
The level of detail depends on how the organization wants to report and analyze project effort.
3. Assign employees to projects
Employees should have access to the projects they are expected to work on.
This makes time entry easier and reduces the risk of employees selecting unrelated projects.
4. Employees record their time
Employees enter the hours they spend working on specific projects and tasks.
For example:
Project Alpha → Design → 4 hours
Project Beta → Client Meeting → 2 hours
5. Employees submit their timesheets
At the end of the relevant timesheet period, employees submit their recorded hours.
This creates a clear point at which the timesheet becomes ready for review.
6. Managers review the information
Managers can review submitted timesheets to check whether the recorded hours and project assignments make sense.
Depending on the organization’s process, the manager can approve or reject the submission.
7. Use the data for reporting
Once project time has been collected and reviewed, the organization can use the information for project and management reporting.
This creates a complete process:
Project → Task → Time → Submission → Approval → Reporting
Project-Based Time Tracking vs. Traditional Timesheets
A traditional timesheet may focus primarily on the number of hours an employee worked.
For example:
| Employee | Date | Hours |
|---|---|---|
| Employee A | Monday | 8 |
| Employee A | Tuesday | 8 |
This tells you how much time the employee recorded.
But it doesn’t necessarily tell you where that time went.
Project-based tracking adds project and task information:
| Employee | Date | Project | Task | Hours |
|---|---|---|---|---|
| Employee A | Monday | Project Alpha | Design | 4 |
| Employee A | Monday | Project Beta | Meeting | 2 |
| Employee A | Monday | Project Alpha | Documentation | 2 |
The second approach provides more context for project reporting.
Neither approach is automatically right for every organization.
The important question is:
What information does your organization need from its timesheets?
If project effort matters, project-based tracking can provide significantly more useful information than simply recording total hours.
What Information Should a Project Timesheet Include?
There isn’t one universal project timesheet format.
The fields you need depend on your projects, reporting requirements, and approval process.
However, a project-based timesheet commonly includes:
- Employee: Who performed the work?
- Date: When was the work performed?
- Project: Which project was the work associated with?
- Task: What activity or task was performed?
- Hours: How much time was spent?
- Billable or non-billable: Should the time be classified as billable or non-billable?
- Comments or description: Is additional context needed for the time entry?
- Approval Status: Has the timesheet been submitted, approved, or rejected?
The goal is not to add as many fields as possible.
Every field should have a purpose.
If a field doesn’t support reporting, approval, project management, or another business requirement, consider whether employees actually need to enter it.
What Are the Benefits of Project-Based Time Tracking?
- Better project visibility: When hours are connected to projects and tasks, managers can see where employee effort is being allocated.
- More structured project reporting: Project reports can use actual recorded hours rather than relying entirely on estimates or manually consolidated information.
- Improved timesheet review: Managers can review time in the context of the project and task rather than looking only at total employee hours.
- Better understanding of resource allocation: Organizations can identify how employee time is distributed across different projects.
- Billable and non-billable visibility: Project teams can distinguish between time that contributes directly to client or project work and time that does not.
- A better foundation for analytics: Structured project time data can be connected to reporting and analytics tools, including Microsoft Power BI.
The quality of the resulting reports depends heavily on the quality and consistency of the data collected at the beginning.
Common Challenges With Project-Based Time Tracking
Project-based tracking sounds straightforward, but organizations often encounter practical problems.
Employees work on multiple projects
An employee may switch between projects several times during a day.
The timesheet process needs to make it easy to record those changes accurately.
Project structures change
Projects can be created, closed, or modified.
The available project and task lists need to stay current.
Employees select the wrong project
If employees have access to too many projects or project names are unclear, incorrect time entries can occur.
Managers need to review large numbers of timesheets
As the number of employees increases, manually checking each timesheet can become time-consuming.
Reporting requires consistent data
If employees use different project or task names, consolidating the information becomes harder.
A structured project and task system can help reduce these inconsistencies.
How Microsoft 365 Can Support Project-Based Time Tracking
Organizations already using Microsoft 365 may want project time tracking to fit into the environment they already use.
SharePoint can provide a foundation for storing structured project and timesheet information, while a dedicated timesheet application can provide the workflows required for employees and managers.
A Microsoft 365-based process can connect:
Employees → Projects → Tasks → Timesheets → Approvals → Reporting
For organizations using Power BI, structured timesheet data can also provide a foundation for project and management dashboards.
The important distinction is that Microsoft 365 provides the environment, while the timesheet process still needs to be designed around the organization’s actual project workflow.
How Timesheet Pro 365 Supports Project-Based Time Tracking
Timesheet Pro 365 is designed for organizations that want to manage project-based time tracking and timesheets within Microsoft 365 and SharePoint.
Employees can record hours against projects and tasks, submit their timesheets, and have their submissions reviewed through an approval workflow.
Managers can review submitted time and approve or reject timesheets.
The resulting information can then be used for reporting and Power BI analysis.
The overall workflow is:
Record → Submit → Review → Approve → Report
This approach helps organizations create a structured process for collecting project hours instead of relying entirely on disconnected timesheets or manual consolidation.
What Should You Look for in a Project Time-Tracking Solution?
If you’re evaluating project-based time-tracking software, consider the complete workflow rather than focusing on one feature.
- Project and task tracking: Can employees record time against the projects and tasks they actually work on?
- Employee-project assignments: Can administrators or managers control which projects employees can access?
- Simple time entry: Can employees record their hours without unnecessary complexity?
- Timesheet submission: Is there a defined process for submitting completed timesheets?
- Approval workflow: Can managers review and approve or reject submissions?
- Reporting: Can you analyze time by employee, project, task, or date?
- Billable and non-billable time: Can your organization distinguish between different types of project hours?
- Microsoft 365 compatibility: If your organization already uses Microsoft 365 and SharePoint, does the solution fit into that environment?
- Power BI integration: Can the collected time data be used for additional analysis and dashboards?
A good solution should support the entire process, not just the time-entry step.
Project-Based Time Tracking: Common Mistakes to Avoid
Tracking hours without projects
If project effort is important to the organization, recording only total employee hours won’t provide enough context.
Creating too many task categories
A complicated task structure can make daily time entry frustrating.
Create enough detail for meaningful reporting without making the process unnecessarily difficult.
Allowing inconsistent project names
A standardized project structure makes reporting easier.
Skipping the approval process
Unreviewed time data may contain errors that eventually affect project reporting.
Collecting data that nobody uses
Every timesheet field should serve a purpose.
If nobody uses a field for reporting, approval, or another business process, reconsider whether employees need to enter it.
How to Make Project Time Tracking Easier for Employees
The employee experience matters.
If recording time becomes complicated, employees may delay entries or enter information inconsistently.
A practical process should make it easy for employees to answer:
What project did I work on?
What task did I perform?
How much time did I spend?
The process should also make frequently used projects and tasks easy to find.
The goal is to capture accurate information without turning timesheet entry into a separate administrative burden.
From Project Time Tracking to Project Reporting
Project-based time tracking becomes more valuable when the collected information can be used for reporting.
Once employee hours are consistently associated with projects and tasks, organizations can analyze:
- Project hours
- Employee hours
- Task effort
- Billable and non-billable time
- Timesheet submission status
- Approval status
- Time distribution across projects
This creates a connection between daily employee activity and broader project reporting.
In other words:
Time entry is the starting point.
Project reporting is one of the outcomes.
For organizations using Microsoft Power BI, structured timesheet information can also become part of a broader analytics process.
Key Takeaways
Project-based time tracking is about more than recording employee hours.
It connects employee time to the projects and tasks where the work actually happens.
A practical process should:
- Define projects and tasks clearly.
- Assign employees to relevant projects.
- Make time entry simple.
- Connect hours to projects and tasks.
- Provide a defined submission and approval process.
- Use structured information for project reporting.
- Fit into the organization’s existing technology environment.
For project-driven organizations, this additional context can make timesheet data much more useful for managers, project teams, and leadership.
Improve Project Time Visibility
Project-based time tracking gives organizations a clearer connection between employees, projects, tasks, hours, approvals, and reporting.
If your organization already uses Microsoft 365 and SharePoint, Timesheet Pro 365 provides a structured way to manage project and task-based time tracking, timesheet approvals, reporting, and Power BI integration.