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This is a series of posts on Contractor Life. The others are:
1. Life as a Contractor
2. Show Me The Money!
3. Office Politics
4. Admin Overhead
5. Time is Money


I've been a project manager for many years now, and a good part of that time has been as a contractor. It took me a long time to make the decision to become a contractor, and I weighed up a lot of the pros and cons. Unfortunately, we're now in an economic climate which means many of you may be thinking of contracting because you are being forced into it - times are tough, and people are finding themselves without a job.

But being pushed into making a decision doesn't necessarily mean it is a bad one! This series is going to look at what I have found to be the differences between being a contractor, and being a permanent employee. It'll look at the things I enjoy about being a contractor, and yes, the things I miss about being a permie. Hope you enjoy it!

In this first installment, I am looking at what initially attracted me to contracting: Variety.

I love working on projects. It always feel great to me to be brought into a new environment, with a new problem to solve, a new puzzle to put together. To me, the sense of the new is one of the things that attracted me not only to contracting, but to project management itself.

Let's face it, there is no better way to see different parts of your organisation than by being a project manager. Not only are you likely to work on projects from different areas of your business, but you will also need to work across departments and functions, and so get an exposure to them.

This works well within an organisation, but the possibilities as a contractor are so much wider. As a contractor, with the very marketable and transferable skill of project management, you can start to work not only across one company, but across the whole of that industry, and even across more industries.

This is something that really gets me excited. I know it sounds a bit, well, nerdy, but finding out about whole new industries is fascinating. In just my last few roles, I have learnt about the inner workings of the telecoms market, computer support for blind and deaf users, and the process of gaining planning permission for a listed building!

This one is going to have to go down as a definite plus for contracting, at least as far as I am concerned. It has broadened my horizons and given me exposure to industries, companies, and most importantly, to people that I would never have had the chance to meet otherwise. And that's got to be a plus.

Next week, I'll be looking at the root of all evil, money. See you then!

Trevor Roberts blogs at Project Management Guide (www.projectmanagementguide.org) about all aspects of project management. You can also follow him on Twitter at twitter.com/trev_roberts.

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Tags: contractor, employee, permanent, variety

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Comment by John Pryor on February 24, 2009 at 3:34pm
I, too, prefer being an employee. There's one aspect I haven't seen covered here, and that is dealing with contracting companies. I don't know how it is elsewhere, but in the US there are essentially two ways to be a contractor: You can be a freelancer, working for yourself, or you can work through a company that finds contractors and assigns them to contracts. If you go the second approach, as I have, what you need to know is that the contracting company has absolutely no loyalty to you and feels no obligation whatsoever to find you the next position once your contract has ended. I had thought working with a contracting company would be a good compromise. They offer some benefits and some sense of community and they could do the searching for contracts for me. It sounded great. Then I took a contract and was very successful and upon completion the contracting company said that was great, thank you, and bye-bye. One would think it would be to their advantage to continue to use you, since you are a known quantity and they don't have to go through the gyrations to establish a contract relationship with you, but no. Instead, they drop you instantly. You can live with this, but you need to be aware of it.
Comment by Trevor Roberts on February 23, 2009 at 12:41pm
Hi everyone,

Thanks for some great comments! I'm glad to see everyone discussing their pros and cons, and their own viewpoints about where it is best to be. Everyone is going to have their own idea of where they want to be, and that's good - this series tells you about where I see things. And yes, as you can tell from the fact I am still a contractor, I do enjoy it, and I do, on the whole, think it is the best place to be - for me.

There have also been a few specific questions about how to go about contracting. Now, this is going to depend a lot on where you are in the world. What I am going to do is wrap up this series in a few weeks time with a short guide to how I go about contracting, and how I set everything up.

Again, thanks for all the comments!
Comment by Christal Corliss on February 20, 2009 at 5:42pm
Are you working through a contract house or strictly running as an independant? My husband thinks I should "put out a shingle". I'm worried that without a great deal of effort I will spend more time on the bench then working (with pay) if I do this myself.

If you are working with a contract company, which is better/worse?
Comment by Annie Muller PMP on February 18, 2009 at 3:31pm
I've had a 50-50 split between contractor and full-timer roles over the last 20 years, ranging from technical programmer & infrastructure analyst to senior project management roles. Bottom line, We're all contractors, no one is exempt from significant change that lead to layoff, though we can cushion that blow when it comes by planning contingencies and risk management. We're PM's - - this is what we do, if we don't then we've done ourselves a disservice to our own credentials and profession. We shouldn't just be managing projects for employers or clients, we should be living the life by which we were certified to our own careers and marketability.

Full time or not, whether we like this or not. This is the new workforce model - mobile and virtual. Permanent is only permanent until the next waive of layoffs or cutbacks, so know the company history - how often they get into financial trouble and how often layoffs, mergers and acquisition occur. Everyone is fair game in a RIF or budget cuts. This said, I am still an advocate of full time work, all things being equal and provided expectations or benefits or professional growth potential are clear on both sides. Contract fills the gap and if it's the difference between eating and not having work to pay the necessities, then I'd hop on consulting - you never know where your next opportunity will come from. Contracting is one way to build your professional network, get a full time role eventually, a way to check each other out for the long haul, or continue to grow in your profession that offers best variety.

***There are pros and cons as well as considerations, depending on your vantage point. So here goes.


1 - your the hired gun, hit the ground running is what you are there for as a consultant. Fast paced. Forget orientation. you were brought in because you have skills that none of the internal staff meet.

2 - have thick skin - it's a love hate relationship in this world. Are you ready to get shot at from all sides and take the hit. can you stand to your own integrity, conviction and professional ethics regardless of the outcome.

3 - pay scale can swing north and south, be ready to adjust and set aside according to your lifestyle

4 - W2, corp to corp or 1099 - check with your accountant, know your pay scale tolerance to cost of living. there are tradeoffs. decide on a sliding rule pay scale for each. do your homework and market analysis

5 - on benefits - some companies have bad benefits even if you are a full timer or permanent that it isn't worth it to be permanent, you will need to shop around for health care and be diligent about investments. Control your own destiny. Check with your insurance agent and accountant, talk to other colleagues

6 - save for a rainy day, severance is not likely, unless you end up w-2 with salary, benefits and bonus. it happens.

7 - unemployment benefits - W-2 you can collect, someone else does the work upfront. 1099 or corp to corp - you are responsible for the work, tax estimates (or tax accountant) etc.

8 - on overtime work, i've worked 60-80 hour weeks as a consultant and seen many in house employees slack off or use the age old excuse I don't know how to or that's for the consultant not for me

9 - permanent vs contractor attributes - don't kid yourself, internal employees can sometimes want a free ride for least amount of work or are so convinced of their excellence until contractors come in and prove them wrong. Contractors are brought in to innovate what the internal staff cannot and in general want to get in and move on upon completion of our assignment specifications. Our loyalty is to what the company needs to achieve quickly or in a short amount of time, not to culture or politics - we're interested in doing the right thing even at the risk of putting myself in the line of fire

10 - contract agreement - read the fine print, exit clauses, liabilities etc. see a lawyer if you have to

11 - network with other consultants - lessons learned are key from those who've been there before.

12 - there are pitfalls in the consulting world, do you have what it takes to adapt and change quickly and to sniff out before the cheese gets stale to move on to the next opportunity.

13 - the greatest challenge in this is you will wear multiple hats to achieve what you need to achieve - from sales to technology expertise as an independent consultant

14 - know what your getting into - trust but verify! do your due diligence. this isn't for everyone. Some are better at it than others.

15 - there are employers who value and leverage consulting experiences - it shows that you are capable, adaptable to any challenge infront of you, so the idea that employers do not offer challenges is really opportunities, so know when it comes your way and act on it or explore it. Carpe Diem!

These are just a few of the considerations you need to think of when weighing in the decision 'to do' or 'not to do'....good luck....Thanks.....Annie M.
Comment by peter hockenhull on February 18, 2009 at 2:23pm
Responding to the general thread and Venu in particular, the grass always seems greener on the other side and contradictorily, more virtuous wherever you choose to be. I have known contractors who give the word 'mercenary' a bad name and those who realise that you are put in to add value. The moment you cease to add value and to contribute less than your permie counterparts is the moment you should be ousted. Most contract PM's are there to get a job done and realise if they do and take a problem away from their sponsor/customer, then they may get return business. I have rarely been in environments where permanent PM staff work the extra hours although ironically they expect the techy resources to do so and make up for poor planning and risk assessment and mitigation. As far as I am concerned I am there to do a job and once finished i have to effectively produce my own business case as to why the client should want me again.

Finally, looks like at the moment everyone in a job, permie or contractor, should stay put - I am seeing the contract market under severe threat - less than half the number of jobserves as in the later stages of 2007, and those are primarily public sector or perhaps banking remedial work. In times like this a lot of cons seek permie roles. Indeed in downturns you are seeing companies like IBM and others who use cons as if they are employees to the client offer fixed term contracts ie permanent salaries for eg 6 months with none of the associated benefits such as pension/healthcare etc. This has always happened as it is a market driven economy and permies, if you are considering contracting, be aware that the key differentiator is that contractors take far more personal risk in their activities (need liability insurance, a cash buffer against 'between times' and the possibility that for no fault of their own their contract can be terminated either on notice period or even less if the client wants to be brutal) and generally have no one to rely on (agencies generally siding with the client, who pays their wages) but themselves. It can be brutally dog eat dog - switch at your own risk!!!
Comment by Joe Dunn on February 18, 2009 at 8:18am
I have been considering being a contractor since in today's economy full-time jobs aren't plentiful and the ones that are available are painfully specific in required experience. I think that if you get into an organization as a contractor and make yourself valued, they are either going to hire you or find another contract position for you. I am looking forward to reading the additional areas on this topic.
Comment by David E. Lewis, PMP, CSM on February 18, 2009 at 8:10am
I enjoyed not only your article, but also all the view points that everyone else have provided. I am currently considering the jump myself. Thanks and I look forward to your next article and everyone's response to it.

Best Regards, Dave L.
Comment by Andrew Macmaster on February 18, 2009 at 5:06am
I am interested in this topic as I have just set up my own company to carry out contracts through. I like the idea of variety. There is little stability in project management as an employee so why not give contracting a go as it puts some control over your career back into your own hands.

Taking Venugopal's comments into consideration, company policies do take time to take on board but should be outlined at the beginning of the contract. Processes in a matrix organisation -These can vary from project to project so would require a learning curve from both employees and contractors.
Motivation. As a contractor's reputation is paramount to getting more contracts then surely this is motivation enough for them to be motivated.
Work Hours. If contractors get a bonus for delivering on time and on budget then they will be more likely to work extended hours. It is a case of getting the contract terms right at the begining.

I look forward to more of this article. It has generated interestin points already.

Rgds

A
Comment by John Paguirigan on February 18, 2009 at 2:10am
This is a good topic.. I really like this topic because I'm thinking about this a lot... for quite some time..
Comment by Tim Connor on February 17, 2009 at 9:24pm
Just my opinion:

I appreciate Trevor’s posting, and I agree that contracting is a good fallback to perm employment, but don’t thing it would be a good idea to quit your day job and take up contracting without first considering all the pros and cons. I see only pros of contracting in this posting. I am sure the rest is to come so forgive me for sharing.

From over 20 years of experience in project management in employee and contract positions, I prefer being an employee. I have difficulty seeing the benefits of contracting over employment; accept when employment opportunities are not available.

As an employee you are considered a part of a team. If you want to challenge yourself, the company will be glad to provide you with opportunities to do so. As a project manager every endeavor will be new, as projects are new and temporary endeavors by definition.

As an employee you also get medical benefits (for you and your family), 401K with possible matching, in some cases pension, bonuses, stock options, and paid vacation. You will get none of theses in a contract position, and hourly rates I have seen for contracts don’t compensate for the salary and benefits of full time employment. Medical benefits may not be an issue if you have a spouse on employee benefits, at least until at least he or she is let go.

Contracting also presents other challenges to consider:

- Accounting for income taxes, not done by W2 employer; you may need an accountant
- Marketing for next position. Most employers try to place you in a next project if possible
- No severance at end of contract, as from employers sometimes
- Legal obligations on contract to yourself, not the company: you may need liability insurance if self contracting; employers assume this responsibility.

If you are not challenged in a position with an employer you may not be in a true PM positon.

Best regards,

- Tim

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