Specing up work!

[DadSoftware]

I'm a newbie contractor and been doing at it for only four months. I'm directly contracting with the client and no agency is involved. My job currently involves clearing a backlog of bugs, nothing too exciting there! The company I'm working for is in the same sector that I have worked in for over a decade - so have a lot of experience with their client base as well as the type of application that's being developed.

After getting my head around their application, I proposed some enhancements and demoed my ideas to the director/architect and other senior developers on the team. The director loved the ideas and has shown a keen interest in implementing the work. We’ve had a chat and I estimated the work to take around eight months. My initial thoughts were when I simply renewal my contract at the beginning of April, we would renegotiate and simply carry on from there!
However, and completely understandably, the director wants me write up a simple spec with a timeline and estimated costs for the work. So simple put I wouldn’t be on a day rate anymore but bill for a whole project.

I’m a little unsure with exactly how I would proceed with this! Being only a recent contractor I’m now currently being asked to spec up the work and come up with a cost! A simple formula would be to charge my day rate for the 8 months + plus 20%. That sounds reasonable as if the work takes longer I would obviously only get paid for my original estimate.

I know I probably sound very naïve here! But not sure where to start or where go to with getting more info! The director is sympathetic and is guiding me through the process, we have developed a good working relationship. I of course need to get as much impartial information as possible but just don’t know where to being, not having an agent and my accountant couldn’t advise me at all… hoping someone on here can point me in the right direction!

Many Thanks
DS

P.S. Thanks for all the contributors on here, made my transition into contracting so much easier!

[mdhd]

When specing, don't forget how you would deal with bugs/issue that come after final release. You might have to factor in warranty/non-warranty issues. Make sure you clearly state that too. All the best.

[oracleslave]

Some useful answers here

http://forums.contractoruk.com/busin...-contract.html

[northernladuk]

Erm.. I'd be very careful here. There is so very fundamental mistakes or oversights here. Thinking the agent might have helped is beyond naive. He'd have pulled your handcuff and scuppered the whole thing and your accountant does your books.

The director is probably looking for a price lower and quicker than your day rate as well TBH. You've offered him more with a dose of uncertainty on the top.

Work out how long it will REALLY take you first of all. Why not charge him more and do it quicker? Can you get a cheap sub in to get the costs down but keep your profit the same while you are doing something else?

[Antman]

Check out the link supplied previously, lots of good information there. As well as all the caveats mentioned, it needs to be said that it is a great opportunity, it could move you to away from being a bum-on-seat contractor into a proper b2b relationship (if that's what you want).

[OnceStonedRose]

I'd be very wary of providing a fixed price for a project unless I had undertaken and delivered this type of project myself a few times already and gotten a really good idea of what was involved.

As someone has already pointed out above, you'll need to take into account post go live support of the project and all that goes along with it, which might well stop you taking on a new gig when this one is "complete" as you may be supporting for a good few months later and taking/answering support calls in a new gig is not going to be easy.

[mudskipper]

Try and find out what their budget is - you don't want to come in at 50K if they think it's going to cost 100.

[dogzilla]

In my experience the total price of a project is usually double the day rates but that will be because there is a business behind the quote.

You as a one man band should stay away from a fixed price contracts unless you have lots of experience designing solutions and coming up with water tight scopes as well as writing water tight contracts.

Otherwise you should simply give them a detailed scope an estimated timeline, costs will be simply based on your day rate. Anything else is madness. Let them take the risk of the over-run, if they don't like it then they need to find a consultancy who will give them a quote twice as big.

[tomtomagain]

An eight month piece of work is going to contain a lot of uncertainty .... there is no way you could have accurately spec'd that piece of work.

Even if you have a decade of experience in the domain subject ..... in fact *especially* if you are a domain expert, because as "experts" we tend to brush over the difficulties and assume everything is easy and forget the fact that most projects go off course, not because of the technology, but because of the people involved, shifting corporate priorities and politics.

For me this would have to be T&M.

However you understand the client and operating environment so it's your call.

Thought : Can you retain the IP? If so then potentially you have the opportunity to get them to pay for you to build a product that you can later resell. Then you have the chance of building a different type of business.

[VectraMan]

WTS. I've done it, but only for a 4-week piece of work and even then I had a half-way milestone where I could invoice for 50%.

Be very sure about what happens at the end. You could finish the work only to have them keep calling you back to make small changes before they approve the whole thing and pay you. By then you might be working somewhere else.