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My company is considering to work with an international IT company to implement an ERP system in our workflow.

This is our first time working with this kind of cooperation (usually we just buy a package of the product and implementation), so my boss is curious how the billing works. I know a bit (from the Workplace), but I don't know what happens when this scenario happens.

The engineer will have to customize a module a bit for us. When doing that, he is stuck and does not know how to proceed. Then he decides to take a walk for 30 minutes for refreshing his mind.

Is this 30 minutes walk billable to us? What if he takes a 4 hour walk? Is this any different whether he work on our premise or remotely? And if it is billable to us why are we expected to pay it?

Both of our companies are located in Indonesia. Our partner is an Indonesian branch of an international IT company.

Please note we are not asking if it is billable in a specific case, but to understand how it usually works since we have never worked with an outside consultant programmer.

  • If you can't say anything nice, don't say anything at all. – enderland Sep 14 '17 at 17:54
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    I generally bill for anything that I would normally do if I was working as an employee in the office. Bathroom break? Billed. Starbucks break? Billed. Any time I'm even thinking about work, billed. Lunch break? Iffy - if it's just a sandwich at my desk, billed. If it's a 3hr boozy brunch, not billed. It also depends how demand the work is. If you are low rate hamburger flipper with punch cards, they care about smoke breaks and the like. If you are world class surgeon, they are more lenient as you are harder to replace. – Chloe Sep 14 '17 at 21:23
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    Obligatory Dilbert: dilbert.com/strip/1995-09-15 – Perkins Sep 14 '17 at 23:58
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    As an alternate, ask the partner firm to give a fixed price/date for achieving what you want. Then you don't have to bother with such details. – happybuddha Sep 15 '17 at 1:04
  • I sometimes find it more pragmatic not to bill such constructive breaks; but definitely bill higher for the rest. – Marc.2377 Sep 15 '17 at 5:21
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Here's a counter question. If he thinks of a solution on the drive home, can he bill you because he was working on the problem?

Programming is THINKING not typing. If you try to nuance this you will get NOBODY to work for you.

If his machine freezes or crashes, do you want him to stop billing when he reboots? Are you going to time his bathroom usage and deduct that from his hours?

What your fellow is doing is a common practice among programmers and people in general called "Sharpening the saw". This dates all the way back to when timber was cut down by manual saws. After a while the saw would dull and be less effective. You had to occasionally stop and sharpen the saw or you would actually cut down less timber if you just continued working rather than take the time to sharpen the saw.

What your engineer is doing is just that. Sharpening his saw, or more specifically his mind. Making an issue of this will end badly as you will end up getting more billable hours charged to you for less output.

Proceed at your own risk

  • Comments are not for extended discussion; this conversation has been moved to chat. – Jane S Sep 16 '17 at 12:12
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You pay humans to do work, not machines. This is an important factor to take into consideration. Some people take a break and produce much more work when they return vs. trying to push through. Bathroom breaks as well are part of the situation as humans have to relieve themselves. This is usually a "reasonability" analysis. Various countries and institutions have varying definitions of what is reasonable for human maintenance in performing ones job.

USA allows federally 2 15 min. paid breaks during the work day. Some countries dictate 35 hour work weeks. It really just depends. In general I personally consider 30 min. as part of normal work, when it goes above that I start to question it, but that is just me. Your company and affiliates should dictate what they view as reasonable within the confines of the laws of countries/states/provinces/territories involved.

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    I like your answer, but some additions: the 15 minute paid breaks are only required for non-exempt (usually hourly) employees. [link]dol.gov/general/topic/workhours/breaks[/link]. For exempt (salaried) there are no laws that I've been able to uncover, only common practices. Also, the way that the client pays the company for the work done (e.g. billable time), may be different than the way the employee is paid. – phaedra Sep 13 '17 at 14:07
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    Understood, the idea is that there are varying definitions and stipulations to "reasonable outage" and the comment is a specific example. Thus the point is they need to define their own definition within the laws of the area where they work. – mutt Sep 13 '17 at 15:35
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What are billable hours?

This is the first question you need to answer to know what the right answer is. Your question implies that you think billable hours are the time that was actively spent delivering a product or service to you. This is notably different from a definition where billable hours are the time that had to be spent in order to deliver the product or service to you.

I would argue that the second definition is a lot more realistic. If you find out that another programmer could have done the work in half the time, do you expect the billable hours to be slashed in half for this project as well? That doesn't seem realistic since this programmer had to spend this time in order to deliver the product. They were unable to spend this time working on other products or services and spent this time on your behalf.

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Is this 30 minutes walk billable to us?

This is something you'll need to ask the international IT company, as it depends solely on your agreement with them. It's not a lot different from the question "is lunch break time billable?"

Personally, if I had a team of contractors working on a project, and I saw them all taking 30-minute walkaround breaks every day, I'd be very concerned. I would go back to the contracting company and ask what was going on. And my contract with them would typically allow me to have any or all replaced if they weren't working up to my expectations.

If I thought the 30-minute break was necessary (it usually isn't), and the working being produced was better for it, then I wouldn't complain. And a one-time or very occasional 30-minute break when stuck is perfectly reasonable.

But anyone who gets stuck repeatedly and needs to take 30 minutes to get unstuck is demonstrating that they aren't sufficiently qualified to work at a client site. I'd have them removed and replaced with someone who didn't get stuck so often.

TL;DR: When you want to know what is billable and what is not, read your contract and talk with the contracting company. That's the only way you will know for sure.

Please note we are not asking if it is billable in a specific case, but to understand how it usually works since we have never worked with an outside consultant programmer.

"How it usually works" isn't as important as how you want it to work. Get it included in the contract, and whoever accepts the contract will do things the way you want without regard to how others do it.

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    Good answer, but I think we need to define "stuck". If it means totally flustered and needs to get away, that would be a problem if it happened on a regular basis. If it instead means, "this change will be tricky and I need to think through and choose between three different options", the fact that the person happens to be walking while thinking shouldn't matter. – Wayne Sep 13 '17 at 19:57
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    As a consultant/contractor - this is the right answer. It's all about the contract. Too many people here are applying this question to life as an employee or possibly imagining a fixed-bid project. None of the contracts I've been involved with on a time and materials project would allow me to bill for time spent on a walk, no matter how productive it might have been. – Rob P. Sep 14 '17 at 1:14
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    I am finding it very hard to believe that the Utopian answers are getting dozens and hundreds of votes while this practical answer has only a handful. If you've ever worked with an outsourced IT vendor of any kind, you know their number one goal is to wrack up billable hours and their number two goal is to lock you in to using their services forever. You have to watch the contracts like a hawk - they can be incredibly predatory and wasteful. – corsiKa Sep 14 '17 at 15:26
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    And I'm not being cynical - but with an employee you both want whats best for the same business. With contractors you want what's best for your business and they want what's best for their business. Naturally, what's best is you pay nothing and get everything. Best for them is they get paid everything and do nothing. Both parties acting in the best interest of their company will be working toward these conflicting goals and meeting somewhere in the middle. – corsiKa Sep 14 '17 at 15:28
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    @corsiKa As a contractor myself my goal is not to get payed to do nothing. My goal is to deliver quality work so I will get hired again a few years down the line and my clients will recommend me to their network. – Arnold Wiersma Sep 15 '17 at 13:14
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I have had experience with ordering development​ of custom IT systems for my workplaces as well as adapting existing 3d party systems to our specifics.

Based on that experience, in your case I would proceed by narrowing down the task to be done until it is possible for the contractor to give you an estimate of hours needed to do it.

Note that depending on the size of project, the narrowing down itself could be quite a task. If you have qualified personnel for describing business requirements, it could be done in-house, otherwise this could be where some consultancy hours go.

Regardless, I wouldn't go into any project without contractor's estimate of expenses. After expenses - including billing for potential unforseen circumstances not due to contractor's fault are agreed upon,- the hours actually spent become somewhat immaterial. They still serve as basis for billing, but there is little point in arguing over +/-1hr as in software development it is hard [and in this case unnecessary] to control what exactly was done at which point.

EDIT:

To clarify. In my opinion and experience, it is bad practice to do hour and minute counting the way it was presupposed in the original question, because it implies lack of trust in contractor AND -- unless you are IT shop yourself -- you have generally little way of CONTROLLING him. So, you could end up arguing about hours in a situation where you frequently have no other (or no cheap) way to test his veracity.

So my approach would be:

  1. The aim generally is to control expenses per result achieved, so the need is to narrow down the actual hours needed as much as possible beforehand. Let's say a task is estimated to take 40hours of development + testing, add to it ~10-20% max hours for adjustments due to incorrect business requirements, etc., and agree that after up to 50h of work you will have a working result with these parameters.

This is especially true in a pre-existing ERP system, which only needs to be adapted to your work environment. The existing functionality is there, so most adaptations can be described as changes to existing system -- usually much easier than building anything from scratch.

  1. If it is impossible to know how much hours the development will take, the development tasks need to be subdivided or extra information about tasks gathered, until some definite estimates can be given.

  2. If it is still impossible for contractor to give any estimates, which could form the basis of contract, the contractor is quite possibly not worth it.

Note that this goes contrary to some software companies' Agile-toted practices much seen these days. In my experience, Agile development shops tend to shift all the responsibility for the end result to the customer -- we will do whatever you say for $X/h. You didn't really know what you wanted? Tough luck.

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I think different cultures use different terms for billable.

The company I work with discusses the project with the customer and sells them a set of hours before the deadline (note that does not mean we sell 40 hours and you get the product in one workweek).

Now like @mutt mentioned, you hire humans and not every minute of the billed hour might be used purely on coding. My company sells an x amount of hours, but most of the time we spend more time on the project (don't quote me on this as many businesses work differently, and I am not involved in the billing process here).

  • Try updating your answer to the current question. I think you will be more well received if you do. The current version reads here is what I think(though I do not think that was your intent). I think a revision will read better. – IDrinkandIKnowThings Sep 13 '17 at 17:46
  • Tje reason i use: i think: is because i have no sources or knowledge about the subject. It is what i litteraly think happes and what gets told to us by the project manager (x many hours have been sold to the customer) – nivlem Sep 13 '17 at 18:52

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