How many billable hours are there in a year?

One of the criteria in developing a resource based retainer model is the number of hours one person could be reasonably expected to bill in a year. This becomes their 100% billable time level or one FTE (Full time equivalent).

Take a year = 52 weeks.

In Australia 4 weeks of that year are for annual leave (so no billing there)

2 weeks a year, or more precisely ten working days, for sick leave (heaven forbid)

A week of public holidays (go on count them up, in most states there is a little more than five)

Suddenly we are down to 45 weeks of work a year.

In an average week how much of the time is it reasonable to bill? 30 hours? 40 hours? 50 hours? 60 hours?

Remember this is not how much time the person is at work, it is how much time of that work time could they be productively and actively on your business. That is removing all the internal non billable meetings, toilet breaks, general non-business discussion, internal administration (like timesheets) etc, how much truly billable, productive time is left.

Well at thirty-six hours and forty minutes this equates to 1650 hours a year. Which is reasobaly well accepted. Some people use 1600.

The lowest we have seen is 1,200 a year and the highest is 2,080 a year.

But why is this important?

Well, if the agency is using 1600 hours and the end of year review says the person did 1870 hours or 13% over the FTE does this mean 1.13 FTE should be charged? No, it just means that the person involved did not take their annual leave or sick leave and kept working at the same billable rate 51 weeks of the year.

Or is the retainer is based on a group Account Director at 100% or 1650 hours a year and they 3060 hours a year does this mean that you need almost two Group Account Directors on your business? No, it is more likely that rather than keeping a real timesheet they recorded 12 hours a day, five days a week for 51 weeks. But the work was done and the GAD did not get paid overtime, so it cost the agency no more. Besides, the problem in this case was not resourcing, it was poor timesheet process.

By undertsanding how FTEs are based on billable hours you can start to see how to interperet the agencies timesheet and resource utilisation reports.

Author: Darren Woolley

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About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com
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2 Responses to How many billable hours are there in a year?

  1. Kevin_Victor says:

    52 weeks per year. 45 hours per week.. 52*45=2340

    • Darren Woolley says:

      Kevin, I thought slavery was outlawed in most civilised countries? What about annual leave, public holidays and sick leave? Or do you own your own business, in which case it should be 60 hours a week.

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