My manager asked me to hide project costs. Is it unethical for me to comply?

Question

I'm a software architect at my company. My company is presently invested in a project that's being architected and developed by an offshore team. A few of my in-house colleagues and I have recurring meetings with the offshore team's leads to discuss the project's architecture to ensure that we're in sync and that sound decisions are being made.

Recently, I received an email from my boss telling me not to charge time to the project in question because I "am not actively in the project and money is tight."

I'll start by saying that I'm a salaried employee, so my boss's instructions in this matter do not affect my take-home pay whatsoever.

Whether or not I'm active in the project depends on how you define "active." I'd contend that I am at least marginally active by virtue of the aforementioned series of meetings.

From what I know about this specific situation and the company at large, I'm pretty certain that this is really about money. More specifically, I think the project is very close to going over budget, and, due to some political infighting amongst the executives, my manager and the CIO want to minimize any reason for negative bias towards their precious pet project.

I know this kind of stuff happens in the business world, but I can't help feeling like my boss's request to hide this project's costs is at least slightly unethical. Slightly worse is that his communication brought me into the deception.

Should I feel compelled to speak up in this situation (even if only for self-preservation), or am I overreacting?

Also, could my boss's communication come back to haunt me (us) if we were audited?

Answer 1

Just ask what you should bill your time on instead. Archive those e-mails in case someone higher up ask you why you are charging your time the way you do.

Depending on the answer, you have to decide. Can that work against you or is it a outright lie (on another project / Education etc.) or is it just a biased opinion kind of thing (general internal consulting, org etc.)

In the latter case I would let it rest, doing what I was told but keeping the commanding e-mail. In the former it is more difficult and you probably have to argue that you can not do this as it would have negative consequences for you.

Answer 2

Am I overreacting?

Yes, to some extent. You should let your boss decide how this project will be handled in terms of cost management.

Could my boss's communication come back to haunt me (us) if we were audited?

This one is bit harder to answer but, active participation in a project can be interpreted in many ways. You, as a software architect, may be engaged in consulting, designing, and even coding. On the other hand, it's possible that meetings are not considered active engagements and may not be billable.

Managing costs sometimes involves adjustments that may not reflect the real situation and are not the most ethical. Again, let your boss handle this part.

Answer 3

This depends on the company and how they do billing. The core question you need to ask yourself is this: is someone paying my company for my work by the hour?

In most companies where I have worked, time accounting is used to bill customers. Some time is routed internally (company meetings, vacation time), others end up on billing statements that project managers send to the customer.

Right now I am working on a fixed quote project that went over its allotted hours. All of my time is charged to a nonbillable project in the time accounting system. There are two "projects" set up for the same project, billable and nonbillable, and I simply switched which one I use at some point. If my time accounting is slightly off I am not too concerned, as none of my time results in the customer paying money anyway.

I have also, in similar cases, been instructed to charge less time to the nonbillable bucket and instead use company buckets such as "team meetings" or "development training" to make internal reports look better. In the end that practice is a shell game where the shells are all empty: it does not really matter from billing perspective to which nonbillable bucket I charge my time, as none of it results in an invoice. Since no money changes hands, ethics play a minor role there. This is simply a game that managers at some companies like to play and has little day-to-day effect on what employees actually do.

Charging hours to a billable project that are not actually spent is a huge ethical transgression. Sure, there are some rounding errors, and nobody will be upset about me charging an hour to a customer when I spent 55 minute working and five minutes refilling my coffee (or answering questions on Stack Exchange). But I have heard of cases where an employee spent one hour working on a project and seven hours screwing around, and charged eight hours. That is behavior that must be avoided for a variety of reasons including "not getting fired."

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If you are working on an internal, R&D, or shrinkwrap project that is not directly billable to a customer, then I would advise you to think about your time as nonbillable to a customer in terms of ethics and how you charge time. Yes, time accounting is an important software engineering metric, but at the end of the day you have to ask yourself if I charge one more hour to the project, is someone initiating a slightly larger bank draft to my company as a result?

Answer 4

Two things: you do what is asked by your boss, and most important: your boss has asked you this question in writing, so in case the hiding of these costs become a problem, you can always refer to this email, which puts you off the hook.

Answer 5

The answer you accepted immediately misses important points, IMO.

Yes, you should accept the request. It is ethical, legal, and pretty common. There is also no need to confuse the issue by thinking about it sarcastically ("precious pet project"). Management could have very valid reasons why to do something like that. And even if not, it is the prerogative of management to do these things however they see fit. They carry the responsibility, and they are not harming anyone.

An issue arises if they ask you not to book the hours at all. I assume that you use some software to keep track of the time you spend on any project. If you work 3 hours for that project, you must book that time somewhere. From your point of view it does not matter much, i.e., it does not matter that you are not booking it on that project.

Your manager has to tell you where to book it though. You can book it on any purely internal position ("PSP element" in SAP speak), on some pure "cost center" or wherever it does not lead to actual money flowing. What you really must not do is either not book it anywhere (in which case you cannot, later, prove that you actually worked at all; i.e. it will be detrimental to yourself, you are losing overtime if you have such things), or book it on another time&material project where some other customer then is charged for said 3 hours (which would, very likely, be fraud in most jurisdictions).

Answer 6

Just do what he says. I wouldn't say it's unethical. It's rather common practice, especially in software development, to not charge or track hours spent on helping collegues in-house (especially if it's just a few hours a week or not even).

You're not really overreacting, but I think it's unproblematic for you to just go with what he says, as he is responsible.

Answer 7

If your client is the US Federal Government, this kind of behavior is a serious problem. A cover-your-ass approach is not sufficient.

This is the best reference I can find quickly, but it is consistent with the standard training and warnings I received when working at companies with federal contracts:

Falsifying time sheets is a criminal offence under the False Claims Act. Employees who do so are liable for criminal proceedings while the company is debarred from government contracting.

Yes, it's the kind of thing that happens. But an email from your boss telling you how to misreport your time would probably not be sufficient to prevent your termination and penalties for your company if caught.

Answer 8

In what way does your position of architect have to do with the monetary decisions of the company? Why would you be discussing finances to the offshore clients? Why would you be disclosing financial information at all. This, to me, would indicate that you're willing to disclose confidential information at a level above yours. I wouldn't want to be doing to, much less to the point I have to be told to not do it. Keep your business' business to the business. Let the bean counters take care of the beans, you take care of the 1's and 0's.

Answer 9

It shouldn't be a problem.

Your boss/project manager should tell you what codes to use when booking your time for different projects. The likelihood is that this project was forecast to use x amount of resource for y amount of time equalling z amount of money. Spending too much money on projects affects the profit margin, so obviously keeping costs down per project is pretty important.

However, most people are salaried (or on contract), so this doesn't map to people being paid less. So, if you're seen not to be related to the project, then the net cost of your project goes down by one amount of x.

Answer 10

Whether or not I'm active in the project depends on how you define "active." I'd contend that I am at least marginally active by virtue of the aforementioned series of meetings.

I know this kind of stuff happens in the business world, but I can't help feeling like my boss's request to hide this project's costs is at least slightly unethical. Slightly worse is that his communication brought me into the deception.

Should I feel compelled to speak up in this situation (even if only for self-preservation), or am I overreacting?

A lot of the other answers are basically saying that you should cooperate with your boss. While I do suppose those answers technically answer the main question ("Is it unethical for me to comply?"), I didn't notice them addressing the second paragraph that I quoted, other than not trying to overstep authority.

Let me give you another way to look at things, in case this helps put your mind at ease.

A project involves what I typically call "billable work". You could also call it "useful work", and your manager may use the term "active work". Regardless of which term you're most familiar with, the concept is the same. When something is charged per hour, billable work is typically actually billed. When something is flat-rated, there might be no actual cost difference to the customer/client, but still this concept of "billable work" is useful to help estimate how many useful hours are typically required for this type of project.

Some type of work, such as training (or re-work if an inexperienced person did something lousy, and requires re-doing) might not be billable work for a couple of reasons. The company may be embarrassed if a client found out that they were paying for such low quality. Time spent in such ways is often highly dependent on details like an individual's learning curve, and therefore challenging-to-impossible to quantify to a specific number of hours ahead of time. So, such things may typically be "unbillable", meaning that they are not part of the billing record.

Having hours that aren't part of the official billing can be quite helpful. I will use "training" as the example, primarily just because of me having seen this be usefully implemented. Fast employees can get things done in X time on a fortunate day. Employees may commonly take X+20% time on average. Slow employees might take X+50% time. Trainees may take anywhere from X+40% to X+1200% time, depending on factors like an individual's learning curve, and higher propensity of mistakes that need to be cleaned up. Now when a manager needs to estimate time, he may be able to handle a 60% variance during estimation, but handling a 700% variance may be a bit more challenging to believably do. If a project comes in 15% under budget, people give each other high fives and celebrate. If a project comes in 750% under budget, people are happy about being under budget but people may wonder why the estimation was so terribly poor to begin with. Therefore, believable estimates are preferred. Controlling what types of hours are billable is one way to be able to have estimates with enough accuracy to be useful, even such estimates aren't a totally precise representation of every detail.

In the end, management has the responsibility of determining how much they want to allow hours that aren't part of the project. A manager might decide to take a hit on accuracy so that numbers seem sensible and useful. Even if the results are not recorded in the project log, there's still the aspect of the manager having a feeling about just how much he managed to keep things accurate. If your time is recorded somewhere else, then there may even be "waste hours" which aren't officially part of a project. Hopefully management has a strong feeling about just how much inaccuracy there is in the official project logs.

As long as such things are understood to anybody who needs the numbers, there's really no intent of dishonesty here. When managers approve a project, they do so with the rough understanding that the project should require approximately X number of hours by experienced people. The managers can consider factors like whether there are trainees, or whether politics may demand trying to keep a client happy, and factor in however much foreseen "buffer time" is tolerable, and , determine how many more "unbillable" hours are likely to be potentially needed. The ideal answer is probably zero unbillable hours actually being needed, but an unideal number may be totally acceptable (particularly when circumstances may be less favorable).

So, if a project manager makes a decision that certain work should not be part of the project's billable hours, cooperate (unless that causes other problems, in which case you probably should voice your concerns, but then be prepared to accept whatever answer management gives). And, this can be completely ethical.

Also, could my boss's communication come back to haunt me (us) if we were audited?

If you may be audited, the purpose of the audit is to see how much reality matches requirements. Whether this will be a big deal or not will depend on what those requirements are, which can vary for different situations (especially when you're dealing with different organizations). Therefore, this question does not have a single/simple answer that is universally correct for all, or even most, general circumstances.

Answer 11

I wouldn't worry about external auditors - they have much more high-level focus than where you bill, and wont worry too much.

It's also commonly not "wrong" to do it in a legal sense - after all, billing is a tool of your own company's choosing, which they use to work out what cost it feels its incurred and understate it a little to seem competitive, and if it is, it's on his shoulders not yours.

I would focus more on a point that isn't mentioned yet in other answers. In some companies, staff billable hours are important in the sense that the company tracks what someone is bringing in to the business. If you are actually working on client work but billing it as back office or administrative work, or internal projects, it may look like you aren't earning them revenues - which may affect how you are seen.

That is, however, your managers choice, as other answers say. So you may need to raise this with him/her in email, and be clear you want to be productive, and revenue producing, and seen as such, and you would like him as your manager to help find a way to ensure the amount of your time not billed to client projects stays reasonable. That is a managers role and a responsible, legitimate, employee concern.