Know your billable and non-billable hours

Billable Hours

Billable hours are the hours worked by a professional or service provider that can be invoiced to a client or customer. They offer a reliable method to directly link your work to the client's payment. Charging clients based on the time spent rather than a fixed price reduces the level of risk involved and ensures a greater project margin in the long run.

Here’s a list of examples of billable work types:

1.      Project management: Managing the overall project, including scheduling, budgeting, and coordinating with contractors and subcontractors.

2.      Client meetings: Holding consultations with clients to discuss their needs, provide advice, or gather information.

3.      Site visits and inspections: Conducting on-site visits to assess progress, ensure compliance with design specifications, and address any issues.

4.      Design and drafting: Design and preparing detailed and accurate drawings, specifications, and schedules for construction purposes.

5.      Post-construction evaluation: Assessing the completed project to ensure it meets the desired design intent and quality standards.

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Non-billable Hours

While billable hours keep your revenue growth. The importance of tracking non-billable hours is also a critical factor to understand the development of your business. By analysing your non-billable hours, you get to improve the efficiencies and profitability of the team. It also helps you to understand how much each of your client may cost you without creating profit.

Non-billable hours may include administrative work such as training, team building, office management, invoicing, and client communication. Here are some example tasks that are often considered as non-billable in our everyday office:

1.      Taking lunch or short breaks.

2.      Starting the week or day with a 15min group discussion.

3.      Meeting a potential client.

4.      Training new employees or on-job learning.

5.      Creating website or social media content.

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Business Indicator 1 – How productive is your team?

Monitoring billable and non-billable hours allows the firm to assess the productivity of its architects and staff. It provides insights into how time is being allocated and helps identify areas where efficiency can be improved. By analysing the data, the firm can identify bottlenecks, streamline processes, and implement strategies to enhance overall productivity.

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Business Indicator 2 – How much time did we really need to complete a project?

Tracking billable hours helps in evaluating the time and effort required for different project types and sizes. This information aids in resource allocation, ensuring that the right amount of manpower is dedicated to each project. It also assists in project planning by providing a basis for estimating timelines and setting realistic deadlines.

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Business Indicator 3 – How do we make improvements for future projects?

Accurate tracking of billable and non-billable hours provides valuable data for future planning and decision-making. It helps insetting realistic targets, identifying areas of improvement, and making informed business decisions based on historical data.

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