Breaking Down Billable vs. Non-Billable Time for Contractors
Breaking Down Billable vs. Non-Billable Time for Contractors
Based on Mistake #5 from “7 Timekeeping Mistakes Contractors Can’t Afford to Make”
The Invisible Profit Leak Nobody's Talking About
It was a Thursday afternoon when I watched Mike, a successful electrical contractor, stare at his P&L statement in complete disbelief.
"This makes no sense," he muttered. "We billed 1,200 hours last month on the hospital project. My guys worked their tails off. The client's happy. But we're barely breaking even. Where's the money going?"
The answer was hiding in plain sight—in all the unbilled, uncoded, and invisible time his team was actually spending.
When we dug into the actual data using proper construction time tracking software, the reality was sobering. His team had indeed worked about 1,200 hours. But only 850 of those hours were directly billable electrical installation work. The rest? A mix of travel time, material handling, unexpected rework, and coordination meetings that never made it onto an invoice.
Mike was essentially giving away 350 hours of paid labor every month without even realizing it.
His situation isn't unique. In fact, it's one of the most common profit killers in the construction and field service industries today.
Job Costing Problems Start with Poor Time Tracking
Not All Time Is Created Equal—And That's Costing You
Let's say your crew logs 45 hours this week. Great, right? You assume those hours are going toward the project—and your bottom line.
But what if only 30 of those hours are billable?
What if the other 15 were spent on cleanup, callbacks, travel between job sites, or fixing errors that never got recorded correctly?
Without a clear system for tracking billable vs. non-billable time, your job costs are inaccurate, your invoices are vague, and your profits slowly disappear.
That's why understanding and properly coding time entries is one of the most important—and most overlooked—ways to improve project profitability and labor cost accuracy.
How Untracked Time Adds Up Fast
Consider this scenario that plays out thousands of times daily across construction sites nationwide:
A three-person crew starts their day at 7:00 AM. They spend:
30 minutes loading materials at the shop
45 minutes driving to the job site
5.5 hours doing actual installation work (billable)
30 minutes at lunch
1 hour troubleshooting an unexpected issue with existing infrastructure
30 minutes cleaning up the site
45 minutes driving back to the shop
15 minutes unloading tools
That's a full 9.5-hour day for each worker (28.5 total hours paid), but only 5.5 hours per person (16.5 total hours) were spent on activities you can directly bill to the client. The rest—12 whole hours—are essentially overhead.
Now multiply that scenario across a month, across multiple crews. The numbers become staggering.
Jason, who runs a mid-sized plumbing company in Colorado, discovered this the hard way: "We did a time study when things weren't adding up financially. Turns out, on average, only 62% of our paid labor hours were making it onto client invoices. The rest was falling into this black hole of unbilled time. We were bleeding money without even knowing it."
Understanding the Difference: Billable vs. Non-Billable Time
Billable Time is any labor directly tied to a customer invoice or project budget. Examples include:
Installing HVAC units on a job site
Framing a new construction build
Plumbing work at a client location
Electrical rough-in or finish work
Concrete pouring or formwork
Direct repair or warranty work covered by the contract
Non-Billable Time is still real work—but it doesn't get passed on to the client. Examples include:
Driving between jobs
Job site cleanup
Tool maintenance or loading
Team meetings or training
Waiting for inspections
Coordinating with other trades
Ordering or picking up materials
Administrative paperwork
Correcting mistakes or rework
You pay for both—but only one earns you revenue.
The "Gut Feeling" Problem in Job Costing
"I know which hours are billable. I don't need fancy software for that."
I hear this all the time from contractors. But dig a little deeper, and you'll find most are operating on gut feeling rather than data.
Sarah, who manages operations for a commercial painting company, thought she had a handle on billable vs. non-billable time—until they implemented proper field time tracking.
"It was eye-opening," she told me. "We discovered our prep and cleanup time was almost double what we thought. We were factoring in maybe 10% of labor hours for prep, when it was actually closer to 18%. No wonder our margins were shrinking on larger jobs."
Without accurate tracking, your "sense" of where time goes is almost always wrong. And being wrong about labor allocation is expensive.
Mistake #5: Uncoded or Mis-Coded Labor Hours
In the field, time entry can feel like an afterthought. Workers may clock in under generic codes or forget to switch when they move from one task to another. That's when the lines between billable and non-billable get blurry.
When labor hours are all lumped into one bucket, your job costing gets... well, messy.
Why It Matters:
You under-bill your clients because labor looks lower than it really was
Your project costs get inflated by hours that should be tracked separately
You miss opportunities to identify and reduce non-billable tasks
You can't explain time discrepancies when clients question invoices
You lose the chance to build more accurate estimates for future work
How Inaccurate Job Coding Skews Every Estimate
Let's say a crew spends 6 hours on a job site:
4 hours framing walls (billable)
1 hour doing cleanup (non-billable)
1 hour troubleshooting a delivery delay (non-billable)
If all 6 hours are coded under "Framing," your reports will say the crew spent 6 hours on framing. Now, that task looks more expensive than it actually was, and your project seems over budget.
Later, when estimating another project, you might over-inflate framing labor—making your bid less competitive.
Inaccurate job codes don't just skew one project. They compound across your entire operation.
Tracking Your Most Important Metric: The Billable Ratio
Carlos, who owns a successful remodeling business, tracks what he calls his "billable ratio"—the percentage of total paid hours that are directly billable to clients.
"When we started tracking this number, it was around 65%," he explained. "That meant for every 40-hour work week, only 26 hours were making it onto customer invoices. The rest was overhead eating into our margins."
Over six months, by identifying time sinks and adjusting workflows, they improved their ratio to 78%—without asking crews to work harder or faster.
"That improvement added about $14,000 in monthly revenue without adding a single employee," Carlos noted. "We're just capturing billable time we were already doing, and reducing the non-billable tasks that were bogging us down."
The key was having accurate data on where time was actually going—not where they thought it was going.
5 Ways Better Job Coding Improves Construction Profits
Cleaner Job Costing – Break down labor hours by task, location, and billable status.
More Accurate Invoicing – Provide detailed billing clients can trust.
Improved Bidding – Use real data to bid more confidently and competitively.
Better Crew Planning – Identify where non-billable hours are dragging productivity.
Higher Billable Percentage – Convert more hours into revenue-generating work.
Time Tracking Revealed a Hidden Revenue Stream
A commercial HVAC contractor I worked with was struggling with tight margins despite having plenty of work. When they implemented proper job coding with TotalTime, they discovered something surprising: their experienced technicians were spending an average of 1.5 hours per day helping newer techs troubleshoot problems—time that wasn't being captured or billed.
This added up to over 170 unbilled hours monthly across their team. At their standard billing rate, that was $8,600 in potential revenue being missed every single month.
The solution wasn't to stop the mentoring—that was valuable for team development. Instead, they adjusted their billing structure to account for this reality and created a more formal training program.
Without accurate job coding, they would never have identified this massive profit leak.
The TotalTime Advantage: Smarter Job Coding for Field Teams
Most time tracking tools let you "tag" time entries—but that doesn't mean your team will do it. Especially if the app is confusing, clunky, or not built for field work.
TotalTime is different. It was designed with real crews in mind.
✅ Job Code Selection Built Into Clock-In
✅ Job Code Visibility for Supervisors
✅ Reports That Show the Full Picture
Training Your Crews for Better Job Code Habits
Train Your Team on the "Why" – Explain the connection between job codes and the health of the company.
Start Small – Roll out with 3–5 categories first.
Use Job-Specific Defaults – Assign job codes to each project.
Make Daily Review a Habit – Encourage foremen to review entries daily.
Reward Accuracy – Celebrate teams who get it right.
A General Contractor’s Turnaround
A general contractor in Texas was consistently under-billing labor. Crews were using one generic code for everything—"Labor." Their invoices didn’t match the work, and clients started pushing back.
After switching to TotalTime:
Labor reports became more detailed
Invoicing disputes dropped by 70%
Estimates became more accurate
They discovered a non-billable cleanup task costing 10+ hours per job
They didn’t hire more people—they just started tracking smarter.
When You Know Where the Time Goes, You Can Take Control
If you're not separating billable and non-billable hours, you're flying blind. That might be fine when business is booming—but when margins tighten, it can be the difference between profit and loss.
Better job coding gives you:
✅ Clearer project visibility
✅ More accurate billing
✅ Stronger bids
✅ Happier clients
✅ More money in your pocket
Start Fixing Your Time Tracking Mistakes Today
Want to learn more about the biggest time tracking problems contractors face—and how to fix them?
📘 Download your free copy of "7 Timekeeping Mistakes Contractors Can't Afford to Make" at:
👉 https://crm.pathfinderlink.com/7-timekeeping-mistakes920383
And if you're ready to simplify time tracking and improve job coding right now, book a demo of TotalTime by PathfinderLink today.
Let your time data work for you—not against you.
Simple tracking. Accurate job costing. Smarter business decisions. That's TotalTime.
