The managing partner of a 40-person engineering consultancy looked at the spreadsheet for the fifth time, then said something I hear at nearly every services firm I visit. “We billed 70% of what we worked last month. I don’t know if that’s because we’re inefficient or because we just aren’t writing everything down.” That gap, the difference between hours worked and hours billed, is where consulting firms lose their profits without ever noticing.
The weird part is that the firm’s quality of work was excellent. Their clients loved them. But the people who designed the systems never designed one for capturing their own time properly, so a big chunk of effort just vanished.
ERPNext Consulting started this engagement by asking a very simple question: for any project, can you tell me the budgeted hours, the worked hours, and the remaining hours in under five minutes? The answer was no.
Where the hours were really going
We put time records in front of the engineers for three weeks, and the results were uncomfortable in the best way. Roughly a third of the “project work” time was actually spent on redoing calculations from earlier stages, because comments and review notes were living in emails nobody could search. Another chunk went to client requests that were never registered as contract changes, so the work was done but never billed.
- Step one is to capture every hour, even the shameful ones, for three weeks before changing any process. You need a baseline, not a guess.
- Step two is to name the project phase for every hour entered. A task called “general work” is a red flag that the naming doesn’t match the actual way the team operates.
- Step three is to hold a weekly 30-minute review, not of each person’s efficiency, but of the top five unbilled activities that week, and decide who talks to the client about them.
Once the team could see the data, the fixes became obvious. Email-based review comments moved into the project log. Client change requests got logged the same day, with the billing consequence highlighted. The first month of the new routine lifted utilization from about 58% to 64%, and by the fourth month the firm was consistently billing above 75% of worked hours.
Why your spreadsheet is lying to you
Most services firms keep a separate spreadsheet for project revenue, and at the end of every quarter they stitch it together with payroll numbers. That’s painful, but the deeper issue is that a spreadsheet has no memory. It won’t tell you that a certain client type generates twice as many unbilled change requests, or that a certain project phase always swallows more hours than the estimate allowed. ERPNext Consulting pushed for a single project record, where budget hours, time capture, and billing status live together, and that’s what made the pattern visible.
If your firm operates on the 70% billing pattern, do one thing this week: print a list of the last ten projects and mark the ones that had scope changes during the work. Then check how many of those changes were actually billed. Most firms discover that the biggest names on their client list are also the most profitable to serve, not because they pay more, but because their change requests are formally tracked. That’s the shift worth making.