How Much of a Carpenter's Time is Billable?

I asked a client what percent of field employees’ time was billable. Without hesitation, he replied, “100%.”

He was wrong. Consider all these hours that aren’t related to jobs but must be paid: Safety meetings. Company meetings. Field education. Time in the office for scheduling, vendor quotes, etc. And paid time off.

Once you take those into account, the question becomes: What percentage of hours that a field worker is paid per week can you expect to bill to jobs? Production expert Tim Faller and I wrangled over this question for a couple hours as I wrote and rewrote this column. I shared with him my expectations for each of the various field positions:

Production Manager: 50% billable to jobs
Project Manager: 65% to 75% billable
Lead Carpenter: 75% to 85% billable
Carpenter: 85% to 90% billable
Laborer: 95% billable

Then I dug into a client’s data to see how close I was to real life: The data covers 11 field employees who held four different positions (project managers, lead carpenters, carpenters, and laborers) from January to June of this year. The owner of this company also is the production manager and is 30% billable to the jobs.

The numbers came from two sources: the payroll and the job hours report for the same six months covered by payroll. These reports showed hours assigned to jobs and hours with no job assigned.

I ordered the dates for both reports so they showed the same date range. Payroll costs are calculated on the pay date, even though that date typically covers one or two weeks prior. Once I got the dates in alignment (i.e., pay days for Jan. 1 to June 30 covered job hours incurred from Dec. 25 to June 24), here’s what the data said from a high level:

Eleven field employees were paid for around 8,500 hours in that six-month period. That’s about 81% of total hours. The other 19%—that’s 1,630 hours—weren’t billed to jobs.

The average pay rate was $24, with a high of $32 and a low of $11. These field employees cost a total of $33 per hour, making the labor burden 35%. (Labor burden covers all costs beyond gross pay that are associated with keeping a field employee on the job. It includes insurance, benefits, indirect expenses like uniforms and phones, and what the employer pays on state and federal payroll taxes.)

Now, let’s break down the numbers by position:For the two project managers the variance was huge: One was 82% non-billable while the other was 38%. Lead carpenters averaged 19% non-billable hours, but two of them were at 12% and the third was 33%.For carpenters, the average was 14% non-billable hours, with a range of 4% to 45%.For laborers, the average non-billable hours was 16%.

So, even though this company had established models of wage rates and burden, there were significant variances between individuals. I think it would be worth investigating why. Just as important, I think the company should set goals regarding what percent of billable hours each type of employee should have. Here’s what those numbers would be for this company when it produces its estimates.

Your data may differ. Dig into it for your most common field employee, perhaps a carpenter. Calculate the complete labor burden as well as the efficiency rate and then estimate the next few jobs with that rate to see if the job cost reports, estimate vs. actual for labor dollars, come closer to reality. Set a goal for each position’s efficiency and train to that goal to increase gross margin.

This exercise will make your estimating better, your job costing better, and your company better. There’s no time like the present to begin.