Is it common business practice to consider constructive break times as billable for consultants?

Question

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.

Answer 1

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

Answer 2

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.

Answer 3

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.

Answer 4

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.

Answer 5

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.

2. 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.

3. 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.

Answer 6

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).