In architecture and engineering (A&E), time is more than just money. It’s the cornerstone of your business. Every hour logged, whether billable vs non-billable, plays a role in shaping your firm’s profitability and efficiency.

But here’s the catch: balancing these hours isn’t always straightforward. Too much time spent on non-billable activities can drain resources while neglecting them entirely can lead to disorganized operations and missed opportunities for growth.

Over the years, we’ve seen A&E firms grapple with this balance. It’s a constant push and pull, but when done right, it’s transformative. Let’s dig deeper into how you can manage billable vs non-billable hours to drive both productivity and profitability.

Billable vs Non-Billable Hours: What’s the Difference?

Let’s start with the basics. Billable work refers to tasks or hours you can directly charge a client for. These are the bread-and-butter activities that keep the lights on and the team paid. Think about designing a project, producing deliverables, or conducting on-site visits.

Then, there’s non-billable work, which doesn’t generate direct revenue. These tasks include team meetings, preparing proposals, or employee training sessions. While they may not bring in dollars immediately, they’re vital for sustaining operations and improving efficiency in the long run. Without this foundational work, you risk creating cracks in your business.

Here’s the thing: not all non-billable time is created equal. For instance, time spent on business development might not pay off immediately but can lead to valuable new clients down the line. Similarly, time devoted to refining internal processes can free up hours for more billable tasks in the future.

Examples of Billable vs Non-Billable Work in the A&E Industry

Now that we’ve established the importance of billable and non-billable work, let’s take a closer look at what this may look like in the architecture and engineering industry so you can understand it better in a real-world setting:

Billable Work

• Drafting plans for a client’s building project.
• Time spent managing client projects, like site visits or coordination.
• Delivering reports, blueprints, or finalized designs.
• Client meetings where project milestones or updates are discussed.

Non Billable Work

• Preparing proposals or responding to RFQs (Request for Qualifications).
• Administrative duties, such as email correspondence or phone calls.
• Internal team meetings to align on strategy or workflows.
• Training new hires or upskilling the current team.

The line between billable and non-billable work can blur. For instance, let’s say you’re researching new building codes. If that’s for a specific project, it’s billable work. But if it’s general knowledge-building, it falls into non-billable activities. Knowing how to categorize tasks correctly is essential for accurate time tracking.

Impact of Non-Billable Hours on an A&E Firm’s Bottom Line

Here’s the reality: non-billable hours are inevitable, but they shouldn’t dominate your time. Every hour of non-billable work contributes to your firm’s overhead costs. Too much of it, and you’re cutting into your profit margins. Here’s how they can impact your firm:

• Increase Overhead Costs: Every hour spent on non-billable work adds to your firm’s overhead, eating into profit margins if not managed well.
• Drain Resources: Excessive internal meetings or poorly managed administrative tasks can distract from revenue-generating activities.
• Hidden Inefficiencies: Without proper time tracking, low-value tasks can quietly consume significant portions of the day, reducing overall productivity.
• Strategic Benefits: Certain non-billable activities, like developing detailed proposals or investing in employee training, can pay off in the long run by increasing efficiency and productivity.
• Employee Morale: A heavy load of unnecessary non-billable tasks can frustrate employees and lead to burnout, impacting engagement and productivity.

The key is to track and evaluate where your team’s hours spent are going. Are they focusing on high-impact tasks, or is their time being consumed by low-priority non-billable tasks? Regular audits and proactive adjustments can ensure that non-billable time supports your firm’s long-term goals rather than detracting from its profitability.

How to Track Billable and Non-Billable Work: 5 Steps

Accurate time tracking is the backbone of balancing billable vs non-billable hours. Without it, you’re flying blind. Here are some strategies to stay on top:

1. Leverage Time Tracking Tools

Using tools like Deltek Vantagepoint can make a world of difference. These platforms allow you to easily track billable and non-billable hours, categorize tasks, and generate reports. The automation alone can save hours of manual work, letting your team focus on what matters—delivering value to clients. With built-in analytics, you can also identify patterns, like how much non-billable time is spent on specific activities, and take steps to adjust workflows accordingly.

2. Define Categories Clearly

Make sure everyone on your team knows what counts as billable tasks versus non-billable tasks. Ambiguity leads to errors, and errors cost time and money. Set clear guidelines and review them regularly. For example, distinguish between time spent on client work versus internal process improvement. This clarity helps reduce disputes over time allocation and ensures consistency across teams.

3. Encourage Real-Time Logging

Train your team to log their time in real-time or at the end of each task instead of waiting until the end of the day or week. Delays in time tracking often lead to inaccuracies or forgotten tasks, especially for short, non-billable activities. Real-time logging ensures every minute is accounted for and categorized properly, giving you more reliable data for reporting and analysis.

4. Set Team-Based Accountability Metrics

Introduce team-wide benchmarks for time tracking accuracy and compliance. By regularly reviewing tracked hours in team meetings, you encourage accountability and create a culture of precision. Metrics like weekly tracking completion rates or time logged for specific project phases can help identify areas for improvement and keep your team engaged with the process.

5. Conduct Regular Audits

Review your tracked time periodically to identify inefficiencies. Are too many hours being logged for non-billable tasks like team meetings or administrative tasks? Use these audits to make informed decisions about reallocating resources and reducing waste.

For a deeper dive into resource optimization, check out our ultimate guide to resource management for A&E.

Extra Tips For Balancing Billable and Non-Billable Hours

Balancing billable and non-billable hours is all about intentionality. Here’s how you can strike that balance:

Set Revenue Goals

Know how many billable hours your team needs to meet revenue targets. Use that as a baseline to allocate non-billable time for essential but indirect tasks. This approach ensures that you’re not just meeting immediate financial needs but also investing in your firm’s future growth.

For example, if your target utilization rate is 75%, aim to allocate the remaining 25% strategically—toward employee training, process improvements, or business development activities. These efforts, though not immediately revenue-generating, lay the groundwork for long-term success.

Invest in the Right Tools

Tools like Deltek Vantagepoint can streamline scheduling, reporting, and time tracking, helping you keep a close eye on both billable work and non-billable work. The ability to visualize how employees spend their time gives you the insights needed to make informed adjustments. Consider tools with real-time dashboards that can highlight trends in billable vs non-billable hours, ensuring that you stay on track.

Monitor Utilization Rates

Utilization rates measure the percentage of working hours spent on billable tasks. A high rate means your team is focusing on revenue-generating work, but it’s crucial to avoid burnout. Balance is key. Regularly review individual and team utilization rates to identify when adjustments are needed—like redistributing workloads or scheduling downtime to prevent overwork.

Automate Repetitive Tasks

From invoicing to project scheduling, automating repetitive tasks can save countless hours. Freeing up this non-billable time lets your team focus on client projects and other billable tasks. Automation tools can also minimize errors in processes like time entry and billing, giving you cleaner, more reliable data to work with.

Evaluate and Adjust Regularly

Balancing billable and non-billable hours isn’t a one-and-done task. Schedule quarterly reviews to evaluate how well your strategies are working. Are you meeting your revenue goals? Is your team’s workload manageable? Use these reviews to refine your approach and ensure your balance remains effective as your business evolves.

Foster Team Buy-In

Encourage your team to understand the importance of balancing billable and non-billable work. Provide training on how to categorize their time accurately and explain how this impacts the firm’s success. When employees feel invested in the process, they’re more likely to engage with tracking tools and follow best practices.

Learn more about optimizing your firm’s resources in our resource management software for A&E guide.

How Deltek Vantagepoint Can Help

When it comes to balancing billable vs non-billable hours, Deltek Vantagepoint stands out as a game-changing tool tailored for A&E firms. Here’s how it can make a difference:

• Seamless Time Tracking: Deltek Vantagepoint makes tracking billable and non-billable hours effortless. With features like automated timers, task categorization, and intuitive interfaces, your team can log time without interrupting their workflow. This reduces the likelihood of missed hours or misallocated time, ensuring every minute is accounted for.
• Comprehensive Reporting: The platform provides detailed reports that break down how your team is spending their working hours. You can easily identify patterns, such as which projects are consuming excessive non-billable time or where resources are being underutilized. These insights allow you to make data-driven decisions to improve productivity and profitability.
• Integrated Project Management: Deltek Vantagepoint integrates seamlessly with your project management tools, ensuring that tracked time aligns directly with project deliverables. This integration simplifies invoicing by connecting time entries with billable tasks, reducing manual effort and improving accuracy.
• Utilization Tracking: Monitor your team’s utilization rates in real time. Deltek Vantagepoint’s dashboards let you see how much of your team’s billable time contributes to revenue, helping you balance workloads and allocate resources effectively. High utilization rates can be achieved without risking burnout, thanks to the platform’s advanced planning tools.
• Automation for Repetitive Tasks: From invoicing to scheduling, Deltek Vantagepoint automates repetitive tasks that often fall under non-billable work. By freeing up your team from these administrative burdens, they can focus on higher-value activities, increasing overall efficiency.

By leveraging Deltek Vantagepoint, A&E firms can bridge the gap between billable and non-billable hours, optimize resource allocation, and streamline operations—all while maintaining a clear view of their financial health.

Conclusion

With intentional strategies, clear processes, and the right tools, you can ensure every hour contributes to your firm’s goals. Whether it’s improving efficiency, maintaining profitability, or enhancing team morale, striking this balance is a game-changer for A&E firms.

By using tools like Deltek Vantagepoint, you can not only simplify time tracking but also gain deeper insights into your operations. These insights help you make informed decisions about resource allocation, workflow adjustments, and long-term planning. Remember, it’s not about eliminating non-billable work but making sure it’s purposeful and aligned with your firm’s success.

Start making smarter decisions about how your team spends their time. And if managing multiple projects feels overwhelming, don’t miss our how to manage multiple projects at a time guide for practical tips to stay ahead.

Key Takeaways

• Billable work is the revenue engine of your firm, but non-billable work lays the foundation for long-term growth and operational stability.
• Tools like Deltek Vantagepoint can optimize time tracking, automate repetitive tasks, and provide real-time insights into resource allocation.
• Regular audits, clear categorization of tasks, and strategic planning are essential for balancing billable and non-billable hours effectively.
• Balancing these hours not only improves your firm’s profitability but also enhances employee satisfaction by reducing inefficiencies and burnout.

Frequently Asked Questions