Where to start with consultant/contract job
oiler_head
I just got an oppurtunity to help a small company find, install and
configure a network and ERP system. while I haven't had too much experience
working with ERP systems, I don't believe it is beyond my capabilities.
The problem is that I don't know how much to charge. Here is the scenario:
Location about a 25 mi one way
No one has any real computer skill so they will need basic admin and
training help
No one really knows what they need
Some hardware is purchased with some more probably needed (at least they've
gone to Dell)
I'm currently unemployed and am having a hard time getting some work in the
IT supprt/admin/help desk field. I think this is a great chance to add to
my expereince and hopefully buid the relationship to something else.
any advice on what to charge and how to handle liability?
thanks
Michael C. Null
number.
Your high number is whatever the traffic will bear, but depends highly on
your experience
(something you didn't mention) and the market in your area.
I strongly recommend you use a Time and Materials contract rather than a
fixed bid type.
You do not know enough about the work at this point to be able to quote it
fixed bid.
Another item to add to the mix is using your last full-time salary (I'm
assuming that you are new to consulting) calculate what your hourly rate
was - Yearly salary divided by 2080 (the maximum number of working hours in
a year). Take the resulting number and double it, since you are paying all
of your own benefits and taxes. Hopefully this number falls into your high
and low range from above.
Write up a list of bulleted items that need to be performed and estimate the
number of hours that it will take to complete them. I initially estimate my
hours for tasks in an optomistic frame of mind. Then take the first set of
hours and double them. Be sure to add in time for learning new software or
hardware, testing configurations, rolling things out into production. In
addition, I would separate the initial work from the ongoing maintenance.
The initial work will get performed and rolled into production over some
"shorter" period of time (months) but the maintenance on the system is
ongoing and may continue for years.
Take this list and modify it so that the items listed will make sense to
your client.
Before quoting any price, get the client to approve (it may take several
revisions) the task list. Then you can give them and "estimate" - stress
the term, since at this point there is much you do not understand and cannot
give them a total number.
You will need a good contract, someone preferably an attorney to review the
contract and a scope of work. The task list mentioned above is the
beginning of a scope of work. This is agreed upon by both you and your
client and becomes a part of the contract. It is what you will do for the
client and what they will get at the completion of the project.
As far as liabilities go, that depends upon your client and yourself. Some
clients require consultants to obtain liability insurance and sometimes
errors and omissions insurance.
Check with the client. From your side, how comfortable are you in
performing work without insurance? You have to ask yourself this question.
Assuming that you are new to consulting, you will most likely be operating
as a sole proprietor (not incorporated). Don't forget that you will need to
be filing quarterly taxes or the IRS will get very nasty. See an accountant
about this. Or look into joining an umbrella organization. There are
several people in this newsgroup that run umbrellas.
Regards,
Michael
Thomas J. Raef
They offer backend services for consultants; billing, insurance, etc.
Then I would set your rate at $105 per hour. Now, when you tell the client
this, you're probably going to feel uncomfortable because you're out of work
and you'd really like to get this project.
State your rate and shut-up. Don't stammer or waiver. Leave the "umms" and
"uhs" out. Tell them "my rate for this project is $105 per hour" and SHUT-UP!
If they say it sounds high, don't respond unless they ask you a direct
question. This is going to be tough but you can do it!
Once you've got the liability and the rate out of the way, focus on their
needs.
Start asking questions about what it is they want. Start building your
knowledge base of what is possible by reading white papers about ERP and CRM.
Go to www.google.com or www.yahoo.com or whatever your favorite search engine
is and type in "white paper" ERP and see what comes up.
Read them all. Go to www.bitpipe.com and see what white papers are there. Also
search on "case studies" ERP and see what comes up.
This will give you the knowledge to know what questions to ask and will give
you the ability to teach them about what other benefits they might obtain by
this implementation.
This is exciting stuff and could lead you into a whole new world. You have an
incredible opportunity in front of you.
If you have any questions or would like to discuss this further please do not
hesitate contacting me.
Go get 'em.
Thomas J. Raef
20 year computer consulting veteran and author of:
"Consultant's Guide to Becoming Gainfully Self-Employed" available at:
http://www.consultantsadvocate.com
oiler_head
I am new to consulting so this is all a little overwhelming. I have done
system planning before but not in this capacity. Have I implemented an eRP
system before - no. Does the client seem to care - not really. In fact I
met him as part of a social visit and when he heard that I had experince
with doing computer support and system support he mentioned that he could
use my help. He just doesn't want to do it himself and his daughter (small
business), while enthusuiastic, is also limited in knowledge.
After thinking about this a little bit, I think my approach to similiar to
what you have suggested. My hope is that I can break down the whole project
into small projects and determine rates and costs that way. When it comes
to the ERP part, I am probably going to need to turn it over to the software
vendor that is chosen and then act as an advisor for the company.
One though that did cross my mind was: Is there any value in arranging to be
setup as a contract employee by the company? My think is that it might
eliminate the need for lawyers and insurance and the client can bill use his
accountant to settle all the taxes and such.
Thanks for the advise,
pauls
Robert W. McAdams
>
> Assuming that you are new to consulting, you will most likely be operating
> as a sole proprietor (not incorporated). Don't forget that you will need to
> be filing quarterly taxes or the IRS will get very nasty. See an accountant
> about this. Or look into joining an umbrella organization. There are
> several people in this newsgroup that run umbrellas.
If he is a sole proprietor, what he should be sending in is estimated
tax payments (via Form 1040ES), and he only needs to file them for
quarters in which he makes money. The IRS also won't exactly get
nasty if he doesn't file them. In fact, nothing at all will happen
until he files his 1040 next year, at which point they will want to
charge interest because the estimated payments weren't made.
Bob McAdams
Fambright
Robert M. Pritchett - RMP Consulting Partners LLC
already has, see http://rmpcp.com/umbrellas.shtml for info about umbrellas
and a list <disclosure> including us </disclosure>. These services handle
exactly this set of issues for you so you don't have to hassle with
incorporating or take the liability exposure of sole proprietorship.
--
Robert M. Pritchett - RMP Consulting Partners LLC - member ICCA
Quality means doing it right the first time - http://rmpcp.com
Tired of hearing "W-2 only"? Work the same contract on our 1099 instead!
Robert W. McAdams
>
> any advice on what to charge and how to handle liability?
I would suggest visiting http://www.realrates.com and accessing the
real rate survey. This will give you an idea of what other
consultants are charging, and how rates vary depending on where you
are. Since you are currently unemployed and are trying to gain
experience with something new, you obviously shouldn't be aiming for
the highest rates, but you should also be aware that undercharging can
actually make it harder to get business, since a potential client may
perceive from this that you are unqualified.
A rule of thumb for relating consulting rates to salary is that if you
multiply the rate by 1000, you will get a rough estimate of the
employee salary that would correspond to that rate. For my business,
about 1/3 of the revenues go toward overhead, so my salary is only
about 2/3 of my company's revenues. Also, not all of my time is
billable, and I don't get paid vacation, paid holidays, etc. In the
employee jobs I've held over the years, my work year varied from 1920
hours (40 hour work week, 2 weeks paid vacation, 10 paid holidays) to
1589 hours (35 hour work week, 4 weeks paid vacation, 13 paid
holidays). It's unlikely as an independent that you'll be able to
consistently go as high as even the lower of these two numbers (once
you factor in marketing time, time needed to keep your skills current,
etc.). If you need to make 1 1/2 times your salary in 1500 hours, you
need to charge a rate that's 1/1000 of your salary.
I agree with Michael that you should charge time and materials rather
than a fixed fee. Fixed fees don't work well unless (1) the task can
be clearly defined in advance, and (2) you have had good experience in
the past with being able to accurately estimate how long it is going
to take to do something. I gather that neither of these is true in
your case.
The best way to handle liability issues is with a properly worded
contract. Even incorporation doesn't fully protect you against
personal lawsuits. You can also get general liability insurance
(which protects you against things like tripping over a computer
cable, knocking the computer on the floor, and totalling it) and
professional liability insurance, also known as errors and omissions
insurance (which protects you against damage caused by errors and
omissions in the work you do). Professional liability insurance is by
far the more expensive of the two.
Bob McAdams
Fambright
Michael C. Null
:)
Michael Null
Robert M. Pritchett - RMP Consulting Partners LLC
annualized income method and form come in handy when your profit is uneven
throughout the year.
--
Robert M. Pritchett - RMP Consulting Partners LLC - member ICCA
Quality means doing it right the first time - http://rmpcp.com
Tired of hearing "W-2 only"? Work the same contract on our 1099 instead!
.
Robert W. McAdams <r...@fambright.com> wrote in message
news:febb0da7.02042...@posting.google.com...
Charles Calvert
wrote in <2Z6x8.15214$uV....@nwrddc01.gnilink.net>:
>One though that did cross my mind was: Is there any value in arranging to be
>setup as a contract employee by the company? My think is that it might
>eliminate the need for lawyers
If there's a contract of any sort involved, nothing can or should
eliminate the need for a good attorney to help you make sure you're
getting a good deal and covering your rear end at the same time.
>and insurance and the client can bill use his
>accountant to settle all the taxes and such.
If you're going to be an employee, then you'll fill out a W2 and he'll
withhold taxes from each paycheck. If you're not going to be an
employee then he'll pay you directly (or your company) and you'll file
quarterly estimated taxes (or your company will write you paychecks
and withhold the taxes).
--
Charles Calvert
Moderator - alt.computer.consultants.moderated
Submission Address: ac...@celticwolf.net
Contact Address: accm...@celticwolf.net
Norman Buck
"Howard Lee Harkness" <hark...@suespammers.org> wrote in message
news:daodcucidp8u3dt3u...@4ax.com...
> tra...@aol.com (Thomas J. Raef) wrote:
>
> >Then I would set your rate at $105 per hour. Now, when you tell the
client
>
>
> 1) you got balls,
> 2) you write well.
>
Setting your rate with the client should be secondary after establishing
that you are the right consultant for the task at hand. Lead the client
thru what thier problem is and how you can resolve it effectively. If the
client is focused mainly on the rate they will find the lowest rate but not
neccessarily the the least expensive solution. I don't compete on rate
(sometimes I do clean up after the "cheap" guy).
I started working with a new client this week. He called me (a referral) to
resolve a problem. The question of my rate came up at the _end_ of the
first day with other admin questions (billing cycle, etc). A good
reputation and referrals are very powerful business tools.
Norman Buck
Coyote Technologies Inc
Thomas J. Raef
Charles Calvert
J. Raef) wrote in <90e130e8.02050...@posting.google.com>:
>The only thing more costly than an expensive consultant is a cheap one.
Did you come up with this or are you quoting someone? If it's yours,
may I use it? How would you like it attributed?
Doug
> On Fri, 03 May 2002 00:55:58 GMT, t...@consultantsadvocate.com (Thomas
> J. Raef) wrote in <90e130e8.02050...@posting.google.com>:
>
> >The only thing more costly than an expensive consultant is a cheap one.
>
> Did you come up with this or are you quoting someone? If it's yours,
> may I use it? How would you like it attributed?
It's a fairly common pattern. A quick search with Google for:
"The only thing more costly than" turns up the following hits on the
first page:
the only thing more costly than going to college is NOT going
The only thing more costly than stretching the schedule of an
established project is accelerating it
The only thing more costly than a drug user who skips work is one who
shows up
The only thing more costly than obedience to God is disobedience
(The latter is referenced to Mathew 11:30 "For my yoke is easy,
and my burden is light" :-))
- Doug
Thomas J. Raef
> J. Raef) wrote in <90e130e8.02050...@posting.google.com>:
>
> >The only thing more costly than an expensive consultant is a cheap one.
>
> Did you come up with this or are you quoting someone? If it's yours,
> may I use it? How would you like it attributed?
It's original and yes it's patterned after a commonly used style. You
may quote me. Just attribute it to www.consultantsadvocate.com.