Is it proper to use the word "bandwidth" as it relates to time allotment?

I'm a web developer and I've often heard other technical and developer types say:

Sorry, I don't have the bandwidth to take on your project at this time.

I started using the term myself and thought it was an excellent way of expressing that you don't have enough time for something. Recently, I used this term with a potential client and he interpreted it as meaning that I still had a dialup internet connection so would not be able to handle his needs.

I then realized this is where the term originated from so I guess I could understand his confusion. Should I use the word only in specific circles of people that I know will understand it?

I happen to find this use of the word irritating, but there is no doubt that it is widely used, at least in technology companies.

As you indicate, it will be misunderstood in some quarters, which might be a good reason for avoiding it.

The question of whether or not it is "proper" is meaningless, unless you define the particular arbiter of manners who you want to defer to. There is no authority for the English language.

Bandwidth, literally, is the amount of data that can be passed along a communications channel in a given period of time. On the other hand, in business jargon, it is sometimes used to refer to the resources needed to complete a task or project. Clear language is important for clear communication. So it may be better to avoid jargon if you are not sure they will understand you.