Billable hours have historically been a measure of productivity and profitability in professional services, especially in the AEC industry; however, this obsession is now proven to stifle innovation and threaten market stability.
We can draw parallels between the AEC industry and the Big Four accountancy firms, whose practices shed light on the darker side of billable hours. A recent study has revealed that, much like in the AEC industry, these firms treat any time that cannot be directly billed to the client to have a significantly lower value than hours that can be directly billed to the client, but these non-billable hours include the very activities that result in innovation.
By instilling this culture, staff hoard tasks to keep their billability high. Mentorship, learning, and upskilling are neglected. Due to the relentless pursuit of billable hours, firms often become static. Thus, their work suffers from poor quality, they gain a reputation for not keeping up with market trends, and they cannot attract and retain talent.
This inward-looking approach to hitting targets not only hampers staff development but also blinds firms to the broader horizons of innovation. Billability has reduced engineering to a numbers game, where meeting targets overshadows the pursuit of new ideas and solutions.
Businesses should use slow times to innovate and explore new markets instead of trimming staff. However, a preoccupation with billable hours prevents them from capturing these golden opportunities.
Billable hours measure short-term business success, but they do not measure long-term growth and innovation. Successful companies invest in their employees rather than just their bottom line.
Embracing Change and the Path Forward
With the fast-paced trends of the AEC industry, a narrow focus on billable hours can limit the creativity necessary to keep up. We face several challenges that are not just technological but deeply human. Professionals are not machines; their output is not uniform.
Utilisation rates oversimplify productivity and ignore the human cost of burnout. Without adequate skills or investment in developing those skills, team friction increases, trust is compromised, and productivity and efficiency suffer. Technology offers solutions by automating mundane tasks, freeing experts to innovate, solving complex problems, and building client relationships. Still, you cannot introduce a new technology layer and expect it to fix a poor company culture by itself.
Though this post isn’t about BIM, its adoption serves as a litmus test for the industry. BIM is a philosophy, not a tool. It is a vehicle for change that requires a new approach to design, construction, and teamwork – one that values people, processes, and innovation over short-term financial goals.
Just as the slow adoption of BIM highlights the industry’s hesitance to invest in innovation, so too must the broader AEC sector reassess its priorities to foster growth. An organization that has been reluctant to adopt because of upfront costs, specialist roles, and uncertainty about returns exemplifies the tension between billability and innovation.
To move forward, we must confront these challenges and understand the reluctance to invest. The path forward demands a shift in mindset from billability to recognising the long-term strategic value of investments like BIM.
Redefining Success from Billable to Valuable
The AEC industry is at a crossroads. A choice needs to be made between continuing down the path of billable hours or paving a new way that values organic innovation and long-term strategic growth.
It’s time to redefine our measures of success. Let’s value the impact and innovation of our work over the hours billed, and in doing so, reshape the AEC industry for the future. This isn’t just about changing metrics; it’s about transforming our perspective to ensure a robust, innovative, and sustainable industry.
Creating an industry culture that values mentoring, upskilling, and innovation is not only about building more resilient and innovative businesses, but also making us more future-ready.
Alvehus, J. and Spicer, A. (2012) “Financialization as a strategy of workplace control in professional service firms.” Critical Perspectives on Accounting, 23(7–8) pp. 497–510.
Elsamani, Y., Mejia, C. and Kajikawa, Y. (2023) “Employee well-being and innovativeness: A multi-level conceptual framework based on citation network analysis and data mining techniques.” PLOS ONE, 18(1) p. e0280005.
Garrick, J. and Chan, A. (2006) “Organisational knowledge and the effects of ‘billable’ hours.” International Journal of Learning and Intellectual Capital, 3(2) p. 143. (Direct PDF Link)