Fixed Price Contract - How does it work?

[Lance]

It would be more than T&M but not double. I know this project very well, it is ideal for fixed cost work, I know exactly what the client wants and I can deliver it.

I am happy my current working arrangements put me outside IR35, and I have everything I need to deal with HMRC (read insurance).

If the client and I agree on working conditions that further puts us as far away as possible from an IR35 inside decision, why would this be considered an attempt to circumvent IR35 as long as the conditions are adhered to?

that in itself isn't a problem. But if the sole purpose for going fixed price is for IR35 reasons then I'd question why you would want the extra burden of commercial risk when the I35 risk is going to be the client's problem in two months.

[zonkkk]

that in itself isn't a problem. But if the sole purpose for going fixed price is for IR35 reasons then I'd question why you would want the extra burden of commercial risk when the I35 risk is going to be the client's problem in two months.

It will be their problem and currently they are still assessing the IR35 risk.

If they are not willing to take it as many others (e.g. decide to force umbrellas, etc), I have already told them I am not interested to continue providing my services.

At the same time I am being proactive and proposing other options.

I have already sent them an outside determination result based on the CEST tool, to which they only raised one question regarding hours (my contract states 37.5h / week being the estimated average number of hours required to attain the objective of the requirements). They seem to think that this would mean that they control the hours - which they aren't. I have had 20h weeks and 45h weeks. I have never requested holiday or permission to do overtime. I have just informed them upfront or simply booked the hours. I work from two different offices a few days a week and from home the rest of the time. I arrive and leave as I please, making sure I am always there when needed.

My other proposition to them is fixed cost contracts, for which I am willing to bear the commercial risk.

[LondonManc]

'cough' - handcuff clause?

Depends - can an agent provide that service (staged delivery contract).

[zonkkk]

Depends - can an agent provide that service (staged delivery contract).

I'll discuss with the agency once I hear back from the client.

[Lance]

It will be their problem and currently they are still assessing the IR35 risk.

If they are not willing to take it as many others (e.g. decide to force umbrellas, etc), I have already told them I am not interested to continue providing my services.

At the same time I am being proactive and proposing other options.

I have already sent them an outside determination result based on the CEST tool, to which they only raised one question regarding hours (my contract states 37.5h / week being the estimated average number of hours required to attain the objective of the requirements). They seem to think that this would mean that they control the hours - which they aren't. I have had 20h weeks and 45h weeks. I have never requested holiday or permission to do overtime. I have just informed them upfront or simply booked the hours. I work from two different offices a few days a week and from home the rest of the time. I arrive and leave as I please, making sure I am always there when needed.

My other proposition to them is fixed cost contracts, for which I am willing to bear the commercial risk.

All seems reasonable.
Make sure you agree a statement or work, that includes payment milestones, deliverables for each milestone, some form of agreed approach in the event of delays/changes (usually the ability to raise delay notices and change requests to the SOW).

If you have faith that the client will not mess you around.... and if the agency agree...... then you could be on to something.
IR35 doesn't really differentiate by the method of payment, but fixed price implies fixing at own cost, and the very nature of a SOW delivery is it's a contract for services. It also allows you to remove a named contractor from delivery.


Keep us posted how it goes.

[zonkkk]

They are willing to give me a fixed cost contract as a last option.

They've asked me again whether I would be interested to go umbrella if for some reason the CEST tool returns an unknown or failed result.
They would raise my rate and pay employer's NI contribution on top of that. I reiterated that I'm not interested.

However they now agree that they do not control my hours; but raised another point: do they tell me how the work is done, if I follow their quality process... which is a gray area.
They've also confirmed, that the contract they have with the agency, doesn't allow them to reject a sub except for lack of expertise - which is an automatic outside determination.

Anyhow the main man will run my contract and working practices through the CEST tool together with the company's IR35 'expert' in the next few days and we'll take from there.
But the idea is that they will do whatever they need to do for me to stay on the project, including fixed cost. Happy days!

[Lance]

They are willing to give me a fixed cost contract as a last option.

They've asked me again whether I would be interested to go umbrella if for some reason the CEST tool returns an unknown or failed result.
They would raise my rate and pay employer's NI contribution on top of that. I reiterated that I'm not interested.

However they now agree that they do not control my hours; but raised another point: do they tell me how the work is done, if I follow their quality process... which is a gray area.
They've also confirmed, that the contract they have with the agency, doesn't allow them to reject a sub except for lack of expertise - which is an automatic outside determination.

Anyhow the main man will run my contract and working practices through the CEST tool together with the company's IR35 'expert' in the next few days and we'll take from there.
But the idea is that they will do whatever they need to do for me to stay on the project, including fixed cost. Happy days!

It sounds like fixed cost is just a tool to get the outcome you both desire.
If they would accept a suitably qualified sub then there's no need to mess around with different commercial arrangements. They just need to understand, and then determine you as outside.

[zonkkk]

If they would accept a suitably qualified sub then there's no need to mess around with different commercial arrangements. They just need to understand, and then determine you as outside.

Exactly, fingers crossed...

[zonkkk]

Depends - can an agent provide that service (staged delivery contract).

I've just had a chat with them. They are flexible and will do everything needed to make it work.

[Paralytic]

I've just had a chat with them. They are flexible and will do everything needed to make it work.

Unless you spoke to someone at Director+ level at the agency, I'd take that with a pinch of salt. The first day of agenct training covers telling the contractor whatever they want to hear until proven wrong, then blame the client.