Narrative:

Flight departed ZZZ runway xyr shortly after xa:00 UTC flying the RNAV departure. I had briefed the first officer (first officer) I intended to manually fly the departure for proficiency using the HUD.as the first officer retracted the flaps and began the after takeoff checklist; we were handed off to departure. After checking in; the controller stated; radar contact; climb via the SID; except maintain 16;000 ft. As we climbed thru 3;000 ft; I pointed to the MCP altitude window; and waited for the first officer to complete writing down the climb clearance. He then set 16;000 ft in the MCP window; which I verbalized. I then asked him if that was a climb direct clearance. He quickly replied; that is correct; referring to his notes and said; the controller used the words; except maintain 16;000 ft. He then deleted the 5000 ft restriction in the FMC and verified we would be above 13;000 ft restriction before zzzzz since we were cleared to 16;000 ft.leaving 4;000 ft for 16;000 ft; I saw traffic 2000 ft above us; at our 10:30 position and 5 miles on my navigation display. It was moving quickly to our 9 o'clock position and passing clear of us to our left. At that moment I thought it was odd that the controller had not pointed out the traffic. At approximately 5;500 ft; after the traffic was no longer on my navigation display; the controller informed us; you were supposed to maintain 5;000 ft on the SID. I manually stopped our climb; disconnected the auto throttles and began to descend back to 5;000 ft as the controller then cleared us to climb and maintain 16;000 ft. I watched; then verified as the first officer set 16;000 ft in the MCP altitude window.I engaged the autopilot; re-engaged the autothrottles; selected and verified VNAV speed and LNAV; as we began climbing again.we were the handed off to the next controller as we continued our climb.

Google
 

Original NASA ASRS Text

Title: While executing a standard instrument departure; the flight crew failed to level of at an assigned intermediate altitude. After being advised of their error by air traffic control; the climb was resumed uneventfully.

Narrative: Flight departed ZZZ RWY XYR shortly after XA:00 UTC flying the RNAV departure. I had briefed the F/O (First Officer) I intended to manually fly the departure for proficiency using the HUD.As the F/O retracted the flaps and began the after takeoff checklist; we were handed off to departure. After checking in; the controller stated; Radar contact; climb via the SID; except maintain 16;000 ft. As we climbed thru 3;000 ft; I pointed to the MCP altitude window; and waited for the F/O to complete writing down the climb clearance. He then set 16;000 ft in the MCP window; which I verbalized. I then asked him if that was a climb direct clearance. He quickly replied; that is correct; referring to his notes and said; the controller used the words; except maintain 16;000 ft. He then deleted the 5000 ft restriction in the FMC and verified we would be above 13;000 ft restriction before ZZZZZ since we were cleared to 16;000 ft.Leaving 4;000 ft for 16;000 ft; I saw traffic 2000 ft above us; at our 10:30 position and 5 miles on my NAV display. It was moving quickly to our 9 o'clock position and passing clear of us to our left. At that moment I thought it was odd that the controller had not pointed out the traffic. At approximately 5;500 ft; after the traffic was no longer on my NAV display; the controller informed us; you were supposed to maintain 5;000 ft on the SID. I manually stopped our climb; disconnected the auto throttles and began to descend back to 5;000 ft as the controller then cleared us to climb and maintain 16;000 ft. I watched; then verified as the F/O set 16;000 ft in the MCP altitude window.I engaged the autopilot; re-engaged the autothrottles; selected and verified VNAV SPD and LNAV; as we began climbing again.We were the handed off to the next controller as we continued our climb.

Data retrieved from NASA's ASRS site and automatically converted to unabbreviated mixed upper/lowercase text. This report is for informational purposes with no guarantee of accuracy. See NASA's ASRS site for official report.