Controlling Non-billable Time: What Makes Great Companies, Great
Controlling Non-billable Time: What Makes Great Companies, Great.
Non-billable time is one of those things that almost every company gets far too comfortable accepting as a necessary evil. It happens every single day, it’s easy to hide, and it’s necessary to the everyday mechanics of a business. It’s particularly insidious because it isn’t just limited to overhead staff. The time you spend estimating, accounting, fixing equipment, selling new work—none of it is passed to the customer. Unfortunately, that’s not even the worst of it.
The hours logged by field staff that don’t generate any revenue, like travel time between jobs or time spent gassing up the truck, are characteristic of the worst kind of non-billable hours. Not only do those hours cost payroll, but they are also lost opportunities for closing sales. In landscaping, time is one of the most precious resources we have, and we can’t afford to waste it. In this business, we have a limited season and a shortage of skilled workers available. Wasting field labor hours on non-billable time might just be the most expensive error you can make.
Consider the difference between these two companies:
ABC Landscaping has 3 crews of 3 persons, each completing design/build/install work. They generate about $1.2M in total sales from their 3 crews. When tracking their non-billable time, they find that 25% of their payroll hours go to un-estimated, non-billable tasks.
XYZ Landscaping has the same number of people and crews. However, they’re more efficient; only 15% of their payroll hours consist of non-billable time. If their crews could build jobs at exactly the same speed as ABC’s staff, XYZ would generate $1.37M in sales – a 15% increase in revenue and productivity with exactly the same payroll, equipment and fixed/overhead expenses.
XYZ will be a lot more profitable than ABC at the end of the year. Ultimately, they’ll also be able to place cheaper bids and make more profit, since their overhead, payroll, and fixed equipment expenses are all a smaller percentage of their overall revenue.
Here are some ways to reduce the percentage of non-billable hours in your business, so you can bid more competitively and earn higher profits.
Communicate and Plan at the End of Every Day
Getting feedback at the end of each day not only encourages accountability, it gives you time to plan, react, and adjust to incoming information. When seven different people are coming at you with seven different problems at 6:30 in the morning, you simply don’t have time to react properly. In this scenario, you make snap decisions that are ill-planned: often just the “least-worst” choice. Crews should call or email (email is better since it creates an e-paper trail) a status update each day just before the end of the day. This strategy gives you more time to adjust to any changes and formulate an updated plan. Then, in the morning, you can hit the ground running, If you’re looking for a proven method for end-of-day communication, download the free 4 o’clock 4 app on either iTunes or Google Play to improve end-of-day communication! Insist that all your foremen and crew leaders submit their report by no later than 4pm each day. You’ll be surprised at what just one email a day can do for your business.
Equip your crews with complete lists of estimated hours, equipment, and materials for every job. This way, they can make timely requests for materials they’ll need for the next day, day after, or week ahead. Institute a daily deadline (try 1pm) at which all material orders must be sent in to the office, or directly to your vendors. This process will reduce the number of hours crews spend doing “busy” work while waiting on materials to be delivered to the construction site.
Include Loading and Driving Hours in Your Estimated Hours for Jobs and Tasks
You might be asking yourself, “What does it matter how I recover load and drive time, as long as I do it?” You can recover this time as estimated hours, overhead hours, or even by adding a non-billable percentage to the cost of your labor. All of those methods will recover the costs, but only one actually helps to reduce non-billable time.
By accounting for load/setup/driving/cleanup time in the hours estimated for each job, you’ll be more likely to actively track and get timely feedback on those hours. If a crew knows they have 150-man hours to get a job done, and every hour spent at the yard or driving is counting down their available work hours, they’re far more likely to plan better, move more quickly, and reduce any stops on the way to a job site. If your job cost estimation doesn’t begin until they get to the site (which is what happens when you don’t include loading/driving hours in your estimates), it’s far too easy for that time to vanish into a massive pool of unknown, unaccounted-for hours.
Stocked, Organized Trailers
Fully stocked and labeled trailers reduce the amount of time spent loading and unloading, but more importantly, they mitigate the risk of forgetting critical supplies and tools. This, by extension, reduces the number of wasteful trips taken back and forth to vendors and the shop. Time spent on vendor and/or shop runs is time that is not being spent on site completing work– which reduces your sales.
When crews have their own dedicated sets of tools, you’ll also find that there’s less planning, juggling, and forgetting– and they tend to take better care of them as well.
Fuel tanks at the yard
Another way to reduce un-billable hours is to keep fuel tanks in your yard. A crew member can fuel up before or after work in the morning, right there. You may pay a bit more for fuel but in the end, you’re saving valuable time and energy, which translates to savings in payroll. A crew heading out in the morning or driving back to the yard in the afternoon will all be clocked in. That’s two or more people you’re paying to sit and wait while the tank is being filled up. When you keep fuel tanks in your yard, only one person needs to be clocked in to fill up the truck.
Starting work earlier in the day typically reduces the number of other commuters on the road, so you’ll spend less time idling in traffic, and more time working at the jobsite.
Equipment: Daily Inspections and Regular Maintenance
It’s frustrating for everyone to get to a job site only to find that the equipment or tools don’t work like they should. Daily inspections and regular maintenance schedules will help to reduce the number of times your crews get stuck with underperforming or unsafe equipment. You might save a few dollars at the time by skipping routine maintenance, but ultimately, the costs to your productivity are far higher in the long run.
Mark Bradley is the president of TBG Landscape and the Landscape Management Network. For more information on how to run a better, more profitable landscape company, visit www.golmn.com.