Do You Bill Project Management Hours Freelance?

Do You Bill Project Management Hours Freelance?

So, you’re a freelancer, juggling tasks, deadlines, and clients. You’re not just doing the core work, like writing, designing, or coding; you’re also planning, organizing, and communicating—you’re essentially a project manager. The big question is: should you bill for those project management hours? The short answer is, almost always, YES! But let’s dig into why, how, and when.

Why Billing for Project Management is Essential

Think of project management as the behind-the-scenes engine that keeps your projects running smoothly. It’s not just extra work; it’s vital for delivering high-quality results on time and within budget. If you don’t account for this time, you’re essentially giving it away for free. Here’s why you absolutely should be billing for those hours:

It’s Part of the Job

Project management is an essential function of any project. Whether you’re working on a small logo design or a large website development project, planning, coordination, and communication are all important components. When clients hire freelancers, they’re not just paying for the tangible output; they’re also paying for expertise in managing the project. A good project manager keeps everything organized, deals with unforeseen issues, and keeps the project moving toward completion, and that should not be free of charge.

Your Time is Valuable

Every hour you spend on project-related activities is time you could be spending on client work or other business growth opportunities. If you don’t bill for these hours, your own income suffers. Remember, you’re a business owner, and you need to value your time. Tracking your time shows you where your hours are actually going, and help you identify where you might be spending too much time on certain activities that you might want to address later.

It Reflects the Scope of Your Services

By including project management in your billing, you are clearly showing the client the full extent of the services they are paying for. This transparency builds trust and demonstrates the professionalism that you bring to the table. When a client sees a line item for project management, it helps them understand what goes into delivering a successful project, and it sets expectations for the process.

Helps to Set Realistic Expectations

When you do not include project management time in your bill, you are likely to underestimate your time and effort required for the project. This can lead to stress, late deliveries, and frustration, both on your end and on the client’s end. When you accurately account for project management, you can set realistic project timelines and deliverables, leading to a more successful and satisfying working experience for everyone involved.

Avoids Scope Creep

Project management also helps you to keep a tight reign on the scope of the project. If a client wants more than what was originally agreed upon, and you haven’t been billing for the project management hours, it becomes harder to make a case that the additional work should be billed too. When you track project management, it is much easier to identify when new requests will cause the project to exceed the original parameters, and it allows you to have clear and objective conversations with clients when it is time to bill for the extra effort.

What Exactly Constitutes Project Management Hours?

So, you’re sold on the idea of billing for project management, but what exactly falls under this category? It’s not just about making a to-do list. Project management encompasses a range of tasks that can be billed to a client:

• Initial Project Scoping and Planning: This includes the time you spend on client calls to understand their needs, brainstorming ideas, defining project goals, researching, and creating an initial plan or project brief.
• Creating Timelines and Schedules: This is the time you spend setting up project timelines, milestones, and deadlines, for the work to be completed.
• Client Communication: Any email exchanges, calls, or meetings with clients to discuss project progress, get feedback, or address their questions.
• Task Assignment and Coordination: If you work with other freelancers or assistants, the time you spend delegating tasks, coordinating their work, and reviewing output is project management.
• Project Monitoring: Time spent tracking project progress, identifying issues, and making adjustments to keep things on schedule.
• Issue Resolution: If you encounter problems or challenges during the project, the time you spend resolving those is also project management.
• Quality Control: This is the time you spend reviewing your work and the work of others, to ensure it meets client expectations.
• Project Documentation and Reporting: This includes the creation of project documents, reports, or updates you send to the client.
• Final Project Review and Handoff: The time you spend reviewing the finished product, making final tweaks, and preparing the project for delivery.

Different Billing Methods for Project Management Hours

Now that you understand what to include, let’s look at different ways to bill those project management hours:

Hourly Rate

This is the most straightforward approach. You track your project management hours and bill the client at your established hourly rate. This method works well for projects where the scope is somewhat defined, but might have a bit of flexibility as the project moves forward. You need to be very careful about tracking your time so that you’re sure you are capturing every minute.

Pros:

• Easy to understand and implement
• Fair for both the freelancer and the client for projects where the scope is likely to change during the project
• Accurate billing if time is tracked properly

Cons:

• Can be difficult to accurately estimate total cost of project for the client
• Can lead to scope creep if not managed correctly

Project-Based Rate

Here, you estimate the total time you will spend on the project, including both the core task and the project management activities, and you create a fixed price for the entire project. This works well for well-defined projects with a specific scope. It requires accurate upfront estimation of time requirements for both the client work and project management tasks. It can be a very attractive payment structure for clients because it creates an easily predictable payment for their budget planning. However, this payment structure also requires very careful planning on your part as you are responsible for completing all the work for the agreed-upon amount.

Pros:

• Predictable costs for clients
• Can be very profitable if estimated carefully
• Provides clear expectations for project cost

Cons:

• Difficult to account for unforeseen issues or scope changes
• Requires accurate upfront time estimation

Blended Rate

This is a bit of a hybrid approach. You calculate an average hourly rate based on your core work and project management activities, and you bill at that single hourly rate. This approach can make invoicing simpler while still ensuring you’re getting paid for your project management efforts. If you are working on projects that have a variety of different tasks and you find yourself having trouble keeping track of the specific time allocated to each task, this billing strategy may be helpful for you.

Pros:

• Simplified invoicing process
• Covers both project management and core work costs

Cons:

• Requires careful calculation of blended rate
• May not accurately reflect the difference in your time spent on core work and project management tasks

Percentage-Based Rate

With this method, you allocate a percentage of the overall project cost to project management. For instance, you might include 20% or 30% of the total project fee for project management, depending on the complexity of the project. This method works well when you have a clear and consistent idea about the ratio of core task time to project management time. This is an easy method for clients to understand, and a method that provides an easy, fixed price for your project. However, it is important to factor in the complexity of project in your percentage calculation.

Pros:

• Simple for clients to understand
• Easy for budget planning for clients

Cons:

• Can be difficult to accurately determine appropriate percentage
• Requires accurate understanding of project complexities

How to Effectively Communicate Project Management Billing to Clients

Transparency is crucial when billing for project management. You want your clients to understand why they’re being charged for these hours. Here are some tips:

Be Upfront

Include a section on project management in your contract or proposal. Clearly state how you bill for project management time, whether it’s hourly, a flat rate, or a percentage of the total project, or some other method. This sets expectations from the beginning and avoids any unpleasant surprises later on.

Explain the Value

Instead of just stating that you will bill for project management, take the time to explain why project management is essential for a successful project. Highlight that it is a way that you ensure that the work gets done on time and within the budget. You can also show them examples of your work, and how good project management contributed to the positive outcome of the project. When you clearly communicate the importance of project management, it helps clients see value in paying for it.

Provide Detailed Invoices

Don’t just send a generic invoice with a total amount. Break down your project management time into specific categories, such as planning, communication, and progress tracking. This not only shows you are organized, but it also assures the client that you are being transparent about how you spent your time. This also helps with tracking the project on your end, which in turn helps with estimating time in future projects.

Use Clear Language

Avoid jargon and technical terms when discussing project management billing with clients. Use straightforward and easy-to-understand language. This helps clients, particularly those that may be new to working with freelancers, to see the value you bring to the project.

Be Open to Questions

Let your clients know that you’re happy to answer any questions they may have about your billing methods or project management processes. This builds trust and promotes a positive working relationship.

Tools and Techniques for Tracking Project Management Hours

Efficient tracking of your time is a cornerstone of billing effectively. Here are some tools and techniques that can assist:

Time Tracking Software

There are many fantastic time tracking tools available, both free and paid, that make it easy to track your time with just one click. A tool that has robust reporting capabilities can help you understand how you’re allocating your time, and will be invaluable for helping you plan out the time for future projects. Some popular options include:

• Toggl Track
• Clockify
• Harvest
• Timely

Spreadsheets

If you prefer to keep things simple, you can use a spreadsheet to log your project management hours. Set up a simple table with columns for date, task, project, time spent, and any notes. This approach is cost-effective, but it does require manual entry of data. Also be sure to use a program that has good reporting functionality, so that you can easily create reporting for both yourself and your clients.

Project Management Software

If you are working on bigger projects, you may find it valuable to use a project management software to manage the entire project. These tools will typically also have a tracking function to keep track of how much time you’re allocating to each task. Some project management tools include:

• Asana
• Trello
• Monday.com
• Basecamp

Combine Different Tools

You don’t have to limit yourself to a single tool. For some projects you may want to combine various tools, for example, you might use project management software for project related communications, but you might want to use a specific time tracking tool to accurately track the time. There is no hard and fast rule, so you should be flexible in your approach and use whatever method that works best for you and the client.

No matter what method you choose, the important thing is that you consistently and accurately track your project management hours.

Addressing Common Client Concerns About Billing Project Management Hours

Even with the best communication, some clients might be hesitant about paying for project management hours. Here’s how to address their concerns:

They Don’t Understand the Need

Many clients may assume project management is part of the core work you’re doing. Explain clearly that project management includes time spent on planning, communication, and organization, and that these are not covered in your core task hours. If you are confident in your work, you can explain that your skills in project management are actually part of the reason they chose to work with you, and that without this service, the project won’t be as smooth and well-executed. Try to offer concrete examples that show the value you are bringing to the table.

They Feel it Adds to the Cost

Show them how good project management can actually save them money in the long run, by preventing delays, scope creep, and rework. It also helps to explain that this is an opportunity for them to get updates on the project, to offer feedback and to get any questions answered. Clients should understand that you are working hard to complete the project in the best way possible for both of you, and they are able to follow the project timeline as it unfolds.

They Want to Negotiate the Rate

Be prepared to negotiate your rates, but don’t undervalue your services. Emphasize your experience and the value you bring to the project. If you need to make a price adjustment, try to adjust the cost of something other than the project management time. It might be appropriate to adjust your core task time, or to add some extra services into the project to justify the price. Be open to discussing options but be firm about the importance of project management.

They Think it’s “Extra Work”

Reframe project management not as extra work, but as an essential part of your process. Explain that it’s the glue that holds the project together and ensures its success. Clients should understand that all of the actions you take throughout the project are there to ensure it is a successful and enjoyable experience for both of you.

Ultimately, billing for project management is a way for freelancers to receive fair compensation for their time and skills, and to create a business that is profitable. When you approach project management with professionalism and transparency, it increases the likelihood that you will have a satisfying experience working with your clients, and that the project you create together is a success.