The best way for engineering firms to begin implementing project accounting processes is simply to jump right in. Guiding your firm to a tracking environment requires changes to your corporate culture. Start by explaining the benefits of doing this to the company.  If you understand your costs, you can run your business.  Otherwise, you're flying blind.

Step 1. Prepare. Get a complete list of the projects or processes whose costs you want to understand, along with a list of the employees that spend their time on that work.  Begin with the end in mind.  What will the reports that you want to get out of the system ultimately need to look like? Decide who will own the system. Begin populating the system by adding new employees and projects to it.

Step 2. Get (at least) most of your people to start tracking time.  Start measuring adoption by seeing how many employees you can get to track their hours and how often they enter it.  Your data will be best if people track their time daily or even more frequently. Recording what you did a week ago is useless.  Who remembers what they ate for lunch last Thursday?

Step 3.  Get everyone tracking time and expenses with pay rates.  Now that you've entered data in the system and employees are tracking their time, you have an accurate and complete list of your firm's projects.  Say, for example, you review the data and see that some projects required more time than you expected.  Real data has already surprised you.  Now it's time to guide your company to the next level.  Compute a pay rate for each person in the company and enter it in the system.  Ask employees, where appropriate, to record mileage and travel expense data.  Further enforce adoption across your entire employee base.  At the end of this step, you will receive per-project-per-person direct cost data.

Step 4.  Provide for calculations of indirect costs and choose formulas for spreading that cost.  Expenses incurred in your company in areas like accounting, marketing, office space, etc. can be organized by project cost, project revenue, per person, by square footage of office space used, or one of countless other ways.  Often, two levels of indirect cost may be necessary. There should be a formula for spreading 'partially indirect' cost over multiple customer projects.