Project managers split time across client work, admin, and coordination. Everhour keeps rates and billable status tied to tracked work.
Track billable vs. non-billable time and see your real utilization rate and revenue potential in seconds.
Working hours in the period
Admin, meetings, internal work
Industry average is 75–80%
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For project managers, the calculation answers how much approved project management time can be billed, what that time is worth, and how much of the working week stayed revenue-generating. A client-facing status call, delivery plan, risk review, or stakeholder workshop may be billable under a time-and-materials agreement. Internal staffing, sales support, training, or general administration usually stays non-billable unless the contract says otherwise.
The result matters in two different ways. On time-and-materials work, billable hours multiplied by the agreed hourly rate creates the labor portion of the invoice before reimbursable materials or expenses. On fixed-fee work, the same hours do not automatically increase the invoice, but they still measure budget burn, delivery margin, and whether project management effort is crowding out the fee.
Professional services work is not billed one way. SPI's 2025 benchmark reported 2024 professional services work sold as 39.6% time and materials and 38.9% fixed time or fixed fee. That mix is why a project manager's billable-hours calculation must start with the commercial model, not the timesheet total alone.
For time-and-materials work, every approved billable hour has a direct invoice value at the agreed rate. For fixed-fee work, billable classification still matters because it shows which hours were spent delivering client value versus internal overhead. The common mistake is treating all project management hours as invoiceable. Scope, contract language, billing policy, and client approval decide what survives into the billable total.
The labor formula is simple: billable hours × agreed hourly rate. Add approved reimbursable materials or expenses after labor. For utilization, divide billable hours by available hours. SPI's benchmark version calculates annual employee billable utilization as total annual billable hours divided by 2,000, while many professional services executives aim for at least 75% billable utilization or about 1,500 annual billable hours.
For example, a project manager records 30 approved billable hours on client delivery coordination and 10 non-billable hours on internal staffing and admin during a 40-hour week. At an agreed $175 hourly rate, the labor value is $5,250. If the engagement also includes $450 in approved reimbursable expenses, the pre-tax invoice subtotal is $5,700. The weekly utilization is 75%.
A U.S. billable-hours total is normally denominated in U.S. dollars, but there is no federal VAT/GST or single national sales-tax rate for billed professional time. Sales tax treatment is state and local. Some services are not taxed, while some jurisdictions tax service activity or gross receipts, so the tax input must match the client, location, service type, and invoice rules.
For project managers, this matters when a clean labor subtotal is being converted into an invoice total. Hawaii applies general excise tax to business activities at 4% for most activities, with county surcharge pass-through caps reaching 4.7120% where adopted. New Mexico gross receipts tax includes performing services in New Mexico and varies by business location. Texas taxes taxable services at 6.25% state, up to 8.25% combined.
A one-time calculation is enough when you are checking a draft invoice, validating a weekly utilization number, or comparing a fixed fee against the hours actually consumed. It is also enough for a small project with one rate, one approval path, and a short billing period.
A managed workflow becomes necessary when project managers oversee multiple budgets, member rates, dated rate changes, billable and non-billable tasks, or fixed-fee projects that need realization tracking. Everhour separates cost and billable rates, supports default per-person rates and per-project overrides, preserves dated rate history, and prices billable work by project, member, or task.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Billable project management time is approved work that the engagement allows you to charge to the client. Examples often include client meetings, delivery planning, status reporting, risk management, and budget coordination. Internal administration, sales support, staffing, training, and general company meetings stay non-billable unless the agreement or billing policy specifically makes them chargeable.
For fixed-fee projects, billable hours do not automatically change the client invoice. Track them anyway because they show how much project management effort the fixed fee absorbed. Compare recorded billable value against the fixed fee to measure realization, and compare total hours against the project budget to see whether delivery margin is shrinking.
Utilization uses billable hours divided by available hours, so non-billable project work stays in the denominator but not the numerator. If a project manager works 40 available hours and only 30 are billable, utilization is 75%. That does not make the other 10 hours useless; it separates revenue-generating delivery from overhead, enablement, or internal support.
The project management profession does not have one universal billing increment. Billing increments are usually an engagement or system setting, such as 15-minute blocks, 6-minute blocks, exact minutes, or no rounding. Apply the same increment consistently to the project, and avoid rounding each entry differently because small entries can become materially overstated.
No. The United States has no federal VAT/GST and no single national sales-tax rate for billed professional time. Tax treatment is state and local, and some services may not be taxed. A U.S. invoice needs the correct jurisdiction-specific tax input when the project management service is taxable.
Everhour separates cost and billable rates, so internal labor cost and client-facing billing value stay distinct. Admins can set default per-person rates, override rates by project, preserve dated rate history, and price billable work by project, member, or task.
Everhour Billing & Invoicing turns tracked billable time and expenses into invoices, with amounts calculated from rates, time, and billable expenses while excluding non-billable work. Invoice line items can be grouped by project, task, person, date, or other available breakdowns.
Set project manager rates once, apply project-specific overrides when needed, and keep dated rate history intact. Everhour connects approved time to billable value without rebuilding the math manually.
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