Subcontracting

[SUnderwood]

Hello all,

I need some assistance with subcontracting arrangements to my current employer, and hope someone could help out.

I'm currently in full-time employment developing an order scheduling database and undertaking all IT support for my employer. In a few months my circumstances will be changing and I will not be able to work full-time, which provides me with the opportunity to suggest sub-contracting to my employer for IT and development work - for which I am sure he would prefer to employing somebody new.

For me this is an excellent opportunity to increase income on an infrequent or sustained basis, whilst my employer will gain security in IT support whilst lowering overall costs. I would like to present him with the idea soon, but I am unsure what consideration should go into the agreement we will make.

Firstly there are the services, from development to hardware failure resolution to product prospecting and procurement. Secondly there is the money aspect; is it best to be on a retainer fee for a fixed term with travel and hours worked paid in addition, or no fixed term with higher paid working hours; also different services require different skills (development, network installation, emergency problem solving) and hence, possible, different prices.

I have a few structures in mind, but I would like to know what other people have been through to gain a idea of a good sub-contracting model for both our purposes.


In advance, your suggestions are gratefully received.

Sean

 

[mmorancbt]

First, regarding your rate. Your rate should reflect the overall value you bring the company. It creates administrative hassle for you and opens the door for disputes if you must track every change in type of work performed over a given time period.

In my opinion, you opt for a proposal that provides you a fixed income based on a set but small range of hours (let's say 20-24/weekly). Hours above will be billed accordingly at a prevailing rate.

You bill against the retainer and the client pays on a weekly basis. The retainer is, in affect, never touched until the client decides to end the relationship and then it is used to pay final billing.

Good luck.

Matthew Moran
The I.T. Career Builder's Toolkit

http://www.cbtoolkit.com

 

[SUnderwood]

Thanks for you quick response, Matthew.

If I may I would like to get a clear example in mind.

Say we agree on a rate of £25/h for 7 hours as an ongoing retainer paid weekly. If I were to work for a given week, 7 hours would be included, whilst hours above these would be paid the following week in addition to the normal 7 hour retainer.

I would think the only occasion for a change in the prevailing rate would be exceptional circumstances - unsociable hours or emergency calls.

Regards

Sean

 

[mmorancbt]

You can definately work it that way. It becomes kind of semantic. What I do and my company did on longer term projects was to have the client pay us a retainer. We then billed them normally, never showing the retainer as being reduced or rebilled. The retainer remained (like an escrow account of sorts) until the arrangement was altered or we stopped doing business.

If the client took too long to pay a bill, we would then pull from the retainer. Slightly different than a lawfirm retainer or traditional retainer. Now, your rate can be contingent upon a 10 hour weekly minimum or 5 hour weekly minimum. Whatever works. The retainer, in my opinion, should be based on at least 2 weeks of work at a minimum hours/minimum term commitment.

For example:
Client agrees to pay a "retainer" of $250, which is based on 10 hours at $25/hr.
He also agrees to provide at least 5 hours/week of work at the prevailing rate. Payments are also made weekly.

Ret. $250
week 1=7 hours @ $25/hr = $175
You bill client $175
Client pays $175
Ret. remaining: $250
Week 2=4 hours @ $25/hr. = $100
You bill client $100
Client pays $100
Ret. remaining: $250

This, of course, assumes you are basing the minimum hours weekly on a two week average so that in week 2 the client is not below the required time because over 2 weeks they had you work 11 hours.

If the client, in 2 weeks is going to have you work less, you should actually notify them (based on scheduled time by Wednesday of the 2nd week. Perhaps offering some maintenance or other work that never gets completed. Otherwise, you still bill them the time needed to get to 10 hours over 2 weeks.

I hope that makes sense. I simply create a spreadsheet with 2 week periods and plug my hours in for the weeks as I work them. I the totals do not add up to the required, I notify the client.

FYI: Being an arrogant American I converted your symbol for the non U.S. currency to dollars (actually I don't know the ascii combo for me to write that).

FYI revisited: This is one way to work it. There are others and certainly work with the client to find what is satisfactory. However, also do not get in the business of funding the client's business. Do not get into drawn out payment cycles. And understand that research into new technologies is part of your value - not something you generally provide for free.

A lot of new contractor/consultants make the mistake of feeling sorry for the client. I'm not above adjusting billing when appropriate but just don't sell yourself short.

That's all for now.

$250 Matthew Moran
The I.T. Career Builder's Toolkit

http://www.cbtoolkit.com