Staff augmentation hours: why 160 per month is a trap

Are you still promising 160 hours per month in staff augmentation contracts? It looks tidy on paper but it creates disputes with clients and frustration inside your team. The calendar does not care about round numbers, and your contracts should not either.

The core mistake in plain terms

Many leaders keep using a shortcut: 160 hours per month per person. One month is not four identical weeks. Some months have 20 working days, others 21, 22 or 23.

When you lock the promise at 160, you invite two predictable problems:

  • Clients challenge delivery. In a 21 day month a 40 hour week implies 168 hours. If you deliver 160, your client can argue you fell short. See cross industry patterns in Deloitte’s Global Outsourcing Survey.
  • Employees hit the cap early. Some team members stop at 160 even when the month still has working days left, because the contract tells them they have fulfilled the obligation.

Use weeks for measurement, use months only for billing

  • One week equals 40 hours for a full time role. Clear and predictable.
  • Months vary and that is fine. Some months total 160 hours, others 168, 176 or 184. Over the year it balances.
  • The yearly total is the anchor. 52 weeks × 40 hours equals 2,080 hours. For guidance on avoiding ambiguous commitments see HBR on relational contracts for complex partnerships.

Quick reference: how months really behave

  • 20 workdays → 160 hours
  • 21 workdays → 168 hours
  • 22 workdays → 176 hours
  • 23 workdays → 184 hours

If your contract says 160 per month, you disappoint clients in longer months or overpay in shorter ones.

Vacation and public holidays belong in the yearly plan

Vacation is a yearly entitlement. If you want to adjust for it, subtract it from the yearly total and keep the weekly unit for delivery. For a useful reference on workforce expectations, see PwC’s Global Workforce Hopes and Fears Survey.

Mini case study: the Netherlands account

At the end of the year I worked with a client that delivered engineering services to a company in the Netherlands. We found the root cause of the largest issue: a unit mismatch between contracts.

  • The Dutch client’s contract required 40 hours per week per engineer.
  • The engineers’ employment contracts inside my client’s company were 160 hours per month.

This created a structural shortfall. In months with more than 160 working hours, engineers hit their internal cap while the Dutch client expected full weekly coverage. Across the year the gap added up to roughly one month per engineer, plus the effect of vacation that had not been modeled in the client agreement. With five engineers, the difference was several hundred hours. The Dutch company requested financial compensation for what they viewed as underdelivery. It became a tough negotiation that lasted several weeks. The lesson was clear. A simple unit mismatch can open large financial and trust gaps.

Objections you will hear and how to answer

“160 is easier for finance.” Keep finance happy by invoicing monthly, not by measuring monthly. Keep a weekly capacity ledger and reconcile it in your monthly invoice.

“Clients want a fixed monthly number.” Offer a fixed monthly price with delivery measured in weekly hours. Explain with the quick reference above.

“We already gave 4 weeks of PTO so 160 is fine.” PTO reduces the yearly total, not the unit of measure. Plan the year at 2,080 minus PTO. Deliver weekly.

What to fix in your contracts

  • Define capacity in weekly units. Example: “Each full time engineer is allocated 40 hours per week. Months may vary in working days. Delivery is measured weekly and reconciled monthly.”
  • Model vacation and holidays. Example: “Paid time off and public holidays reduce the yearly capacity. The delivery schedule is adjusted with notice. PTO is planned in coordination with the client.”
  • Add a small carryover rule. Example: “Up to 8 hours per engineer per week may carry forward within the same quarter.”
  • Specify the ledger. Example: “The provider maintains a weekly capacity ledger shared with the client. Invoices summarize that ledger.”

Operational habits that make this work

  • Weekly capacity ledger. A shared sheet showing planned versus delivered hours for each week.
  • Time tracking discipline. Make it daily and light. Review weekly.
  • One page of working norms. Define availability, response time expectations and escalation paths.
  • Quarterly reviews. Compare weekly delivery to outcomes and adjust staffing early. See patterns in Deloitte’s Global Business Services Survey.

Takeaway

When you sell time, precision matters. The 160 hour shortcut looks simple but it causes more harm than good. Measure by weeks, plan by year, bill by month.

If you want help to rewrite legacy contracts and set up a weekly capacity ledger for your team, let’s talk. I offer a free 20 to 30 minute virtual coffee. Book a time here.