In a service business (IT, consulting, legal, design, marketing), project hours decide whether a client makes you money or costs you money. Track them badly and you either under-bill and lose revenue, or over-bill and end up in a dispute. Track them well and you get honest invoices, a clear view of which projects pay, and real data for capacity planning. This is how we would set it up.

What "tracking project hours" actually requires

1. Project structure

Each project: name, client, start date, end date (or "ongoing"), budget (hours and/or fee), team members, billing model (T&M, fixed fee, retainer).

2. Task structure within projects

Tasks within a project for granular tracking. "Backend development - sprint 12 - feature X" rather than "work on Project A." Granularity supports both billing detail and capacity analysis.

3. Billable vs non-billable distinction

Internal meetings, training and sales work are non-billable. Client-facing work and project deliverables are billable. The system should support both, billing only the billable hours.

4. Time entry: by employee, per day

Employees log their hours per task every day. Nobody remembers yesterday accurately the next morning, let alone at the end of the week.

5. Approval workflow

Manager / project lead approves time entries weekly or monthly before invoicing.

6. Billing data export

Approved billable hours go to invoicing, split by client, project and task, and the invoice is raised from there.

7. Project profitability view

Hours invested (billable + non-billable) × cost rate vs project revenue = profitability. You see it live, per project.

The two big tracking patterns

Time-block tracking

The employee enters time blocks at the end of the day: 9-11 Project A task 1, 11-12 internal meeting, 1-3 Project B task 2, etc. It is accurate if people are disciplined about it.

Timer-based tracking

Start a timer when you begin a task and stop it when you finish. Switch tasks, switch the timer. This is more accurate because nobody has to reconstruct the day, but the employee has to remember to switch.

Most tools support both. What works best in practice is running timers during the day and doing a quick review at the end of the day to clean up.

What goes wrong

"I'll fill it on Friday"

Friday's memory of Monday's work is approximate at best. Daily entry has to be the rule. If that means a 30-second entry on mobile, fine.

"This task fits one of these 50 task codes... I'll pick one"

With too many task codes, employees just pick the nearest match and your analysis stops meaning anything. Keep the list of codes short and add new ones only when you need them.

Non-billable hidden as billable

Internal sprint planning billed to the client. Once the client notices, you lose their trust. Be strict about what counts as billable.

Billable hidden as non-billable

An employee helps a client with something urgent outside the contract scope and doesn't log it. The bill is never sent and the revenue is gone.

No client-facing report

Client receives an invoice with a single line "consulting services - PKR X". They want detail, so give them a task-level breakdown.

The integration that matters

With HR / employee records

Time entries roll up to the employee's record. Total billable hours per employee per month are then available for performance and utilisation reviews.

With attendance

Time entries and attendance should agree on total hours. If they don't, one is wrong.

With payroll

For per-hour-paid contractors, time entries × rate = payroll. For salaried staff, time entries feed into performance reviews, not pay.

With invoicing

Approved billable hours flow into the invoicing tool or module and the invoice is generated automatically.

The Pakistani IT services pattern

A typical software house in Lahore, Islamabad or Karachi looks like this:

Multiple offshore clients with different billing models
Mix of salaried employees + offshore-paid contractors
Dual currency (PKR for local salaries, USD for client billing)
Sprint / scrum structure for projects

Your time tracking system has to handle all of this in one place and work with HR, payroll and attendance.

The Zaffre HRM project tracking fit

Zaffre HRM includes project management with time tracking that is connected to HR, attendance and payroll. You get projects and tasks, billable and non-billable hours, an approval workflow and billing data export. See: IT services HR guide.

Book a demo and we will walk you through setting up project hour tracking.

How to Track Project Hours for Billing: IT and Services Guide