Published July 28, 2026 · Altvina Insights · 5 min read

Before You Cut Non-Client Time, Classify It

Hours outside client delivery can be necessary overhead, growth work, rework, waiting, or available capacity. They should not receive the same decision.

The short version: Pull one or two weeks of actual work, assign every hour to a plain category, and record why it happened. Keep necessary work, redesign repeated friction, and decide what to do with true available capacity. Do not label the whole remainder "waste."

A service firm records 2,000 worked hours in a month. Only 1,200 appear on client jobs.

The tempting conclusion is that 800 hours disappeared.

They did not. They went somewhere.

The example is invented to teach the method. It uses illustrative numbers and is not a client case.

Use categories that lead to different decisions

Start with these:

Category	What belongs here	Likely decision
Client delivery	Work that creates the contracted service or job outcome	Measure scope, cost, and quality
Required firm work	Management, scheduling, finance, compliance, preparation, and coordination	Keep, assign, simplify, or automate carefully
Growth work	Sales, proposals, account development, and operator or partner relationships	Tie to a pipeline or relationship goal
Capability work	Training, documentation, and improvement	Protect when intentional; time-box when vague
Rework or callbacks	Correcting errors, revisiting jobs, recreating information, or handling avoidable exceptions	Find and remove the repeat cause
Waiting or unclear ownership	Work paused for approval, missing information, access, material, or a decision	Fix the handoff or ownership rule
Available capacity	Paid time with no current demand or chosen internal use	Sell, redeploy, reduce, or preserve intentionally

Those categories are not a benchmark. Change the labels to fit your firm, but do not collapse them into billable and non-billable.

"Non-billable" describes how an hour reached an invoice. It does not explain whether the hour was useful, required, avoidable, or available.

Build the sample

For a firm of 5 to 10 people, review one complete week for everyone.

For a firm of 11 to 30 people, start with two weeks and a labeled sample:

one delivery role;
one coordination or management role;
one sales or client-facing role;
several active jobs, accounts, or crews.

Use calendars, job records, time notes, tickets, inbox history, and a short team recall. Rough inputs are acceptable if the limits remain visible.

Record:

Person or role	Hours	Category	What triggered the work?	Who owns the system around it?	Keep, reduce, redesign, or investigate?

The trigger column is important. "Coordination" may be required. "Coordination because the handoff arrives without the same three fields every week" is a repeat mechanism you can change.

An illustrative 800-hour remainder

Suppose the firm classifies its 800 hours like this:

Category	Hours	First question
Sales and proposals	220	Which pipeline or renewal result did this support?
Management, preparation, and administration	260	Which work is required, and which part lacks a clear owner or standard?
Training and documentation	80	Was this planned, used, and time-boxed?
Rework and callbacks	140	What repeated cause created the return trip?
Waiting or available capacity	100	Was demand absent, or was work blocked?
Total	800

The table does not justify cutting 800 hours. It creates five different investigations.

The 140 hours of rework may contain the best first improvement. The 100 hours of waiting or capacity may be a handoff problem, a demand problem, or an intentional buffer. The 220 growth hours may be exactly what the future calendar needs.

Add cost without inventing precision

If payroll or contractor cost by role is available, calculate:

Category direct cost = hours in category x direct hourly cost for the people doing the work

If it is not available, stay with hours on the first pass. Do not divide total company expense by all hours and call the result the cost of a client-delivery hour. That mixes units.

For a rough company screen, divide total operating expense by delivered client units only, then label the result as an allocation. For more accurate decisions, match actual labor, material, subcontractor, travel, and other direct cost to the work.

Translate the categories to your model

Fixed-fee projects: separate scoped delivery, approved changes, unapproved extras, rework, and work between projects.
Retainers: separate included service, exceptions, relationship work, unused designed capacity, and over-consumption.
Time and materials: separate worked, approved, billable, invoiced, and collected hours.
Trades and field service: separate job labor, travel, material handling, callbacks, warranty work, dispatch, and waiting for parts or approval.

Use a stop rule before cutting

Do not cut a category until you can answer:

What business purpose does this work serve?
What creates it?
What happens downstream if it stops?
Who owns the replacement rule or handoff?
What result will show the change helped?

If those answers are missing, keep measuring.

The goal is not to force every hour onto an invoice. It is to make deliberate work visible and repeated friction difficult to hide beside it.

This article is for general informational purposes only. It is not financial, legal, tax, or accounting advice. Work with qualified professionals on decisions for your firm.

AI assisted with the draft. Altvina is responsible for the final published version.

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