Make your hours count

Time is a finite resource, but by effectively managing it, you’ll contribute to your individual success and the long-term prosperity of your firm.

When you think of billable professions, you might think of doctors, lawyers, or accountants – but what about engineers? Yes, many times, engineers bill by the hour, too. The success of both your professional development, and the engineering firm you work for, isn’t just about technical work; it’s also about contributing to making sure the business is healthy. Specifically, managing your billable hours and tracking time.

Engineering goes far beyond design for projects. What we’re really creating – and contributing to our clients – is hours. Embracing this mindset, from day one to retirement, is crucial for setting both you and your firm up for success. Let’s take a deeper dive into what this means for you, your team, your clients, and your firm.

Understanding billable hours and measuring metrics.

I like to tell young engineers to think of your firm as an assembly line. The track starts to run, and everyone must be ready to do their part. If one person on the line takes too long, rushes their process, or drops the ball, the entire operation won’t move efficiently – and may end up costing your firm. Plus, if you don’t spend your hours wisely, the trust you’ve built with your team and with your client could start to be questioned.

So how do you avoid things getting off track? Begin by managing your time effectively. This includes knowing how many hours you can bill to a specific task given the budget and schedule – and sticking to it. It also means consistently communicating with the project manager, department head, and other team members to make sure schedule or scope hasn’t changed to avoid unnecessary work.

Another critical component is to make the most of your hours in each day, coupling your time management efforts with tracking your utilization goal. But what is utilization? Utilization refers to the percentage of time spent on billable tasks compared to non-billable tasks. For example, if you work 40 hours a week, and only 30 of those hours go toward billable work, your utilization rate is 75 percent. Balancing your billable time (on projects) with your non-billable time (business development, professional development, and/or administrative duties), is critical and depends on your role in the company. Being highly utilized with quality hours is the basis for a thriving project, department, and, ultimately, firm.

The life cycle of a project and its impact on billable hours.

To understand how time management and billable hours fit into the broader picture, it’s essential to understand the lifecycle of a project. A well-managed project requires methodical planning, structured execution, and constant attention to timelines and budgets. Let’s look at how a project runs, beginning to end:

1. Client development and contracting. First, we always encourage our team members to develop strong, lasting relationships with clients which in turn create continuing opportunities. Typically, you’ll receive a formal solicitation in the form of a request for proposals or qualifications. If you’re familiar with the client, you can tailor your response to their unique needs, making you stand out from competitors. Ideally, you’ve known this project was on the horizon and have already established a team, talked with the client on priorities, and are ready to hit the ground running.
   Once you receive the official “win” notice, you can lay the groundwork for how time and work will get contracted and billed. Familiarity with the client helps provide clear communication of the scope, timeline, and budget and helps prevent misunderstandings. Even if this is a brand-new client, the time and effort you put into familiarizing yourself with them shows your investment in achieving the project goal.
2. Scope, timeline, and budget. Once you understand your project scope, the client, and their expectations, you can budget out your time with accuracy. If this understanding isn’t complete, it’s unclear how to estimate the time for each task and allocate resources accordingly. Without this clarity, your team’s capabilities become strained as they don’t have a clear path to project completion.
3. Change orders and scope creep. Once you have your plan in place, watch out for change orders and scope creep. Sometimes, additional requests and unforeseen challenges pop-up during the project execution phase that require you to re-budget your time. When you budget your time out early in the project process, you can easily navigate through these changes, finding areas where time can be reallocated or trimmed. If this isn’t possible, your team is able to confidently approach the client with a revised scope, timeline, or fee.
4. Project delivery and invoicing. As the project nears completion, review the time you spent on each task and ensure that all hours are billed accurately and appropriately for the type of project. For example, if the project is going to be billed as a “Time and Expense,” each task should be spent and billed as the hours are accrued. Timely invoicing at this stage is also critical because it ensures your firm receives compensation for completed work without any delays. Providing the final deliverable to your client also involves confirming that all tasks have been completed to satisfaction and that it meets their expectations. In this review, you can quickly identify areas of your time management that are effective, strengthening your process for the next project. Invoicing also creates an opportunity to communicate directly with the client about the status of the project and the upcoming phases needed for completion. Communication is key and effective, direct communication will ensure a smoother project delivery.

Working as a team.

While you may manage, track, and report your own time, you also need to understand how indirect time impacts the greater good of your firm through unbillable efforts. A few examples common to most firms include:

1. Project accounting. Project accountants monitor team members’ time and ensure that billable hours get properly recorded. They set up projects based on contracts, define billing rates, and assist project managers with accurate, timely invoicing. By working closely with project teams, project accountants are a critical part of capturing and billing hours.
2. Information technology. A key function of IT in a firm is to keep you operating at your maximum efficiency including management of your firm’s time-tracking systems to ensure that they are user-friendly, secure, and accessible. A reliable time-tracking system helps engineers record hours quickly and accurately, reducing errors and improving efficiency. They are much more than the folks you call when you can’t open a file!
3. Marketing. The final piece to the project puzzle is the marketing team. It’s their job to position the company so that it attracts new business and brings in those projects. They’re often tasked with creating the proposals and qualifications packages sent to clients to help win work. Ensuring that your budgeted time allows for effective communication and collaboration with the marketing team secures your project wins, and in turn, keeps projects flowing into the business.

There are many more key players who contribute to engineering firms, such as corporate accountants, legal representatives, and human resources, but what is important is that you understand the value of their time. When you understand their roles, you can gain a better understanding of how their hours fit into the pie and help drive efficiencies for the engineering technical staff.

Why billable hours and time management matter.

Time management and billable hours directly influence the health of an engineering firm. Accurate billing practices build trust with clients, who expect transparency and fairness. The more you effectively manage your time, the more reliable you become – to both these clients and your firm’s leadership team.

In the business of engineering, the most valuable product we offer clients is our time. By optimizing your billable hours, accurately tracking time, and monitoring project budgets, you can contribute to the financial health of your firm. Time is a finite resource, but by effectively managing it, you’ll contribute to your individual success and the long-term prosperity of your firm. 

Adam Langley is the chief financial officer and an owner at Croy, a more than 100-person full-service engineering firm with offices in Alabama, Georgia, and Tennessee. He can be reached at alangley@croyeng.com.