Hours paid are not all Chargeable hours
One of the many mistakes companies make is not understanding that the hours paid to an employee is the not the same as what can be charged. It is important to remember that we must allow for both lost hours and nonchargeable hours.
Lost hours can be broken down into different areas. Lost hours that are usually across all employees are Annual Leave, Public Holidays, and Sick Leave (Wise to allow for this). Additional variable lost hours are things like TAFE, Training, rostered days off plus others. This can account for 304+ hours of non-billable time.
Other Non-Chargeable time
This can be everything from tool box meetings, picking up parts from the office or suppliers, workshop attendance for paperwork plus more. Depending on the type of work performed this can be as high as 15% for service work and as low as 6% for project work. Either way 6-15% (2-7 weeks) makes a big difference in your costing