Growth of an Engineering Contracting Business

[johnrees]

Hello,

I'm an engineering contractor, operating through a ltd company and I've been thinking about the possible options for trying to expand my one man (plus secretary) company. The main problem as I see it is that in order to be able to take on more business I would have to take on a member of staff or maybe subcon the work initially - not a problem in itself but mostof the work I get at the moment is due to the relationship I have with the client and I essentially get the work becuse they expect me to be the one carrying out the work, despite the standard right of substitution clause.

This seems like a bit of a hurdle and I'm just wondering if anyone has taken this route and can offer any advice.

Thanks,
John

[Wanderer]

I essentially get the work becuse they expect me to be the one carrying out the work, despite the standard right of substitution clause.

Find a package of work and then propose that you subcontract part of it but with you overseeing the work and taking ultimate responsibility for the delivery of the task. Start small and then work your way up. I'd always present myself as the front man and any subbies would report directly through me, not to the client.

Tricky one though - if the client rejects your proposal of a subbie then it looks bad for IR35.

[lukemg]

Got a mate who has had a perm employee for the last 2 years. Chap has never covered his costs during that time (100k all in). He has now handed in his notice and my mate has just found out he has contacted a number of his clients with a view to undermining him and stealing the business for himself....
HTH

[Fred Bloggs]

I think you'll find it really tough going to be honest. Presuming you're in engineering design, rather than manufacturing, there are many small design houses who are already seriously undercutting the larger EPC Co's rates substantially to take on smaller projects. Some of the larger EPC Co's have closed smaller regional offices as they can't compete. I have seen contract design jobs offered at these small design houses paying as little as £18/hour. If you're going to try to undercut them it will be tough and hiring someone who can be productive at rates like that is very hard. Think about paying peanuts and attracting monkeys.

[johnrees]

Thanks for the tips guys. I've also contacted business link to see if they've got any advice also.
I'm doing some work for a contract house at the moment and was actually shocked to hear what small profit margins they are making, and I know they have to pare their quotes right back with next to no contingency to win the business... So i know what you mean about it being a competitive industry. I think I would have to focus on a specialist area - Would be reliability type stuff, as that's where some of my main experience is and have taken on a small fixed price workpackage in that area before which worked out well and was relatively easy to scope. There are large consultancies specialising in this area but they are very expensive.

Thanks,
John