Are any of you consultants?

Parent Cafe
1

<p>In addition to my full time job I’m I’m about to start in the wonderful world of consulting. I will be working with someone who has a Federal contract but is not a subject matter expert. </p>

<p>I have a bunch of questions.</p>

<li>How much should I charge?</li>
<li>Is there a limit of how much you can get per day on a Federal contract. My wife who is still in the Feds mentioned something like $325.00 per day. Does anyone know if that’s right?</li>
<li>Do you get to charge for travel time?</li>
<li>If you’re on-site do you get a per diem and hotel and travel expenses? If so, is it at the same rate a Federal employee would get?</li>
<li>If you’re on-site is it a 24 hour day or do you only charge for the time you are actually working?</li>
<li>Anything else?</li>
</ol>

2

<p>I have hired a lot of consultants over the years. What you charge is pretty much dependant on the going rate for your kind of work. Yes, usually you are paid for travel time. Sometimes it is at a lower rate than your normal hourly fee. You normally wouldn’t charge for 24 hours if you are on-site. Don’t charge for sleeping time. You could either negotiate a per diem or get reimbursed for actual expenses (hotel and meals). I am not sure how the fact that it is a federal contract would affect it, but the person hiring you should know.</p>

3

<p>Hmmm… tough questions. I think you need an Ivy League consultant-consultant to help you sort it all out. Then, just copy whatever s/he does.</p>

4

<p>I don’t know anything about federal contract work, only private, but here are a couple of answers:</p>

<p>What you charge depends on your specific area of expertise, which could conceivably range from $100-500 an hour, depending on how badly someone wants your advice and counsel. Many consultants are paid $2000 a day, or a flat rate for a several day contract if overnight time is included (I know one public policy consultant who is paid $5000 for a typical non-profit or corporate weekend retreat).</p>

<p>Yes, you typically get hotel and travel expenses.</p>

5

<p>Driver–LOL.</p>

6

<p>tsdad - I used to be, in another life, a consultant to almost exclusively federal clients. But we are talking 1982 and prior, so I’m hoping someone else will chime in. If not, I will wrack my brain for as many answers as I can muster.</p>

<p>Things I do remember: there was a $limit on what one could charge per day. I would be surprised if it were only $325 as we were charging $200 (maybe more) way back then.
Ours was a day rate, not an hourly rate, so there was no “overtime” or 24-hour vs. 8-hour rate.
We could only bill the Feds for the same per diem as federal employees got. It was ridiculously unrealistic. It varied by city (you might be able to google it). As I recall, it was a specified amount for lodging and a specified amount for meals. We oculd charge actual and reasonable for local transportation, etc.
Our clients were HEW (see how long ago this was?) DofEd, HUD, HHS. When I met DH, he dealt as a contractor with DoD - got higher per diems and many other more liberal rules. Surprise!</p>

<p><em>all of this could have changed and/or my memory could be shot to he</em>* *</p>

<p>Back then, the Commerce Business Daily was the bible re govt. procurement. Here is the link (I didn’t explore it just now to see whether it answers any of your questions - makes me have a headache and want to lie down :o ): <a href=“http://cbdnet.gpo.gov/[/url]”>http://cbdnet.gpo.gov/&lt;/a&gt;&lt;/p&gt;

7

<p>I have both worked as a consultant and have hired consultants (although not from a government perspective). Travel expenses were always reimbursement for hotel/travel with a daily max for meals (reimbursement up to X). Rates are just totally dependent on expertise and the “rarity” of your knowledge. I have been priced out at $185 per hour and have been paid as low as $400 per day. My “standard” rate was $125 per hour, but every job is different.</p>

<p>I just remembered that I DID contract for the Federal Government, but in that case, I was getting paid for deliverables (technical writing). I’d make an attempt to figure out how long it would take me to finish a section, multiply by the daily rate (everthing there was a day-rate instead of hourly), and that would be the charge.</p>

<p>One thing to worry about is the timeliness of getting paid. It seems that in most gigs, I spent a significant portion of my time pushing to get my checks - sometimes as much as 45 days overdue.</p>

<p>Taxes are another area - a whole topic unto itself and remember that if you are independent, you will be paying a 15% self-employment tax on top of everything else (but wierdly, you will be able to deduct half of that from your income).</p>

<p>Health insurance was a costly monthly expense as well.</p>

<p>So you can either consult as a 1099 person or as a W-2 person (via a consulting agency that will do all of the taxes and other paperwork for a not-so-small fee - 15%-20%; in some professional services organizations, they will be getting the lion’s share, but those are big hourly rate charges - $200+/hr - that will be charged to the customer). In some cases they might even offer benefits.</p>

<p>One rule to remember in consulting: “No one likes to pay to be told they’re wrong.”</p>

8

<p>In planning, the term “billable hours” will be the mantra: allow about one-fourth of your year as “marketing time” (non-billable). You may have to pay your own costs to go to conferences and other trade shows.</p>

9

<p>Note: the $200/day back then was before overhead, adminstrative,benefits, etc. and - here comes the dirty word - profit. (I’ve forgotten the proper terminology).</p>

10

<ol>
<li>How much should I charge?</li>
</ol>

<p>That depends on your industry, skill set and experience, and the going contract rate for the skills - you might check some of the on-line job sites, some jobs advertise rates. Then too, it depends on the type of contract the firm has with the Federal agency - 8(a) firms can charge more, for instance.</p>

<ol>
<li>Is there a limit of how much you can get per day on a Federal contract. My wife who is still in the Feds mentioned something like $325.00 per day. Does anyone know if that’s right?</li>
</ol>

<p>Not to my knowledge. I know Federal clients who pay $1000 per day or more for executive level meeting facilitators, top-flight business process reengineering consultants, or specialilzed knowledge. </p>

<ol>
<li>Do you get to charge for travel time?</li>
</ol>

<p>Usually you can if you are contracting as your own firm and you have an EIN - but this is usually negotiable, with the contract, service, and distance as relevant factors. Typically, if you are within in local commuting distance, no. But you could strongarm your friend and try to get it anyway.</p>

<ol>
<li>If you’re on-site do you get a per diem and hotel and travel expenses? </li>
</ol>

<p>You can and should negotiate this if it is more than 50 miles from your home.</p>

<p>If so, is it at the same rate a Federal employee would get?</p>

<p>Per diem is usually according to the State Department guidelines for the city or area - used by the Feds as well as firms that contract with them.</p>

<ol>
<li>If you’re on-site is it a 24 hour day or do you only charge for the time you are actually working?</li>
</ol>

<p>Only for the time you are working - you usually either are working a ‘professional day’ (no overtime) or by the hour (paid overtime) - always best to negotiate the latter, naturally.</p>

<ol>
<li>Anything else?</li>
</ol>

<p>You are paid for your experience, problem-solving abilities, and the knowledge that you demonstrate in your work products - be convincing and confident, and be sure to either deliver what you say you will deliver on time or have a very good reason, in advance, why you will not make the deadline (e.g., the scope of the task has increased with the client’s blessing). If the assignment is somewhat different than you were told it would be (happens frequently) but you can do it, roll with it and give them what they want.</p>

11

<p>We charge about $2000 a day depending on complexity but we usually include travel and costs in that unless it is out of driving (4 hrs) distance. Then we negotiate a travel budget.</p>

12

<p>Wow. This is all so interesting. I never, never thought I’d actually make any money doing civil rights. But I have been asked by a contractor located at an insititue at a well know women’s college to assist her in working with a Federal agency (not ED) that wants to do a compliance review of two departments at a university that gets major play on these boards. There is a possibility of doing one or two more reviews. The agency does very lttle external civil rights, just in-house EEO, and is inexperienced in doing civil rights monitoring of their recipients. It involves Title IX, but not athletics. No ivys involved.</p>

<p>Will see how this turns out.</p>

13

<p>Does this mean you are moving away from Unreality?</p>

<p>Not sure about per diem fees, but I do have tips about tracking billable hours and reimbursables if you go that route.</p>

<ol>
<li><p>When we estimate a job, we often give an ‘upset’ figure; ie $175 per hour with a not-to-exceed figure of $XX,XXXX.</p></li>
<li><p>In business since 1986, we have been very successful getting hefty retainers to start the jobs. However, we usually credit the retainer to the first invoices rather than the last. Hefty retainers have the added advantage of forcing the client to be serious and stay loyal.</p></li>
<li><p>If you do billable hours, you MUST keep a fantastic timesheet. When billing by the hour, we list the hours by category on each invoice. The profit is in the detail.</p></li>
<li><p>The lowest segment of billable time is .25 hours. </p></li>
<li><p>We charge a 10% handling fee on top of all reimbursable expenses such as printing, car rental, hotel, petrol etc.</p></li>
<li><p>If the client has ‘repeat’ potential or ‘recommendation’ potential, we probably will not charge the travel time.</p></li>
<li><p>We include travel time for all local clients, including standard automobile expenses.</p></li>
</ol>

<p>Good luck.</p>

14

<p>I work as a consultant from my home, but I previously worked for ten years for a large engineering and scientific consulting firm. For larger firms such as these, the general billing rate of an individual consultant (at the lower levels) is about 4 times their pay rate. In other words, if someone is paid $50,000 per year, then their hourly billing rate would typically be set at about $100 (because there are about 2000 possible billable hours per year). This might seem like 300 percent overhead (because it is), but you need to understand that this is the standard practice for setting rates. </p>

<p>Where does all the extra money go? First of all, just as in a law firm, more experienced consultants receive a much greater percentage of the billing rate. Therefore, someone who bills out at $300 per hour would, if you calculated 1/4 of the generated revenue based on 2000 billable hours, would have a salary of $150,000, but it would likely be higher than that. Instead of only keeping 25 percent, it might be 35 percent or so. When I mention keeping a percentage of the billing rate, this is just an average because I am only familiar with salaried positions (although there are certainly additional bonuses). The higher paid consultants are expected to be, on top of consultants who can keep themselves billable, RAINMAKERS (i.e. people who generate enough business to keep a number of lower paid consultants employed).</p>

<p>It may seem unfair that a firm woud keep such a large percentage of the revenue you generate. That is why consulting firms have significant turnover. Those consultants who are rainmakers and have developed a number of contacts over the years are able to leave and start their own firms, or work individually and make more money. </p>

<p>The keys to a successful consulting practice are to do excellent work and then to build up your contacts. Most work comes through referrals, very little through cold calls. Hence, it might not be easy to pull yourself up by your own bootstraps. You might need to work for another consulting form to get yourself experienced and known to a number of clients.</p>

<p>When working for a firm, you will likely be expected to have around 1500 or more billable hours per year if you are a junior consultant. A senior consultant may be expected to have fewer billable hours, particupalrly if he generatesa lot of business that keeps lower-billing-rate employees billable (and generates money for the firm). It sounds easier than it is to generate business. You might think, if I can bill myself out at X dollars, then it would be trivial to generate 1000 billable hours per year, etc. This is frequently a bad assumption. Being competent is not the most difficult step in consulting – getting new business is.</p>

15

<p>It appears that the large amount of overhead is going to be paid to the college where the contractor works with the rest to be split between the two of us. It will be $52.00 per hour and the Federal agency has allocated 260 hours to the task. I need to make sure that my university doesn’t want any of it. Since we are a major research institution after their cut there wouldn’t be anything left to actually pay for the work to be done. I’m pretty sure I can avoid this by conducting the work on my own time and using leave when necessary.</p>

<p>Thanks for your help.</p>

16

<p>Good luck tsdad. But $52 per hour is pretty low! My 17 year old is getting $30 per hour for graphic design…That’s another rule for consulting–raise your rates!!</p>

<p>Also, politely disagree with pa’s theory of cold calling. We have gotten a number of HUGE projects (3000 acre resorts on the Paciifc) through persistant cold calling. We got our first client in a foreign country because I happened to tell our new banker that we were architects who needed work. He pointed us toward the banker for new Asian immigrant clients and the next week we met a Singaporean immigrant and secured our first job–worth $100k in fees. </p>

<p>The banker wasn’t a higher-up. Six months earlier, he’d been a courier.</p>

<p>My theory on building up business is that when you need work, tell everyone you meet that you are looking. Then, dial up your list of potential clients. </p>

<p>Worked for us for the last 20 years in three different cities and two different countries.</p>

17

<p>Good luck again TS. I just don’t want to read about you being busted for a phone call from work or something. Those Wisconsin papers are serious about going after any state worker doing anything on government time/equipment.</p>