Project Management

Billing IT consulting clients for travel time

Chip Camden says that, if you bill for travel time, you need to spell that out in your client agreement. Find out how he navigates this arrangement with his IT consulting clients.

Since I perform most of my IT consulting work from home, I don't have to travel much for business anymore -- twice a year is a lot for me. My clients can connect to my brain over the wonderful World Wide Web and suck everything they need out of it most of the time. But, every now and then, someone will insist on transporting my brain (precariously packaged within my fragile body) inside a metal tube traveling at over 400 miles per hour across a continent or two.

By the time I make it to the airport, endure the humiliation of Transportation Security Administration (TSA), wait at the airport, and actually fly to my destination, these trips can take up the better part of a day, during which I would otherwise be working. So I make sure to bill IT consulting clients for my travel time. (Thanks to TechRepublic member rjt for bringing up this great subject of billing for travel time.)

Include travel time in your contracts

If you bill for travel time, you need to spell that out in your client agreement -- and be sure to state the amount you plan to charge. When it comes to billing, surprise line items are never popular -- unless they're credits. In most of my contracts, I specify that travel time is billed at half my usual hourly rate. Clients aren't getting any services from me, but I'm not able to bill anyone else, so we split the difference. One client has a philosophical problem with paying for travel time, and since I otherwise like them as a client, I let them off that hook -- but I raise my rate to account for it.

How do you define travel time?

In my contracts, I state that travel time is billable only if the travel was requested by the client. Travel time includes all time between leaving my home/office and setting foot at the client's destination -- either the venue itself or the hotel if I arrive the day before. (I don't bill for sleep time, though I often solve problems in my dreams). I insist on making the flight arrangements myself, not only to best suit my schedule of billable hours but also to make sure that I can catch a ferry both ways since I live on an island.

Working while en route

It's becoming increasingly possible to do billable work while traveling. When I first started consulting, in-travel work was limited to reading printed material and jotting down notes on paper. These days, my notebook PC is powerful enough to carry most of my business with me (yea virtualization!), and with EV-DO, I can even stay online except when in-flight (and even that may change some day).

So I revised my travel policy to exclude from travel time any hours during which I am performing billable work -- whether for the same client or someone else. I bill that time at the full rate because I'm being just as productive as if I were in my office. Naturally, this policy requires some judgment. I don't normally bill full rate for time when I might be staring out the airplane window and pondering a project, unless I've intentionally dedicated my mind to that subject for a period of time. One good indicator of "off" vs. "on" time is whether I have a cocktail in my hand.

Share your experiences

Do you bill IT consulting clients for travel time? If so, how much do you charge? How do you define travel hours? Have you ever met with any resistance to billing for travel time? Has the increased flexibility of working remotely reduced your number of travel days? I'm curious to know how you handle this arrangement.

About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

59 comments
sophieot123
sophieot123

Hey, even I am in the same boat. Have to travel once in a while to client's place and I make sure that I charge back every expense of the travel to the clients. I use a web based time and expense tracking software (http://www.officetimer.com/) which helps me capture everything in real time and tie it to respective projects. I would recommend it to any company for their employee's use.

DonFillion
DonFillion

Hey is this thing still on? :-) I'm coming to the discussion late, but am looking for any insight in setting up on site consulting gigs. Our business model to this point has revolved around doing remote software development, with occasional trips for onsite meetings. We typically estimate all travel expenses and spell them out on each agreement, but this travel has typically been in weeks, not months. We are now being asked to provide onsite consultants, and I'm trying to structure the arrangement so it works for all parties. For example, when doing long projects - let's say a year - what are the best practices for T&E? If I can get the client to go for it,  I am leaning toward a monthly allowance that would cover all expenses - lodging and travel included. I'd love to hear about your experiences with long-term onsite engagements if there are any out there..

bwatkins
bwatkins

I think you're being very noble by excluding hours that are billable while you're travelling. In traditional consulting firms, double billing like this is encouraged. Simply do some work for A DIFFERENT CLIENT while you're billing travel time to the first. When utilization reports come out at the end of the week, it's not unusual to find some consultants at 110% for this reason.

PMPsicle
PMPsicle

I wish I could bill travel time. Lately, I've been finding clients are unwilling to even pay expenses (plane/hotel etc.).

JohnMcGrew
JohnMcGrew

This is a good topic. Thanks for bringing it up, as it's very educational to see how our peers handle this. Most of my clients are 500 to 2000 miles away. Fortunately, due to the increased reliability of hardware & broadband, I find my required visits becoming less and less frequent. Where a few years ago, I was travelling about once every 45 days, I'm now down to every 4 or 5 months. Given how expensive and unpleasant long-distance travel has become over the last several years, I do not complain. As for billing, I have several rates. Generally, "consulting" is something that takes place when I am working at home or anywhere other than a client's site. When I visit clients on a trip, I charge a "site visit" rate, which is obviously much higher. Usually on each trip, I am able to schedule time with multiple clients, so travel expenses are built in to the "site visit" rate and can be spread across several clients. It's been years since I've needed to see a single client on an "emergency" basis, (I've got surrogates who can deal with the occasional hardware-based crisis) but in that case it understood to be on an "all expenses covered" plus "consulting" rate basis. When I used to have many "in town" clients, I would only charge "travel time" one-way at my "consulting" rate if the client was out of my immediate (20 minutes or so) area.

Ian Thurston
Ian Thurston

I live a 90-minute commute north of some of my clients. That means 3 bus or train commutes per week. In the past, I billed travel hours and worked while I traveled. The result: 8-hours days became 11-hour days. I got less done because I arrived at my clients ready for a break ... and I arrived home zonked. I've since come to the conclusion that cutting 3 hours of time out of 24 is a golden gift of time for uninterrupted personal use. I make full use of that time, and arrive fresh and ready to rock and roll at my clients. There ain't enough money to pay for that luxury. Not for everyone, I'm sure. But it works for me. I recommend giving it a try.

paulj
paulj

I live in congested Long Island, NY. Every client I visit is typically a 30 minute trip, for which I charge a $45 flat fee. This is for my technician's as well as me. We have gotten more flack for that charge than I can tell you. We use to charge $65 flat fee, but I did away with it for all the complaints. Now we "sneak in" the $45 whenever we can. FYI- I bill my technicians at $65/hr. Now we are trying another idea...$100 for the first hr (yeah, I know this lovers it to $35 per trip, but we don't seem to get any complaints for that one!

Jaqui
Jaqui

Not for in town clients, since I can walk to their offices in at most 30 minutes. Since Vancouver is not very spread out, it's not hard to get anywhere in town in a short time. Out of town clients, yes, those get billed for travel time / costs.

AlexNagy
AlexNagy

Definitely something to consider if I can ever get a home based web design business off the ground. Thanks for the advice!

jmhmaine
jmhmaine

I only travel for clients a few times a year, but when I do, I bill at full-rate, door-to-door. The meter is running once the garage door goes up and stops once I arrive at a hotel room for the night. At the hotel I connect online and work on other projects. Once I leave the hotel room the meter is back on until l arrive back at the hotel or home. I have a home office as well, so if I have to leave to meet with a client, I'm not able to bill during that time. I charge full rate because they using my time, which has a fixed hourly rate. Basically they are renting my brain, if they choose have my brain program or travel, it is still the same rate. I don?t charge if the travel is a short difference, such a 15 minute drive from my house to their office. I figure if I still had an office in town, I?d would be able to walk to their office, or they could walk to mine.

Sterling chip Camden
Sterling chip Camden

... have you ever forgotten to account for time zone changes? I did that one time, but since I made the mistake in both directions, it evened out. My client got a good laugh at my computational wizardry.

Sterling chip Camden
Sterling chip Camden

... that's just plain dishonest. The reason I charge for travel time is because I'm prevented from doing billable work. If I can bill someone else for my time, why should I bill you, too? But yes, it happens in many firms. And lawyers are even worse.

Sterling chip Camden
Sterling chip Camden

I might have to explore that in a future post: "How much do you charge for site visits?" Sometimes I bill my hourly rate, sometimes its a special daily rate -- I don't have a firm policy. It would be good to discuss the reasons for a higher or lower rate when on-site.

Sterling chip Camden
Sterling chip Camden

Breaks are extremely helpful to mental capacity. When traveling, I'm usually working for a different client (unless I'm really jazzed about the current project), or sometimes I'll just read a book. I don't beat myself up for not getting full-rate hours in.

Techcited!
Techcited!

I too have about a 30 minute trip to many customer sites. So, in my contracts, I have put in for a minimum of 30 minutes of travel time as part of the hourly fee. Of course, with all of the remote tools we have at our disposal now (remote desktop, GoToMeeting, etc.), we don't have to travel nearly as much. I don't get any complaints about it. To the contrary, I use the travel time as something of a plus for customers. Kind of a bargaining/marketing/goodwill chip of sorts. For those customers that have treated me well one way or another, it is nice to be able to tell them when I send the invoice "I have waived the travel time. Thanks for your business."

Sterling chip Camden
Sterling chip Camden

I should get up there more often. Nice to be able to walk to your clients' offices. My nearest active client is 800 miles away.

willygreen
willygreen

I have always charged 65% of full rate. We calculated this using the fully loaded salary cost of the consultant along with IRS per mile reimbursement. We are thinking about raising it to encourage customers to let us handle more issues remotely.

canadiancontractor
canadiancontractor

I'm an IT consultant (software implementations) on an 8-month contract with a large international company. Contract doesn't specify about travel time, but I'm expected to be traveling about 50% of the time from one province to another province by air. Prior to accepting, I was told that "all costs related to travel would be covered of course". I charge hourly for my work. Timesheet is now disputed because of including travel time flying on average once per week. Keep in mind, these are about 4 hours each way, not 15 to 30 minutes so probably amounts to 130 hours over the life of the contract. I know that I should have (darn it!) gotten travel time mentioned specifically as a cost related to travel. I also feel that it should have been at least mentioned if there was to be an exception to contractor hourly billing. Any answers to these two questions would be most appreciated: 1. Is it *established as common practice* that if you're expected to fly around on an hourly contract that you charge for your travel time? 2. Does anyone know of any resources or articles establishing this as a common practice? Thanks for your help, I hope to get paid for all this travel time without damaging any relationships.

Sterling chip Camden
Sterling chip Camden

One of our readers named Josh sent me the following wording from his contracts. He didn't want to post it himself for fear of having to act as an attorney to answer questions. Here it is: Code Reuse and Public Domain Company agrees that elements of source code written by Consultant for ongoing projects normally will contain common use algorithms and functions that are either works created by Consultant or are part of the public domain. These elements can not be exclusively transferred to Company and either have been, or will be used in future projects for others outside of the scope of this agreement. Use at your own risk.

ggcraven
ggcraven

My philosophy is that the fact that I am not located at the client's site (or city) is not my fault and it isn't theirs. Therefor we agree in advance to split the cost. I bill them at half my regular rate if I am not working enroute. If I am working while I travel, they are billed at the full rate.

reisen55
reisen55

We have wonderful tools these days to calculate costs such as driving and meals. My general rate is $ 40 flat fee per day. The bad part of the deal is driving and we all know that gasoline is a horrible item to consume. This expense impacts retainer agreements, and my annual ones do not factor in the huge increase we have so recently seen. That is the hard part - we have good tools but no crystal balls.

Techcited!
Techcited!

Chip: You bring up an interesting ethical dilemma. Does your thinking then apply to multitasking in the office? I have occasions where I am working remotely at two different customer sites (perhaps doing maintenance at both sites) at the same time. I have gone to the trouble of setting up the technology, etc. to be able to do such a thing. Shouldn't I be able to reap the benefits of that?

JohnMcGrew
JohnMcGrew

It costs me far more to solve a problem on-site (travel expenses and what-not) than it does to do so sitting in my office. Plus, while I am at a site, I can usually only focus on a single client. However, when I am working in my office, I have the opportunity to switch between clients/problems on a whim or to multitask, making me far more productive.

Ian Thurston
Ian Thurston

Good point. Sometimes a change of focus is indeed as good as a rest. When I do work during travel, it's usually meeting prep - going over what I want to happen at the meeting I'm going to. I'll bill for that. If I'm feeling completely rested and full of beans, I'll work on a completely unrelated projects, or occasionally on "futures" - stuff I'd like see the client adopt, but which is not yet on the table. Some of my best work comes from that sort of anticipation, and the "bread" usually comes back ten-fold.

The Chief Nerd
The Chief Nerd

I can't think of a single client that is less than 15-30 minutes away. Remote access has definately helped and we are doing that more and more, thankfully. Clients also have us do it more because it improves response time greatly and cuts their cost. When we do have to bill for travel time, we also take the "first hour" approach. The first hour has a slightly higher rate than all other hours and I don't get many complaints. When I get asked, we explain that it is necessary to cover travel time and we normally get a sympthetic nod of approval. The high cost of gas has helped with the sympathy aspect.

Jaqui
Jaqui

one of my ongoing support contracts it would take 5 hours to walk, but it's only 30 minutes on transit. their location is so close to a station that I can't even finish a smoke before walking there from the station. :D [ my preference for not harming the environment as much as possible, I use transit instead of driving. $7.00 is the cost of a trip to them and back. Also, I can be productive better on transit than in a car. :D ]

bill
bill

My contracts always spell out the details of travel time. The client is given the option of the details or pay the flat daily rate on the door-to-door approach. They usually select the daily door-to-door rate. (Airline travel is always a premium, they pay all ticket and airport fees plus any visa/work permit fees.)

jmhmaine
jmhmaine

I have a paragraph in all my contracts that I'm reimbursed for Travel, but I don't spell out the details. I always mention it to the client before traveling.

bizservices
bizservices

CanadianContractor: I would chalk this up as a learning experience. If you want to bill for travel time, you should make it clear in your contract with your client. When I'm told that "all costs for travel will be covered" I'm going to assume that they mean T&E which means direct costs such as airfare, mileage, bus/train, rental car, hotel, meals, etc. Most clients do not expect to be billed for travel time unless it is clearly stated in the contract so that they can decide if they are willing to pay for it or not - negotiate. For your future contracts, clearly state what you will be billing for travel time. Other people on this blog have provided great options for billing travel time. Also, expect to get resistance from your client on travel time and think about a good reason to charge for the travel time. I think it is fair to charge for travel time but sometimes I use travel time charge as a negotiation to get the contract. If I remove it, the client feels they are getting a better deal and they are getting a better deal, but in exchange I'm getting their business.

reisen55
reisen55

Do not misunderstand me. If I drive to a client in Staten Island or Monroe, NY - my rate to DO THAT TASK is $40 flat fee. That gets me to the client's door. ONSITE time is a whole DIFFERENT STORY MY FRIENDS. $ 70 TO0 $ 125 an hour. Sheesh. And I also calculate OFFSITE time. Whenever I come back to home/office and copy backup of client data to my network and/or burn a DVD of client data (and some of this data is truly massive), THAT is billable time as well. Oh heaven forbid $40 an hour for what I do.

richard
richard

$800 per month! Be a plumber at $40/hour.

JohnMcGrew
JohnMcGrew

...I managed to bill 70% of an 8-hour day. I'm just too easily distracted.

Sterling chip Camden
Sterling chip Camden

... of course, I often find myself getting distracted with email, RSS feeds, playing with new technology, etc.; so while I do bill 100% for some hours, I average about 70% over the course of the day.

Sterling chip Camden
Sterling chip Camden

Before I started writing for this blog, I didn't think there was that much to discuss about consulting. This gig has really opened my eyes, and it's great to explore these topics with fellow consultants like yourself. Re: ethical problems - like most problems in consulting, I think they usually arise from a disconnect between the client's expectations and what you deliver. As long as you set the expectations right from the top, no ethical questions come up.

JohnMcGrew
JohnMcGrew

...where clients are billed for the "slices" of my attention. I frequently have 2 or more remote sessions going with different clients at the same time. I might even be on the phone with another. Usually, so much of the time with a client is spent waiting for things to copy, reboot, or whatever. The beauty of being able to work remotely is that you can easily divert your attention to other tasks while waiting for a Windoze machine to go through it's 5+minute shutdown & restart routine. (Of course, this is something a client would be charged 100% of the time for if I was sitting there on-site) I generally charge for the amount of direct "attention" I give a particular client. Usually, it's an estimate and it's not always perfect. Most of my clients understand this is my practice, and I cannot remember the last time anyone complaind. And if they were to, I've got automatic phone logs and remote access logs that will show far more time spent on-line that I actually billed for. The beauty of this approach is that although I do not "double bill", I can come pretty close to billing 100% of my time for any given "busy" hour.

Techcited!
Techcited!

Oh yeah, Chip. I almost forgot. Keep up the great discussions such as these. The thought provoking topics are much appreciated.

Techcited!
Techcited!

Good points all Chip. A couple of good reasons to move to a "charge per service/incident" model or better yet, managed services. Then we don't have to worry about time. And those pesky ethical questions resolve themselves.

Sterling chip Camden
Sterling chip Camden

even if you only bill them 15 minutes each. You get an extra 30 minutes in which to get something else billable done. Yes, it's true that you could bill them both 30 minutes, and probably not get any objection from your clients, and still have another 30 minutes to do something else. But I think it's a bad precedent for yourself. If you say you worked for 30 minutes, then you should have worked for 30 minutes -- not split those 30 minutes with another client. It starts you down the path of creating two stories: what you tell your client and what you're actually doing. What would your client say if you said, "I'm going to bill you for 30 minutes, but I'm going to be working for another client at the same time?"

Techcited!
Techcited!

Chip: So, let's paint a scenario. I have two clients that I am working on remotely. Let's just say that I have to move some data from one folder location to another for each client. Both file moves take about 30 mintues each. I.E., if I do them serially, it's a total of 30 minutes. However, I cannot set the file moves to run for 30 mintues and be done. For whatever reason, I can only do 5 minutes worth of file movement at a time before I have to start another. And most of the time for each file move is spent waiting for segments of the move to complete. So scenario 1 has me doing the following: Start copying client A batch 1; Wait 5 minutes; Start copying client A batch 2; Wait 5 minutes... Then, 20 minutes later, I start in on Client 2. Total time, 60 minutes. The alternative scenario is: "Start copying client A batch 1, start copying client B batch 1. Wait. Start copying client A batch 2. Start copying client B batch 2. Wait..." Total time, 30 minutes. How much would you bill for scenario 2? 15 mintues per client? Shouldn't there be something for the fact that you have set up your infrastructure in such a way that you can do two things at once? Shouldn't you get some extra for being competent enough to multitask? Or am I completely off my rocker? (Wouldn't be the first time!) Let me know.

Sterling chip Camden
Sterling chip Camden

... you don't actually bill two hours within the same hour, do you? If I'm working for two clients at the same time, I split the hours between them.

Sterling chip Camden
Sterling chip Camden

Yeah, it's easy to get so focused on the problems at hand that you can't see what's coming around the corner. Often you do need to stop and let your mind wander into what-if's for your client.

Sterling chip Camden
Sterling chip Camden

... is where I usually break it, but I don't have a stated policy that governs that.

NickNielsen
NickNielsen

We charge in 15-minute increments; time is rounded to the nearest multiple. If the tech is on-site for 22 minutes, the bill is for 15 minutes; if 23 minutes, the bill is for 30 minutes. This may not work in your situation. For me, I'd say the break point for 30-minute increments would be around 38 minutes.

Sterling chip Camden
Sterling chip Camden

I currently don't have a minimum, though I've considered it. It would help cut down on interruptions. And I, too, have gradually moved from 15-minute to 30-minute increments. So, if you work 31 minutes, is that an hour? Or where is your break-point?

Jaqui
Jaqui

the 2 hour minimum is used instead of a travel time cost, and only really applies to "emergency" calls. a regularly scheduled visit can be exempted from that. Though if you keep the two hour minimum, and wander around after the meeting with the boss chatting with the staff to find out about issues they haven't mentioned to anyone yet, you can find that you get enough little bugs cleaned up that the client feels they got far better than two hours out of you. [ as well, you reduced the risks of a critical failure making an unscheduled on site visit unlikely ] The relationship with the client is improved when you seem to give them more than just basic service. [ assuming it's a network / system support contract ]

The Chief Nerd
The Chief Nerd

We do one hour minimum, so it's one hour no matter how long the visit. We used to do 15 minute increments after the first hour, but now we are back to 30 minute increments after the first hour. Again, it's not like we don't want to be on-site, but we get more done and bill more time if we remote in. We actually want to be on-site once a month for an hour with each client. Face time with the people who pay you is extremely important.

Jaqui
Jaqui

the twp hour minimum approach for on site visits? even if the job is only 5 minutes, they pay for 2 hours. that also promotes remote service more, since it doesn't carry that charge. then if you do have to go on site, you know it is more likely a serious issue and will be at least two hours.

Sterling chip Camden
Sterling chip Camden

...building the travel time into a special rate for the first hour. You could also justify that higher first hour rate by the need to account for fragmented billable hours. In other words, if all your jobs are less than an hour, you end up with lots of gaps so you need to make up for that on rate.

Sterling chip Camden
Sterling chip Camden

As much as I love the roar of a gasoline engine, I'm looking forward to the day when they become a relic of history.

Sterling chip Camden
Sterling chip Camden

... aren't too bad. Pressure-side is where I always get into trouble. 'Nuff said.

NickNielsen
NickNielsen

The rules are simple: hot on the left, cold on the right, poop flows downhill. :D I'm lucky enough to know how to do most of my own utility work. As a teenager, I worked a summer as a plumber's helper. (Yes, I've already heard all the jokes. :| ) I do all my own fixture work and most of the drain work. Sanitary sewer and pressure side I leave to the pros.

Sterling chip Camden
Sterling chip Camden

... but ours charges $115 an hour. Compared to me doing it, though, it's a deal. Besides the fact that my hourly is higher, all my adventures in plumbing have been accompanied by band-aids, swearing, and a mop.

Editor's Picks