Reply to: Milestone/deliverable based contracts

[d000hg]

This is much more of a proper B2B relationship instead of the traditional freelancing/contracting agency model. You'd probably need to approach/sell yourself to companies as a 'shop' than a freelancer?

Great scope to sub-contract or even hire employees too down the line.

[pr1]

When I used to write bid documents for the consultancy I worked for, we would price everything as expected and then double it.

Or think of a number and double that instead.

If you know they need YOU [otherwise they'll need to spend a lot of money and probably more importantly, time, finding someone else] then you can name almost any price

Alternatively if you know who you are bidding against then work out what you think they will charge and knock 10% off (if you think your competitor can do it cheaper than you are prepared to, just don't bid)

It's great for ad-hoc "additional" income but it would be very hard to gross the same amount averaged across a year vs "standard" t&m contracting

[Snarf]

You're right there about it being difficult to achieve unless working with the client directly, malvolio, but then how do I find the clients? How did you go about it, Snarf? (I've taken the delays from other parties idea on board Lance, thanks for that!)

Im direct with the client. Got the role through knowing people in the business improvement team from previous employment.

So far every role I have had since 2014 has been word of mouth or referrals, Ive not dealt with a single agency! Its looking like the next one will be the same as Ive just had a call saying that another company wants a system similar to the one Im doing for my current client.

Ill make sure that I get a better contract this time though!

[TheFaQQer]

The problem, as I see it, is the only way to win as a consultancy with fixed price is on small, short timescale projects (Great, I can increase my 'day rate' marginally for 6 - 8 weeks or whatever) or by massively loading the cost to account for the inevitable tulipe. Because of that, most customers don't really want fixed price because they (should, at least) know that's exactly what you're doing.

When I used to write bid documents for the consultancy I worked for, we would price everything as expected and then double it.

Or think of a number and double that instead.

[mudskipper]

I've done it with one contract. We agreed 3 prioritised phases - 50%, 30% and 20% payment. There was some flexibility in terms of adding stuff in/taking stuff away by mutual agreement. As others have said, you need to have a timescale for acceptance - in my case we agreed that any problems would be reported within two weeks of delivery, with six weeks 'guarantee' at the final phase (the work I was doing was geared around month end, so that gave them two cycles). From my POV it worked well; one of my more profitable contracts From their POV it worked well too - they have promised to send future work in my direction.

[northernladyuk]

Viewing it from the client side, the killer milestone is client acceptance. It can drag on for months and you are at the end of their dithering and change requests to get paid.

[MrMarkyMark]

Every time I look at fixed price work it doubles in price once you’ve added some margin for error (25%), the known unknowns (another 25%) then factored in unknown unknowns (33% on the total).

I’m happy to quote fixed price but any company with a clue should get an internal pm to watch the project and use t&m with a consultancy pm.

You know that.

[malvolio]

You're right there about it being difficult to achieve unless working with the client directly, malvolio, but then how do I find the clients? How did you go about it, Snarf? (I've taken the delays from other parties idea on board Lance, thanks for that!)

Actually I don't. The times I've had such a deal, they called me. Never underestimate the power of a network of ex-colleagues...

[eek]

Every time I look at fixed price work it doubles in price once you’ve added some margin for error (25%), the known unknowns (another 25%) then factored in unknown unknowns (33% on the total).

I’m happy to quote fixed price but any company with a clue should get an internal pm to watch the project and use t&m with a consultancy pm.

[MrMarkyMark]

Although great from an IR35 perspective, I always saw fixed price work as nothing but a headache. Even at the consultancy level, we would always prefer day rated work.

The problem, as I see it, is the only way to win as a consultancy with fixed price is on small, short timescale projects (Great, I can increase my 'day rate' marginally for 6 - 8 weeks or whatever) or by massively loading the cost to account for the inevitable tulipe. Because of that, most customers don't really want fixed price because they (should, at least) know that's exactly what you're doing.

Paperwork is all well and good, but now you're into a mud slinging fest and good luck if it all goes legal.

+1 work a lot in the OPs field funnily enough.

The amount of dependencies you would face can be very high.

[vwdan]

Although great from an IR35 perspective, I always saw fixed price work as nothing but a headache. Even at the consultancy level, we would always prefer day rated work.

The problem, as I see it, is the only way to win as a consultancy with fixed price is on small, short timescale projects (Great, I can increase my 'day rate' marginally for 6 - 8 weeks or whatever) or by massively loading the cost to account for the inevitable tulipe. Because of that, most customers don't really want fixed price because they (should, at least) know that's exactly what you're doing.

Paperwork is all well and good, but now you're into a mud slinging fest and good luck if it all goes legal.

[magicbuttons]

You're right there about it being difficult to achieve unless working with the client directly, malvolio, but then how do I find the clients? How did you go about it, Snarf? (I've taken the delays from other parties idea on board Lance, thanks for that!)

[Snarf]

if I could agree a price upfront for a specific piece of work then I could complete it and move on to something else more quickly than if I were just invoicing by the day.!

This was my thinking too, a few months working from home and a big fat cheque at the end.
My reality though has been that its harder to walk away. Normally I'd be able to give 1 weeks notice and leave a client now Im two weeks into the second phase of a 6 week development and its looking like it might go tits up again (See my post above) so I can either stick with the client until the project ends and put up with periods where I CANT work and they wont pay me * or cut my losses and loose the money for the two weeks that I have been working (12 hour days 7 days a week)...

* Someone else pointed out/suggested you should have penalties for delays caused by the client - I strongly suggest you do that - thats exactly what Im missing!

[Snarf]

Does anyone here have experience of finding and setting up a payment-by-milestone type of contract where invoices are based on phased deliverables, and if so how did it go?

All the listings on the usual boards are for x months at y daily rate, and if I did find a client that would go for it then is there an accepted way of divvying it up - as in x% upfront, y% at delivery of each phase and z% on completion - or a standard contract template used for this sort of thing?

I'm looking into moving towards this way of working, but I'm not too sure how to go about it and my searches haven't yielded much in the way of useful info. I'm not convinced G-Cloud/Digital Marketplace are the way to go, my work isn't generally cloud-based and I'm thinking in terms of public and private sector.

In the middle of one now and its a f**king nightmare.

Turns out the "spec" that I was given was more of a wish list than anything else.. of course we only found this out when the first milestone came up... So the first payment was OK but then we entered a period of doing nothing while they get their S**t together and work out what they actually need the system to do and what they are prepared to pay for.

I suppose my advice would be make sure that the milestones are clearly defined and achievable AND that the client has signed them off (by client I include all of the various people with your client who want their say! - this is easier said than done!)

[malvolio]

If you can do it, then you can forget IR35 as a constraint. However, it is difficult to achieve unless you are dealing with the client directly. Agencies are simply not willing to break their x months at y rate model since it buggers up their bonus schemes and general business risk protecting cashflow models.

The payment thing has been mentioned, but in your skillset can you genuinely define a set deliverable? If so, that's one hurdle removed.

Stage payments aren't an answer to IR35, and taken to extreme you may as well go with the traditional payment regime, not forgetting defining a stage payment point that is time based puts you back ino I35 lalaland.