Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Want to up your consulting rate? Try overwhelming force.

30sleeps.com

Post reply on HN
Print view View original

11–20 of 29 posts

Re: Want to up your consulting rate? Try overwhelming force.

#11

Post by jacquesm »

patio11 wrote: post #10
jacquesm wrote: post #9

Earlier quoted context omitted.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

So my first consulting contract ended up taking 5 months (calendar time, not near 100% utilization) where I thought it would take about 1, due to a combination of "consulting learning curve", scheduling conflicts, and scope creep. Both my client and I are pretty happy with how it worked out. I charged him an hourly rate and quoted my rough estimate for how long the work originally in scope would take. When I ended up…

But you learned a lot, and I'll bet your next estimate will be a lot closer to the mark. A lot of this stuff is experience, both technical knowledge and knowing how to interview your customer to get as much as possible on the same page with respect to what's going to be built.

I think that alone is a source of a large part of the trouble, customers and suppliers talking at cross purposes during the negotiation phase.

I've mostly done 'fixed price' work, and I like it a lot because both the customer and you know what is going to happen and when a job will be done. It also sets a very good barrier against scope creep, because it means they'll have to go back to get approval again, whereas if they stick to the deal as made it'll be delivered on time and within their original budget. On metered time there is no such barrier.

Fixed price is good, if you only do hourly jobs try doing a bunch of smaller jobs on a fixed price basis to get more experience with estimating and negotiating.

Re: Want to up your consulting rate? Try overwhelming force.

#12

Post by jamesbritt »

jacquesm wrote: post #9
davepeck wrote: post #8

I've run a software consultancy for the past few years and wish to reiterate one of his key points: never accept a fixed-bid contract. Such contracts are incompatible with the creative and unpredictable forces of software development.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

    Not being able to do fixed bid work basically says 
    "I'm bad at estimating and don't know how to control 
    scope creep".
Exactly. Better to get that out up front, unless you really are good at estimating and know how to control scope creep.

Many consultants are not, and are better off not getting a job than getting a job that will end up monopolizing their time for grossly insufficient money.

If you are good at these things then fixed bids can be golden. You know what you're going to make, you know the time allotted, and surprises are few. But you better be sure about this.

Re: Want to up your consulting rate? Try overwhelming force.

#13

Post by jacquesm »

jamesbritt wrote: post #12
jacquesm wrote: post #9

Earlier quoted context omitted.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Exactly. Better to get that out up front, unless you really are good at estimating and know how to control scope creep. Many consultants are not, and are better off not getting a job than getting a job that will end up monopolizing their time for grossly insufficient money. If you are good at these th…

And you can almost count on the competition playing it safe and wanting to bill by the hour. So you are almost sure to get the job.

Re: Want to up your consulting rate? Try overwhelming force.

#14

Post by davepeck »

jacquesm wrote: post #9
davepeck wrote: post #8

I've run a software consultancy for the past few years and wish to reiterate one of his key points: never accept a fixed-bid contract. Such contracts are incompatible with the creative and unpredictable forces of software development.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

> Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep".

Hourly contracts do not preclude careful up-front estimates and clear statements of work. Fixed-bid contracts are no different in this regard.

That said, the industry as a whole is bad at estimating and controlling scope creep. The best of best practices (which we follow) and years of industry experience (which we have) don't always save you. We resolve this with our clients by noting that in the world of fixed bid contracts, unless the estimates are precisely correct, someone will come up short. In the world of hourly contracts, so long as initial estimates are in the ballpark, everyone gets good value. Our clients agree and come back time and again; we've been chosen over fixed bids on many occasions.

(Random aside: I imagine, but have no data to demonstrate, that in the world of fixed bid contracts there is effectively a normal distribution of "who won" vs "who lost." Outliers are probably dishonest or incompetent companies or consultants.)

Re: Want to up your consulting rate? Try overwhelming force.

#15

Post by jacquesm »

davepeck wrote: post #14
jacquesm wrote: post #9

Earlier quoted context omitted.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

> Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Hourly contracts do not preclude careful up-front estimates and clear statements of work. Fixed-bid contracts are no different in this regard. That said, the industry as a whole is bad at estimating and controlling scope creep. The best of best practices (which we follow) and years of industry exper…

If you do careful up-front estimates and clear statements of work then you're pretty damn close to doing a fixed price contract, why not label it as such ?

In my experience, those that do fixed bids and suck at estimating will build in unrealistic reserves to avoid getting burned.

If you are good enough to get as close as you describe it then you could simply underbid by a bit and feel good anyway, after all it's just a small percentage of the total amount that you're risking.

If you've built up a relationship using this model then I can see how you would win against fixed bids, does that happen as well when both you and the fixed bidder are in the same pricerange and the quality of the presentations are comparable?

Re: Want to up your consulting rate? Try overwhelming force.

#16

Post by kranner »

patio11 wrote: post #7

While trying 80 people and picking the best observation from the distribution is going to help a little, how about shifting the distribution first: a) Do something measurable. "Rails programming" is not measurable. "Rails programming... where I directly contributed two million dollars of yearly revenue attributable to a 3 week engagement" is measurable. b) Do it for rich people. (Sam Walton proves there is money to b…

>> ... RentAResource.com? ... most dehumanizing website name I've ever heard ...

I drew this comic once, to express my annoyance with the same thing:

http://blog.codeboff.in/2010/07/13/programmers-and-recruiter...

(It's been on HN before)

Re: Want to up your consulting rate? Try overwhelming force.

#17

Post by davepeck »

jacquesm wrote: post #15
davepeck wrote: post #14

Earlier quoted context omitted.

> Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Hourly contracts do not preclude careful up-front estimates and clear statements of work. Fixed-bid contracts are no different in this regard. That said, the industry as a whole is bad at estimating and controlling scope creep. The best of best practices (which we follow) and years of industry exper…

If you do careful up-front estimates and clear statements of work then you're pretty damn close to doing a fixed price contract, why not label it as such ? In my experience, those that do fixed bids and suck at estimating will build in unrealistic reserves to avoid getting burned. If you are good enough to get as close as you describe it then you could simply underbid by a bit and feel good anyway, after all it's jus…

> why not label it as such ?

We often work with early stage startups, where uncertainty is a fact of life. In these cases, both parties agree that hourly is preferable.

For mid-size companies, there is certainly less distinction. We generally give a bracket (+/- 7%) outside of which further discussion is automatically triggered.

> does that happen as well when both you and the fixed bidder are in the same pricerange and the quality of the presentations are comparable?

A great question, but unfortunately it's unknowable except through backchannel heresy. I like to believe our bids are simply always better. :-)

Re: Want to up your consulting rate? Try overwhelming force.

#18

Post by tptacek »

davepeck wrote: post #8

I've run a software consultancy for the past few years and wish to reiterate one of his key points: never accept a fixed-bid contract. Such contracts are incompatible with the creative and unpredictable forces of software development.

Get better at estimating, and please don't ever use the words "creative and unpredictable forces of software development" in front of a client. You may be able to avoid project rates in your market, but in mine, clients (a) want to pay for an outcome, and (b) want to know what they're going to end up paying.

There is a middle ground here; bill in person/weeks instead of by the hour (which, by the way, is probably an amateur signal), and structure your projects in terms of milestones that have economic value to your client.

Re: Want to up your consulting rate? Try overwhelming force.

#19

Post by byw »

jacquesm wrote: post #9
davepeck wrote: post #8

I've run a software consultancy for the past few years and wish to reiterate one of his key points: never accept a fixed-bid contract. Such contracts are incompatible with the creative and unpredictable forces of software development.

If you can't accept fixed bid contracts you won't be doing much work in quite a few places. Fixed bid contracts are the way vast segments of the industry work. Not being able to do fixed bid work basically says "I'm bad at estimating and don't know how to control scope creep". Of course you can do fixed bid contracts. But you'll have to make an ironclad arrangement about what is to be done within the scope of the con…

Out of curiosity, how do you define a solid scope ahead of time? What kind of details do you go into? What if the client asks you to tweak a feature that's within the scope, but ends up taking up significant amount time?

Re: Want to up your consulting rate? Try overwhelming force.

#20

Post by jacquesm »

davepeck wrote: post #17
jacquesm wrote: post #15

Earlier quoted context omitted.

If you do careful up-front estimates and clear statements of work then you're pretty damn close to doing a fixed price contract, why not label it as such ? In my experience, those that do fixed bids and suck at estimating will build in unrealistic reserves to avoid getting burned. If you are good enough to get as close as you describe it then you could simply underbid by a bit and feel good anyway, after all it's jus…

> why not label it as such ? We often work with early stage startups, where uncertainty is a fact of life. In these cases, both parties agree that hourly is preferable. For mid-size companies, there is certainly less distinction. We generally give a bracket (+/- 7%) outside of which further discussion is automatically triggered. > does that happen as well when both you and the fixed bidder are in the same pricerange…

> We often work with early stage startups, where uncertainty is a fact of life. In these cases, both parties agree that hourly is preferable.

Ah, yes I can see that, that was not clear from your initial statements, I thought you meant under 'ordinary' conditions as in when working with established companies.

> We generally give a bracket (+/- 7%) outside of which further discussion is automatically triggered.

How did you arrive at the 7%? Gut feeling or some kind of formula? (It's a funny number to pick, why not 5 or 10?)

> I like to believe our bids are simply always better.

Hehe, don't we all :)

Post reply on HN