Fixed Price Contract - How does it work?

[jamesbrown]

Yes they would get their 7% cut, when I deliver. I don't see why they would say no to free money.
They will bill the client when I send them the "delivery accepted" confirmation every (couple of) month(s) rather than a timesheet every week.

"Free money"

With T&M their cut is guaranteed. If you fail to deliver, they fail to receive their fee.

Might they not prefer to get a more compliant T&M person instead? Afterall, it's their client, not yours.

[zonkkk]

"Free money"

With T&M their cut is guaranteed. If you fail to deliver, they fail to receive their fee.

Might they not prefer to get a more compliant T&M person instead? Afterall, it's their client, not yours.

Well the client doesn't give a s**t about the agency, but apparently they will bend over backwards to ensure I stay on the project... so I was told, by someone privy to the big boys conversations.

[Paralytic]

Well the client doesn't give a s**t about the agency, but apparently they will bend over backwards to ensure I stay on the project... so I was told, by someone privy to the big boys conversations.

If that is the case, it should be a piece of p*** to get rid of the agency and work directly with the client.

I suspect you're falling into the often-seen trap of only seeing what the agency does from the contractor's point of view, not what load they take off the client, but do let us know how that conversation goes.

[Lance]

Yes they would get their 7% cut, when I deliver. I don't see why they would say no to free money.
They will bill the client when I send them the "delivery accepted" confirmation every (couple of) month(s) rather than a timesheet every week.

It’s not free money.

At the moment they are owed money by the client every day you show up.

Your proposal means that the agency now need to wait for you to deliver. They need to understand that delivery (currently they only know show/no-show). They need to be responsible for that delivery. They need to understand that delivery to obtain payment. They need to understand the test and acceptance criteria.
They are in effect now a consultancy.
They’re not, IMO, going to do that for just 7%.
Make their cut 25% and you might get some interest. You need to be looking at charging the client double what you would for T&M.

[WordIsBond]

If the client is willing to do what is necessary to keep you on the project, reach a three way deal with the agent to pay them off so you can go direct. Shouldn't be hard if the client is pushing it.

[zonkkk]

Your proposal means that the agency now need to wait for you to deliver. They need to understand that delivery (currently they only know show/no-show). They need to be responsible for that delivery. They need to understand that delivery to obtain payment. They need to understand the test and acceptance criteria.
They are in effect now a consultancy.
They’re not, IMO, going to do that for just 7%.
Make their cut 25% and you might get some interest. You need to be looking at charging the client double what you would for T&M.

I would have thought, they just need to understand the email from the client confirming delivery.
Also charging double T&M may raise some eyebrows at the client.

Interesting times ahead. Thanks again for your comments.

[northernladuk]

Well the client doesn't give a s**t about the agency, but apparently they will bend over backwards to ensure I stay on the project... so I was told, by someone privy to the big boys conversations.

And I'm sure this has been the case in many situations but when the finance people or legal people say no then the project will have no choice. If the agency start kicking up a fuss and pulling handcuffs out the legal/finance people get involved and for some reason they often don't agree how critical you are.

But as has been said get a deal between the three of you on the table and see what you can negotiate.

[Lance]

Fixed Price Contract - How does it work?

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Also charging double T&M may raise some eyebrows at the client.
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Then don’t do it.

Why would you accept the risks unless there is a greater payout?
Unless this is a thinly disguised attempt to circumvent IR35.

I’ve done fixed price work before. It’s challenging and if the client doesn’t understand it it’s even more challenging. The way to find out if they do is ask them how many fixed priced projects they have run recently. If they haven’t then don’t bother.

Client’s like the *idea* of a fixed cost as the risks are no longer theirs. It’s usually an illusion as a well managed T&M project will cost less (unless they can find a mug who will do fixed price based on a T&M estimate)
If you’re one person on a larger project how can you align your deliverables with the rest of the team?

I could go on.

[cojak]

Fixed Price Contract - How does it work?

I worked for a Project Manager who did the whole project (for a major telco) as a fixed cost business. He had all the risk and was a driver who could turn into a bully when the pressure was on. I could handle him and would work for him again.

When he wasn’t working he was floating around the Mediterranean on his yacht, which shows how much he earned. He was a very good project manager.

[zonkkk]

Then don’t do it.

Why would you accept the risks unless there is a greater payout?
Unless this is a thinly disguised attempt to circumvent IR35

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?