Best of TE on Consulting Vol1

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Published by IEEE-USA.

Copyright © 2005 by the IEEE. All rights reserved. Printed in the U.S.A.Compiled and edited by Georgia C. Stelluto, IEEE-USA Publishing Manager, [email protected] design and layout by Gregory O. Hill, IEEE-USA Member & Electronic Communications Specialist

This IEEE-USA publication is made possible through funding provided by a special dues assessment ofIEEE members residing in the United States.Copying this material in any form is not permitted without prior written approval from the IEEE.



Table of Contents

Introduction ..........................................................................................................................................................4Successful Consulting (Part 1): How to Make Sure You Get Paid for Your Work ..................................7

Successful Consulting (Part 2): Fixed Price Versus Time-and-Materials

Consulting Contracts — Be Sure You Know What You’re Getting Into ....................................................9

Successful Consulting (Part 3): Don’t Give Away the Store Before the Job is Yours ........................... 11

Successful Consulting (Part 4): Make the Transition from Marketing

to Paid Consulting as Quickly as Possible ................................................................................................. 13

Contract Engineering: A Viable Career Alternative ............................................................................... 16

The Client Is Always/Never Right ................................................................................................................ 18

Low Bid Doesn’t Always Win ........................................................................................................................ 24Consulting from Baghdad .............................................................................................................................. 29

How to Start A Local Consultants’ Network ............................................................................................... 31

Prole of IEEE Consultants, 2004 ................................................................................................................. 34

Sample Consulting Contract .......................................................................................................................... 55



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Introduction

By coincidence, I was asked to write this introduction on the same day that I was traveling to do a six-

hour seminar “How to Start and Expand a Successful Consulting Practice” for an IEEE Section. Although Ihad done this seminar before for many other Sections, I always have a great deal of anticipation and alot of preparation to do — adding new material, updating old material, and adjusting the presentationto the needs of the group. I realized that many of the topics that the seminar attendees want to hear areideal to preface this publication.

With the current trends in downsizing, restructuring and early retirements, engineers in conventional em-ployment have become uneasy. Many of them are considering self-employment and independence. Thedemand for consultants is growing. Unfortunately, the skills required to become an independent consultant

are not taught in engineering schools. Many engineers are apprehensive about making the transition froma regular, forty-hour per week job with predictable weekly or monthly earnings to a situation where theperception is that income would be uncertain and irregular. Almost all experienced consultants were oncecompany employees. They made the change, and most of them will tell you it was the wisest career andbusiness decision they ever made.

I was an employee who had thirty days to make the transition when my employer forced me into aposition I did not want (a promotion and move to Germany, without my family). I was fortunate to haveclients immediately, and I was never without a client for more than a week over the next thirty years.

Experienced consultants will tell you that they earn much more than they were making or ever hoped tomake on a job. They enjoy signicant tax advantages. They will tell you how they learned to control their

own destinies and income so they were no longer controlled by the politics and whims of management.The work as a consultant is very interesting and technically challenging. The seminar attendees are always

interested in the details of how to make the transition smoothly, without loss of income and benets.

What are your reasons for becoming a consultant? I ask this question and listen carefully to the answers.Then, I ask: Are the reasons strong enough to provide the determination to fuel the transition? and Howcan the reasons be used to assure success?

Engineers are detail-oriented. So, then they ask: How do I know if I have enough experience to be aconsultant? What about incorporating? What about the name of my business? What about taxes andrecord keeping? What about contracts? Do I need an attorney? What about licenses? The need for busi-ness licenses depends on where you live and what you will be doing as a consultant. But wherever you areand whatever you do it has become important to have a Professional Engineers license.

Engineers like formulas. I show the attendees the derivation and give them an algebraic formula fordetermining how much to charge a client for their services. I also advise them to examine the surveyinformation available on the IEEE-USA website at www.ieeeusa.org/business/default.asp .

As in any other business, consulting is competitive. Other consultants will attempt to win the same assign-ments. Why will a potential client choose you over some other consultant? What factors do you need



BEST OF TE: ON CONSULTING

best of TE: on consulting 5

to consider to win the job? Consultants must learn what to say, what to do, and what to write. Andbehind the scenes, what should they be doing to improve their business?

Then, we come to a topic highlight. How do you nd clients? I am amazed at how many clients are

actively seeking consultants and how many consultants are actively seeking clients. Yet, they are passing

each other like ships in the night, with no efcient marketplace or clearinghouse. From personal experi-ence, I know that doing a mass mailing of resumes did nothing. I learned from my mentor that the best way

to nd clients is to do what no one else is doing, as long as I am comfortable doing it. Do the unusual. You

can literally come up with dozens of simple ways to nd clients, and to let clients nd you.

In this brief introduction, I can give you only one of the many methods I have used for nding clients.

In recent years, IEEE-USA has given us the pleasure and the gift of forming Consultants Networks. As a

means of continuing to provide more useful services to its members, many IEEE Sections have formed Con-sultants Networks. And in some cases, Sections have formed multiple Networks. The cost to establish andrun a Network is little to none, and IEEE-USA and the IEEE’s Alliance of Independent Consultants Networks(AICN) can help. At press time, we counted approximately 38 U.S. IEEE consultants networks, and about

seven networks outside the United States. AICN unites the U.S. networks, and the numbers of networks aregrowing rapidly in all Regions.

Many consultants have found that one of the most effective ways of nding clients is through an IEEE

Consultants Network. By networking with other consultants with the same interests and desires, we areconstantly exposed to the needs of potential clients and other consultants. I always close each seminarencouraging the attendees to start a local Consultants Network before we leave the room. Find out the

details in this publication.

Gary L. Blank, Ph.D.,Past Vice President, IEEE-USA Member Activities,

IEEE-USA Past Chair, Alliance of IEEE Consultants Networks,Consultant, Electronics & Control Systems

Director, Engineering Update Institute



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During “boom” times, some engineers branchout, leaving their company jobs to become “inde-pendent consultants.” During “bust” times, corporaterestructuring and layoffs swell the consulting pool.

And although many consulting engineers are prob-ably well prepared technically, many do not have

experience with the business aspects of self-em-ployment. This lack of experience can make someeasy prey for the clients who try to avoid payingfor consulting services.

How can you start and maintain a successful con-sulting business — and make sure you get paid for

the work you do?

Your Priorities Are Few in the Consulting

Business

As a consultant, you are responsible for accom-

plishing three main tasks:

Getting businessDoing the work satisfactorily

••

Getting paid

You’ll nd many lectures, courses, and books

available to help you with the rst two tasks. Rarely,

however, is the third task discussed. If you fail to get

paid for your work, you are worse off than if you

had failed to get the business in the rst place; you

will have spent valuable time doing the work and yet

end up empty-handed.

Can You Spot the Problem Clients?

Most clients with whom you will do work arehonest business people. The few who are dishon-est, though, can cause you enormous trouble, notto mention nancial setbacks. Of course, it is far

better to prevent problems from occurring than tobe forced to try to cure the problems after theyhave occurred. One way to avoid the problem alltogether is to know which potential clients may be

difcult and therefore best avoided.

Occasionally, you will be able to make a correla-tion between clients with whom you may experiencepayment problems with the type or location of thecompany. Attempts to avoid payment are more

Successful Consulting How to Make Sure You Get Paid for Your Work

by Nathan O. Sokal



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likely to be made by:

A small or mid-sized company controlled bya founder who has a personal monetary or

ego stake in the company’s net prot

A large company in which an executive’sbonus is tied to the protability of the proj-ect to which you are contributingA company with a manager who has apersonal stake in reducing the cost of theprojectA poorly funded company

Because the time you will spend trying to col-

lect from non-paying clients can be substantial, youshould make every effort to avoid getting into these

situations in the rst place.

Is the Check in the Mail?

Consider the following scenario:

You’re nearing the end of a project when yourclient stops paying on your invoices. He urges youto hurry and nish the project because (and consul-tants have heard all of these reasons before):

He must show the product at an upcomingtrade show

He needs the product for marketing pur-posesHis marketing “window” is closing

You point out that you have not received pay-ments, but the client assures you that all is welland:

The bill will be paid soon

The check is in the mailYour check will be cut in the next accounting

pay cycleThey lost your invoice, so could you pleasesend a new invoiceThe person who signs the checks is out oftown until next week, among other reasons.

•

•

•

•

•

•

•

•

••

•

•

You want to believe the client, and occasionallythese excuses might be true. But because the clientmay be taking you for a ride, take action as soonas possible. One effective time to speak up is atthe end of a project status meeting. After you and

your client agree on what you must do to nish the

project quickly and in good order, announce thatyou will stop work immediately until all outstand-ing bills have been paid. In one case I know of,the consultant got a check as he walked out of thebuilding.

Avoid Getting Short-Changed

Another way to avoid getting caught on thewrong side of the no-payment track is to get an ad-vance payment at the beginning of the project. This

advance should be sufcient to cover the amount

you expect to spend while you’re doing the work

before you get paid. No worthy client will objectto reasonable advance payment arrangements.The more strongly a potential client objects to yourreasonable attempts to ensure payment, the moresuspicious you should be of his or her real inten-tions.

Entering a consulting arrangement with your -nancial bases covered will help you avoid the frus-

tration — and nancial strain — associated with

nonpaying clients.

Nathan O. Sokal is president of Design Automation,

Inc., an engineering consulting business. Mr. Sokal

has been a consultant for 30 years.





In the traditional workplace, paychecks are almostalways guaranteed; sometimes they’re even takenfor granted. In the consulting world, however, it’snot always so simple.

How Do You Bid Them? Let Me Count the Ways

Sometimes getting consulting agreements andproject and pricing terms in place can pose a sig-

nicant challenge. Generally, consultants can bid

jobs in two — sometimes three — ways:

Some provide xed-price proposals. Thesearrangements bind consultants to the pricethey quote, often regardless of whether ornot the scope of work changes.Others work on a time-and-materials basis,

which offers a little more exibility, espe-

cially on projects that aren’t well dened at

the outset.Still others can arrange a two-phase agree-

ment, which allows them to do and get paidfor initial work that will help dene the

project better and then follow that up with

•

•

•

a more accurate, second-phase xed-price,

or time-and-materials effort.

Can You Survive the Fixed-Price Gamble?

It’s all right to submit a xed-price proposal if

you know:

The job is well-denedThe goals are achievableExactly what must be done and how long itwill take

If you don’t know these things, try hard to ne-gotiate a time-and-materials agreement instead.

Clients tend to give their most difcult and least

known jobs to consultants. These factors often lendthemselves to less clearly dened project require-ments, usually because no one knows enough about

the project to be able to dene clearly what needsto be done.

Often times, clients that insist strongly on a xed-

price agreement are aware of how difcult the job

is and that the specications are not yet complete.

•••

Successful ConsultingFixed-Price Versus Time-and-Materials Consulting

Contracts — Be Sure You Know What You’re Getting Into

by Nathan O. Sokal



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They could be trying to secure a rock-bottom price.

Be careful. If xed-price is the only way to go, and

you feel comfortable enough with the arrangement,just be sure to include a provision in your agree-

ment that allows for modications to be made to

the price as the statement of work or project speci-cations change.

Sometimes the Safe Path Is Through the Middle

Clients sometimes worry about time-and-ma-

terials arrangements, especially when they areworking with new consultants. Some perceive theseagreements as giving consultants carte blanche tospend their money without limit, with no assurancethat they’ll get any useful results for their invest-ment. One reasonable way to minimize the risksand serve the interests of both client and consultantis agreeing to a two-phase project arrangement.

Especially for jobs that are loaded with unknowns,propose a paid Phase I (xed-price, if necessary),

in which you will develop a good specication and

a preliminary design to meet the specication. Af-ter completing Phase I, you will be closer to havingthe knowledge you need to develop and submit a

more accurate xed-price or time-and-materials

proposal for the rest of the project.

Of Course, Always Get It In Writing

Regardless of the arrangement you and yournew client choose, make sure your agreement isin writing and signed, and that you have included

enough exibility wherever possible to accommo-date project modications. Then, have fun with the

new challenge!








Engineering consultants reap rewards and ben-ets few of their corporate-environment colleagues

can boast. Projects and challenges are always freshand different; they enjoy a degree of job exibility

that eludes most ofce employees; and they have

the opportunity to benet from participating in a

broader spectrum of activities with a diverse group

of professionals.

The grass isn’t always greener on the consultingside of the fence, however. Take compensation, forexample. In the traditional workplace, paychecksare guaranteed in most cases — even taken forgranted. In the consulting world, it’s not always sosimple.

Giving and Getting Something for Nothing

Consider the following scenario:

Your potential client asks you for a xed-price

proposal. They tell you that you have not yet “prov-en” your capabilities to them, which puts them at riskof not receiving an adequate solution. To reduce

that risk, they want you to demonstrate that youunderstand their unique problem fully by providing

them with a proposed solution. Your proposed solu-tion must have a sound scientic basis that will lead

to a reliable and reproducible product. You mustprovide them with a detailed technical explanationof your proposed solution’s operation principles,along with calculations that demonstrate you have

considered and accounted for the deleterious ef-fects of all tolerances, parasitic parameters, varia-

tions of parameters with ambient conditions andaging, and so on.

Or consider this variation:

A potential client’s project schedule is too tightto take a chance that you might fail, requiring the

client to nd another consultant to do the job over.

The client wants you to remove that schedule riskby demonstrating conclusively that your proposedsolution will meet the requirements.

You devise a really clever solution and submityour proposal. You get no reaction from the client.Every time you telephone them, your contacts are

“away from their desks” or “out of the ofce.” You

leave messages but your contact never returns your

call. When you write to the company, they don’t an-

Successful ConsultingDon’t Give Away the Store Before the Job Is Yours

by Nathan O. Sokal



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swer your letters. If you do nally catch the people

you need, they thank you for submitting your pro-posal and inform you that the company either wentwith another consultant or decided not to pursuethe project.

Don’t Get Set Up

What this potential client didn’t tell you — and itdidn’t occur to you to ask — is that staff had triedand failed to solve this problem for two years. They

were looking for a clever solution to their techni-cal problem. You gave it to them in your proposal

— for free.

While some companies want — and occasionallyget — something for nothing from consultants, oth-

ers look to consultants to provide an independentcross-check on a technical approach and on cost andschedule estimates submitted by their engineering

department. While most will enter into an consultingagreement for this evaluation, some companies tryto get it for free by asking for a formal, detailedproposal, with no intent of actually hiring you on asa consultant to do the work. Always be sure to askpotential clients about their previous efforts on theproject you are discussing you are discussing

When you get requests for proposals from com-panies that want you to demonstrate your techni-cal capability using their problem or project, referthem to your own previous work as your demonstra-tion instead. In other words, don’t give away thestore. You can provide them with a demonstrationof your thoroughness in thinking through solutions,and you can give them references for clients forwhom you’ve done similar work. But if the company

is looking for a free answer, you’ll never hear fromthem again.








Market, market, market. Many consider this

phraseology the consultant’s mantra. The benets

and perks of being self-employed are many; ex-ible work schedules, work variety, and the op-

portunity to rule your own destiny are but a few.But for independent consultants, work time does

not always translate to a paycheck. Considerableeffort goes into landing the jobs themselves, intomarketing expertise and services. This marketingeffort is an ongoing task for consultants, regardlessof how much work is actually done in house. Andit often requires consultants to take risks by givingaway time and sometimes even work at the front

end, with the hope that paid work will follow.

Consultants must be careful about what and howmuch they give away. The key to success here is

to move from a marketing effort to a paid consult -ing effort as quickly as possible. The followingscenarios — some real and some theoretical — il-lustrate some of the pitfalls that can beset unwittingor inexperienced consultants.

Scenario #1: Avoid Providing Free Consulting

One consultant described the following experi-ence: “I got a call from a fellow who wanted me

to evaluate some patents and tell him where to goto try to market them. He kept asking for lettersdescribing ‘what I would do for him,’ which I sub-mitted. I began feeling a little uneasy; I got theimpression he wanted me to let slip a simple opin-

ion as to whether the ideas were really technicallyviable, so I was excruciatingly careful not to giveaway any such information. When the guy realized

I wasn’t going to give him what he wanted for free,he dropped me like a hot rock.”

As a consultant, you must constantly walk a ne

line between helping a legitimate potential clientas part of your marketing and public relations ef-fort, and giving away work or expertise — whichyou are in the business of selling — for free. Try to

determine whether the request for help is legitimateor whether your potential client is simply seekingfree advice. When your marketing meetings anddocuments begin to provide useful information toyour potential client, professional fees have becomeappropriate; the potential should be dropped from

Successful Consulting Make the Transition from Marketing to Paid

Consulting As Quickly As Possible

by Nathan O. Sokal



ieee-usa eBooks14

the client reference, and you should begin gettingpaid for your work.

Scenario #2: Verbal Agreements Don’t Always

Stick

You contribute to a client’s proposal at no cost tothe client, with a verbal agreement that if the client

lands a contract, you will get a dened subcontract.

You have no problem with this agreement becauseyou have worked with the president of the client

company for years and know he is as honest as theycome. But what happens if the president suddenlyleaves the company? For starters, your long-termrelationship leaves as well, leaving you with a newpresident who is not obligated to honor that verbalagreement.

Regardless of how well you know a client, do notrely on verbal promises or agreements. Draw up a

written agreement. If you have a strong working re-lationship with the client, he or she will understand.Your written agreement should describe the termsof the up-front work to be performed and shouldspecify what will happen if the company decidesnot to issue a subcontract. At the very least, thisagreement should include a payment agreementfor your proposal effort.

Scenario #3: Don’t Assume Your Proprietary

Information Will Stay Proprietary

A consultant submitted a proposal to the headof a group in a large company. The consultant dis-

closed his proprietary technique for the potentialclient’s analysis. The two made a verbal agreementthat the consultant would receive a considerablesubcontract if the client received a prime contract.The head of the group retired and no one else inthe group knew the terms of the verbal agreement.To make matters worse, the company usurped theconsultant’s proprietary technique.

Be sure that anything you deem proprietaryremains proprietary. Specify in writing that propri-etary information, techniques or specications are

your property. State that they cannot be releasedin whole or in part to any other party without yourwritten permission, and that the client must use theminternally only for the purpose for which they weresubmitted originally.

Scenario #4: Potential Clients’ Emergencies

Need Not Cost You

Your potential client’s project manager is in apanic. You must start work immediately to help

get the project out of a technical crisis. The con-sulting agreement paperwork will follow later. Yourespond immediately, work days, nights and overthe weekend, and solve the problem. The projectengineer is grateful to you for getting him out ofan embarrassing hole. Two weeks later, though, youstill have not received a purchase order. When youcall the project engineer about it, he tells you that

management didn’t approve his emergency requi-sition for your services. Since you can’t submit aninvoice without a purchase order, you performedall of that hard work for free and you have norecourse.

It’s good customer relations to help clients in emer-

gencies, but be aware of the nancial risk involved.

Maybe your work can be considered an investment

that will lead to paid work later, but why take thenancial risk if you can avoid it?

Before you begin work, nd out whether the

people calling you has the authority to committhe company for the required amount of fundingwithout getting approval from a higher level. If so,have them issue a purchase order or requisition

to cover at least the rst few days of your work

— preferably all of it. And always get a copy ofthe paperwork; don’t rely on verbal reassurance

that it’s in the mill.

Don’t Give Away the Jewels for Free

Yes, you must market your services. And partof your effort may require you to do somethingfor nothing on occasion. But don’t give away your





jewels of ideas for free. Find the ne line between

proving your capability or offering help to developgood client relations and giving away your jewels

— and then walk that ne line.






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In today’s job market, employment opportunitiesvary tremendously. While most engineers still seekpermanent, full-time positions, many have turned toequally viable alternatives: contract engineering

and consulting.

What’s the Difference?

Contractors typically work through a contract

rm that assigns them to companies for particular

projects. The contract rms pay the contractors an

hourly rate and then collect fees (generally 40 to50 percent more than the contractor’s hourly rate)from the third party company. Perhaps one of themost attractive aspects of being a contract engineer

is that the contract rm nds assignments for you.

Sometimes, contract work opens doors that mightotherwise not be available to you. In fact, contract

positions sometimes lead to permanent full-timepositions.

As a consultant, however, no rm does your

marketing or administrative work for you. You are

on your own. You have to nd assignments, work

the assignments, bill and collect your fees and, ofcourse, continually market your services for future

assignments. Wearing all of these hats simultane-ously can create time management challenges,among other things. To survive, you have to be sureyou address these areas consistently. You can’t waituntil you’re nearing the end of one assignment to

begin looking for a new one, or to negotiate furtherwork with your current client.

As a consultant, you should explore incorporating

or establishing a sole proprietorship. Though notrequired, such business structures are worth consid-ering. One excellent resource for setting up yourbusiness is the IRS Small Business Resource, www.irs.gov/businesses/small/index.html.

Negotiating Power?

As a contractor, the company looking to ll assign-ment positions will drive your hourly rate. You canset a target rate for yourself, but you will have to

negotiate your nal rate with the contract company

representing you. Some contract rms set specic

rates, forcing you to “take it or leave it.” Often, the

Contract Engineering A Viable Career Alternative

by Paul Kostek





supply of engineers and the demand to ll positions

will play roles in the rates offered.

Tax Incentives for Contractors

One advantage you have as a contractor, rather

than as a consultant, will be per diem. Contractrms’ standard practice for the past few years has

been to split contractors’ hourly rates into salaryand per diem. For example, they may split a $55/hour rate as $33.00 in salary and $22.00 in per

diem. This practice can amount to a considerablesavings for contractors, since per diem pay is non-taxable income.

Retirement, Medical Coverage and Training

Some contract rms offer access to or provide

benets such as 401(k) plans and medical cover-age. Most often, though, you’ll have to pay for yourmedical and life insurance. Some rms also provide

training for contractors, as do some employers.However, most companies look for engineers withcurrent skills, so be sure to plan on developing skillson your own, if necessary. Monitor the industry to be

sure your skills are both current and in demand.

Do Your Homework and Be Prepared

Contracts can run from as little as 90 days to

three years or longer. In general, contract agree-ments are not rm, and contractors or the company

using them can end the agreement — or extend it — at any time. I’ve had six-month contracts turn intothree-year assignments and 12-month assignmentsend after just four months. Be prepared and be

exible.

Before accepting an assignment, research the

company you’ll be working for and check on theproject you’ll be working on. Learn the company’s

history with using contractors and be sure you knowup front how viable the project is. Also, part ofbeing a successful contract engineer is to develop

contacts within companies and with contract rms.

A good network will keep you employed. Finally,many contractors experience slow periods. Prepare

yourself for the down times by having sufcient sav-ings to tide you over.

Contract engineering can become a career in andof itself, or can be a stepping stone to move into

full-time consulting or a full-time position. Contract-ing offers exibility that will enable you to work for

different companies — perhaps even in differentindustries — and to develop a wide range of skills.And in times when full-time employment is not avail-able — or is not what you’re looking for — contractengineering can be a great career alternative.

For More Information

One of the best resources for anyone interestedin contract engineering is Contract Engineer Weekly

(www.ceweekly.com), which lists contract rms andopen positions. You can also consult the IEEE-USA

Consultants Network, a resource contract rms use

frequently.

Paul Kostek is a principal at Air Direct Solutions, a

systems engineering services provider. He has served

as chair of the American Association of Engineer-

ing Societies (AAES), as IEEE-USA President and as

Region 6 PACE Coordinator.



ieee-usa eBooks18

The expression always/never — in case youhaven’t worked with data dictionaries — meanseither always or never.1 This article really asks twoquestions:

Is the client always right?

Is the client never right?

In three decades as a management and com-munications consultant, I have come to believe thatthis paradox best characterizes the relationshipbetween consultants and clients. On one hand,clients are customers and, therefore, always right

and always entitled to what they want. (A client may be dened as the person or group who must

judge the engagement valuable.) On the other hand,clients are people with problems they cannot solve,

sometimes of their own making, and they may notbe aware of everything that needs to be done.

Teachers and mentors disagree on these theo-ries. In graduate school, teachers told me “never

believe the client’s assessment of the problem.” Butin a contract research lab, my superior advised me

that “the only failure of a consultant is to leave theclient unhappy.”

Granted, on some engagements, the issue neverarises. Such projects are well-dened, with specic

objectives and a shared perspective between cli-ent and consultant — simple software applications,minor grading and land management problems,small-scale facilities renovations. These cases donot resolve the question; rather, they point out thedifference between a consultant and a contractor.

Consultant or Contractor?

Most of the people and companies who call

themselves consultants are attering themselves.

Contract workers — people who hire themselves out,sometimes by the hour, for well-dened technical

services within uncontroversial specications — are

consultants in only the most self-promoting sense ofthe term. And like service providers in any business,they have little trouble accepting the maxim thatthe client is always right. Some contractors call thisThe Golden Rule — the one with the gold makes therules. Contractors are loyal to their contract and, if

The Client Is Always/Never RightThe Love-Hate Relationship Between

Consultants and Their Clients

by Edmond H. Weiss





they want more work, are slavishly responsive tothe demands of the client.

But consultants are different. In addition to be-ing loyal to the contract and client, they are also

loyal to the canons of their profession, the disciplineof science — a set of issues and criteria that arelarger than the current engagement. Often this setof loyalties is synthesized into the term profession-

alism or professional integrity . According to humanresources experts, these very factors make profes-sional employees hard to manage and motivate,

causing consultants to be in occasional conict with

their clients.

To illustrate the distinction ... A contractor can

monitor changes in airborne particulate matter; aconsultant might want a municipality to shut downits incinerator. A contractor can write code to spec;a consultant might recommend the phase-out of theobsolete program under repair. A contractor willdraw a plan for a new school; a consultant mightsee the school as too big, too small, or unnecessary.

Or, (a common experience in my own practice) acontractor will write and assemble the technicalproposal that the consultant would have advisedagainst writing at all.

Under the best of circumstances, the client andconsultant educate each other. In other cases, theysystematically misunderstand and misjudge each

other, so that neither is satised.

Always/Never Right: The Stereotypes

The Always/NeverRight construct is a usefulframework for exploring the patterns of expecta-tions, prejudices, and stereotypes that the parties

bring to the engagement. As Figure 1 shows, there

is a 2x2 array of possibilities corresponding to thevalue we assign to the judgment of the participants.Note that, not only does the Always/NeverRight construct apply to clients but also, reciprocally, toconsultants. Even after only one or two experienceswith consultants, clients develop expectations about

the character and behavior of consultants, oftenmore intense and problematical than the consul-tants’ expectations about the clients.

Notice also that arrows link Quadrant I with IVand II with III. It does not necessarily follow that,whoever thinks the client always right, will think theconsultant always wrong (or vice-versa), but expe-rience shows that these stereotypes do tend to becomplementary and, in their most extreme forms,make a consulting engagement quite unpleasant

Figure 2 captures some of the stereotypical at-

titudes found in each quadrant:

Quadrant I: The Client Is Always Right

Quadrant I contains the most “correct” attitudes;

indeed it represents the ofcial position of every

business professional, especially since the adventof Total Quality. The underlying logic is simple.To nd out what applications and systems people

need, ask them. To nd out the best way to solve

a community’s transportation problems or environ-mental concerns, just ask enough folks and resolve

the conicting answers as deftly as possible. Todetermine what training employees need, let themwrite the curriculum.

The ontology of this position is that clients, by

denition, cannot be wrong about what they need,



ieee-usa eBooks20

because there is no higher criterion for correctness.Granted, the consultant will offer alternatives, sug-gest solutions, or make recommendations. But theclient has the right to reject the consultant’s advice,

demand more options, or even atly disregard the

advice — in much the same way that juries have theright to nullify the judge’s instructions on the law.

Consultants must even be cautious about “educat-ing” the clients, lest it appear that they are foistingan unwanted plan from their inventory of “canned”solutions (see Quadrant IV). Such skeptical clientsoften try to get consultants to alter their reports and

recommendations, to revise or “soften” the partsthey object to. (Most federally funded researchcontracts, for example, call for a Preliminary Final

Report and a Revised Final Report , the latter reect-ing, among other things, the changes demanded bythe sponsor.)

Ironically, consultants devoted to this way ofthinking are sometimes criticized for “parroting” theclients’ recommendations and not providing enoughindependent technical content.

Quadrant II: The Consultant Is Always RightAlthough many consultants think the client is al-

ways right (or at least claim to), few clients thinkthe consultant is always right. This attitude is usuallyexpressed (privately) by consultants themselves or,

sometimes, by zealous advocates for the consultantin the client’s organization.

The attitudes in Quadrant II may seem arrogantto outsiders, but they usually reect the consultant’s

belief that the criteria for designing or selecting so-

lutions are broader and deeper than the short-termpreferences and expectations of the client. Suchconsultants believe that what clients need depends

on more complicated factors than those the client can

appreciate, and that easy and obvious solutions arenearly always less appropriate than subtle, difcult

solutions

Consultants in this quadrant tend to think of theirsolutions as informed and rational, while the clients’preferences tend to be shortsighted and — the

strongest opprobrium in the technical professional’svocabulary — political. A political decision, fromthis perspective, is a placation of, or pandering to,the preferences of the most powerful people in theclient organization, rather than a rational conclu-

sion based on a scientic, competent appraisal of

the problem and alternatives.

Quadrant III: The Client Is Always Wrong

Quadrant III is the domain of the haughty con-sultants who believe that, far from providing well-

dened services, they are rescuing clients from theirown ignorance and ineptitude. One sees this attitudein technical experts, like some software developers,

and often in other consultant-like professions, suchas medicine.





The basis for these stereotypes is the belief thatthe denition of problems and solutions is a difcult,

esoteric process, not one that can be performed by

collecting the opinions of non-experts. Astonish-ingly, even some programmers believe that user

requirements are too shallow to be taken seriously,especially given the ease with which non-expertscan be sold on faddish, over-hyped technology. (Ionce heard a consultant tell his clients that he couldexplain the new system to them but not understand it for them!)

Quadrant IV: The Consultant Is Always Wrong

Quadrant IV reects the attitudes of those clients

who have had least one unsatisfactory experiencewith a consultant. But those who consider consul-tants “always wrong” are rarely commenting onthe competence or expertise of consultants. Rather,

the issue is the perceived tendency of consultants to

offer standard, “canned” solutions to new and unique

problems. The kernel of truth here is that consultantstend to do just that, either because they have aproprietary or ideological commitment to an exist-ing technology or solution strategy or, in the less

attering case, because they are trying to mine

past projects for additional revenues.

...Clients are customers and, therefore

always right...clients have problems they

cannot solve themselves...

From a short-term economic perspective, it is farbetter for consultants to sell their current stock ofsolutions and services than to create new ones forthe current engagement. (In my seminars, I say thatthe goal of a technical proposal is to move one’s

inventory without appearing to do so.) Genuinely

new technology — software, hardware, seminars,publications, processes — is usually too expensiveto charge to a particular client and, therefore, itscosts have to be recovered in later engagements.

The most intense advocates for Quadrant IV tendto be former consultants who are now part of client

organizations, who know where and how consultants

make their prots and where the occasional abuse

occurs. Such critics often insist on adding perfor-mance clauses and other accountability mechanismsinto the consulting contracts, to ensure (they believe)

that the consultant will respect the client and givewhat is asked for.

Discipline and Tactics for Consultants

What are the practical implications of this analy-

sis? First, it should be clear that the attitudes inher-ent in Quadrants III and IV, although they may bewidespread and even understandable, are coun-terproductive and unprofessional. In any business orprofessional relationship, nothing can be gained bydoubting the fundamental intelligence or integrity ofthe other participant. In such a setting, projects are

likely to fail, conrming the pessimistic expectations

of the participants. Since many reading this articleare likely consultants (and only sometimes clients),the main warning is against Quadrant III — The

Client is Always Wrong. It reects a smugness and

superiority that, ironically, undercuts the intellectualauthority of otherwise talented consultants.

Next, it is important for every consultant to decideif they are really a contractor. If the real objective

of every project is to provide well-dened services

that please the client and produce a string of fol-low-on contracts (a kind of customer satisfaction an-nuity), then Quadrant I, The Client is Always Right , isthe only place to be. Such consultants/contractorswill injure themselves if they subscribe to any otherview. Indeed, a key to their success will be to stopthinking of themselves as consultants at all, a titlethat can encourage more independence from the

client’s preferences than a contractor can afford.

For example, once I was invited to develop atraining plan for a group of employees at a NewYork bank. Thinking I was a consultant, I advised theclient that the group of employees she had identi-

ed lacked the education and experience to ben-

et from the proposed training. The client, however,



ieee-usa eBooks22

thought I was a contractor, hired to give what shewanted, and gave her business to someone else.

Of course, one sometimes hears that consultantswho give in to clients slavishly will eventually lose

their credibility. I doubt it. In all my years as bothconsultant and contractor, I’ve never seen a con-tractor lose business by being too attentive to theclient.

But what if the consultant is truly a consultant — at least on some projects? Is it appropriate toespouse the Quadrant II attitude — The Consultant

is Always Right?

Obviously, the Quadrant II posture is too arrogantand abrasive to be expressed aloud in a business

relationship. But, moderated with mild languageand polite manners, it may be the wisest businessstrategy. So long as the consultant has a wisdomthat the client lacks, and so long as the consultant isdetermined to serve the best interests of the client,there is nothing wrong with an approach in whichthe main aim of the consultant is to educate and

enlighten the client, rather than to provide instantgratication.

Case Study

To illustrate, consider this slightly disguised casefrom my own consulting experience: A municipalityhires an engineering rm to perform the Environ-mental Impact Study (EIS) for a new waste disposalproject. It chooses this consultant, in part, because

of his rm’s reputation for producing extremely clear

and readable reports. When the environmental as-sessments are submitted, the report is so strikinglyclear that the municipal authorities are extremely

dissatised; they fear that the risks and hazards

associated with the project are so clearly explainedand highlighted in the report that the press andpublic will surely notice them and react unfavor-

ably. The client asks the rm to revise the report

— not to change content — but to:

eliminate most of the helpful headings andside headingsstrip away summaries, marginal glosses,and overviewsfuse short paragraphs into longer para-

graphsremove all boldfacing and italics asidefrom headings and technical termsmove technical appendixes into the bodyof the document

What’s a Contractor/ Consultant to Do?

Ironically, the client was originally drawn to this

consulting rm by its reputation for readable re-ports. Instead, the client decides it wants the EISto look more like a traditional engineering report

— inaccessible and intimidating to the non-techni-

cal reader. On the surface, it’s a simple enough re-quest, not even involving a single word of technicalcontent.

But alas, more is at stake. The client’s request isnot merely stylistic; it is self-serving and disingenu-ous. Acceding to the request will make the client’slife undeservedly easier. Should a consultant makethe change?

A contractor would — and should. The client isentitled to exactly the kind of nal product it desires

and, moreover, the contractor that fails to deliver itis jeopardizing future engagements.

But a consultant must think carefully before pro-ceeding. Can the environmental consultant be indif-ferent to the attempt to suppress environmental dis-

course? Can a rm with a reputation for unusually

readable reports put its name on a report that is

especially unreadable? Can any professional con-sultant, in any eld, deliberately alter a report so

as to make it less clear and accessible, just becausea client prefers it that way?

In the actual case described, I advised the head

of the consulting rm to refuse to change the report.

•

•

•

•

•





I argued that, not only would it damage the repu-tation of his company, but also that it would be adisservice to the taxpayers who paid for the studyand might even endanger the environment of thecommunity.2 I was overruled. And the rm went on

to do other expensive projects for the same client.

The waste disposal plant was built.

For a succinct introduction to data dictionaryconventions see Yourdon, E., Modern Structured

Analysis, Yourdon Press/Prentice Hall 1989,pp.191-196

For more, see E.H. Weiss, “An Unreadable EIS

is an Environmental Hazard,” The Environmental

Professional, Volume 11, No 3 1989, pp.236-

240

Edmond Weiss, Ph.D., is a consultant specializing in

the design and implementation of effective execu-

tive and technical communication for companies

and organizations in a variety of industries. With

a focus on scientic, technical and management

communications, Edmond Weiss applies his 35 yearsof real world experience to identifying and solving

communication and management problems.

1

2



ieee-usa eBooks24

When many consultants and contractors bid on ajob, the price is little more than whatever appearsin the lower right cell of their spreadsheet. They es-

timate their stafng requirements,

the equipment and materials, andother direct expenses, and add

in overhead and indirect alloca-tions, general and administrativeexpenses, and fees.

More successful consultants andcontractors derive their bid froman estimate of an ideal, or win-

ning, price. As illogical as it mayseem at rst, successful projects

are designed to come in at a pricethat will make them especially at-

tractive to the client — and almostnever substantially more than theclient has been authorized or in-tends to spend.

Part of information gathering, or customer intelli-gence, is nding the planned or estimated price the

client has in mind. In government procurements, that

price is often a legislated or ofcially authorized

amount, published in government plans or inferablefrom key phrases in the request for proposals (RFP),

such as estimated person-years of

effort . But just because the infor-mation is not publicly available

does not mean that the success-ful bidder is excused from intel-

ligence work, such as nding out

how much the client has set asideand how much the client has spentfor similar projects or services inthe past. Every client with experi-ence develops a sense of typicalcosts, including the consultant’sdaily rates, and isn’t likely to bedissuaded.

To make a sale, contractors andconsultants must dene a price

they want to bid, and then adjusttheir offering until it makes sense

at that price. If the number in the lower right cor-

Low Bid Doesn’t Always WinUse customer intelligence to determine what the client really wants and is

willing to pay — then nd ways to justify a ‘winning’ price

by Edmond H. Weiss





ner of the spreadsheet

is too high, recongure

the project to produce alower price. Surprisingly,in most cases, if the num-

ber is much less than theclient intends to spend,an adjustment will beneeded.

Consider The Market -

ing-Merchandising Loop (Figure 1) on page 26.Marketing means trying

to persuade the clientto buy what you prefer

to sell at the price you’dlike to charge. Merchandising means changing theproposal to suit what the client is inclined to pay – ei-ther by changing the approach or simply chargingless. The reluctance to merchandise, an especiallycommon attitude among technical professionals, isa recurring barrier to making the sale.

Pricing Strategies

What the client wants, the scope of work, is partlypublic and partly secret. The public part is revealed

in the RFP, Invitation for Bids, Request for Quotation,and the whole family of tender documents. Whatthe client really wants, would prefer, or would settlefor is deduced from intelligence gathering and aninformed reading between the lines of the ofcial

documents.

Proposal developers must estimate two essentialvariables: exactly what the client intends to spend

and exactly what the client hopes to receive for thatexpenditure. Given these two estimates — price

and scope — the next task is to develop a pric-ing strategy based on the intersection of these twotargets.

Consultants consider the most obvious strategy — to offer exactly what was asked for at exactly

the intended price — a poor one. Although offeringexactly what was asked for may seem reasonable

at rst, in most competitive bids, it will be bettered

by another strategy.

The 25 Pricing Strategies Table (Figure 2) identi-

es possible pricing strategies. This array assumes

there are ve degrees on each estimate: much less,

slightly less, exact, slightly more, and much more.The shaded cells illustrate that any offer promisingmuch less than the client’s expected scope of work,

irrespective of price, is probably a poor bid. Clientstypically don’t perceive a bargain when they’reasked to give up many of the services they werehoping to buy. Similarly, any offer that costs much

more than the client intends to spend will also havea hard time, because no matter how attractive thepackage, the client may be powerless to approve.

It should be obvious to almost anyone who hasever bought or sold anything that these nine cells(see Pricing Strategies, Figure 2) are a poor offer.

Yet every day, consultants and contractors who area bad match for the client’s requirements offer to

do a small fraction of the scope of work. And stillothers, who do not understand the notion of a win-ning price, bid whatever farfetched amount is in thegrand-total box of their spreadsheet.



ieee-usa eBooks26

Even after eliminating these nine bad cells fromthe strategy matrix, though, many choices remain.The strongest strategies are in the “+” boxes. Evena shallow examination of the array shows thatbidding slightly less than the client anticipated is

the best strategy, because it leads to two winners.Charging exactly what was planned works only ifmore service is offered; and charging more thanwhat was planned works only if substantially moreservice is offered, assuming that the client has anydiscretion at all in exceeding the pre-set limit.

The “?” cells are strategies of uncertain effect,that is, strategies with very different results for di-

verse clients. While most clients will accept a slightreduction in service for a substantial reduction in

cost, many clients will accept no reduction in service,irrespective of cost.

In this connection, several questionable strategiesinvolving a “much lower” price exist. Why? Wouldn’tmost clients be attracted to an offer well belowthe authorized amount — a bargain? The result is

quite difcult to predict. Consultants and contrac-tors should remember that the person judging thebid or proposal has usually requested the budgetfor a consulting contract. In effect, accepting a bid

well below the expected cost could embarrass theadvocates and undermine their persuasiveness inthe client organization. In construction projects, forexample, an unusually low bid may be interpretedeither as incompetence (the contractor misunder-

stands the project) or as venality (a lowball offeredwith the intention of adding charges later in theproject).

How to Justify a Higher Price

In competitive bidding, you must select the win-

ning price that is the most attractive among thecompetitors. And that’s not always the lowest price.The terms proposal and bid embrace a wide varietyof business offers, in only some of which the maindeterminant of success is the price, or the lowness ofthe bid. In other cases, where the client is less clear

about the work that needs to be done, the bid thatwins isn’t necessarily the cheapest.

The Tradeoffs Between Price and Technical Origi-

nality model (Figure 3) illustrates the complementary

relationship between technical ingenuity on the onehand and aggressive pricing on the other. At thetop of the pyramid are research and development(R&D) projects and new goods, where the client isnot well versed in what needs to be done and howmuch it should cost. Indeed, for some R&D projects,

the client is not sure that the nal deliverable can

be achieved at all.

In effect, the client for such a project is a nov-

ice. No matter how experienced the client rm, it

cannot rely comfortably on its past to estimate thecomplexity and risk of solving a frontier engineer-ing problem or designing a new generation ofmachines. In these cases, the client depends on the

consultant to dene the scope and price.

Generally, the newer the problem, the less fa-miliar the domain of inquiry — a low bid is less

compelling. A more expensive offer from a rm

that reduces the decision anxiety for the client willoften prevail over a low bid.

High prices are far more problematic in thelower half of the pyramid. Here, the clients knowmore precisely what they want and are mainlylooking for a bargain. In extreme cases, they areable to shop from catalogs of standard products

(machine parts) or commodity-like services (testinglabs). These offers are more correctly understoodas bids, rather than proposals, because the pricepage is often the only part of the document theclient cares about.

When the offered price is slightly higher than theclient intended to spend, the consultant must offermore service than the client expected. When, in a

competitive bid, the offered price is higher than thatof a credible competitor, then the consultant mustoffer at least slightly more than the competition.





Either through explicit promises (when appropri-

ate) or implicit assurances (when explicit promisesare inappropriate), the consultant should use one

of the 10 basic price justication arguments (see

Arguements Supporting a Higher Price) to justify thefact that, although the bid is not the lowest, it is thebest.

The rst nine of these 10 are variations on the

same theme: exceeding the scope of work anddoing more than required by codes, standards, orprocurement regulations. In each appeal, the client

receives either a material benet (such as reduced

downstream costs) or a nonmaterial benet (such as

political favor). In competitive proposals, it also is

Arguments Supporting a Higher Price

Appeal Explanation

Precision The project exceeds the specications, especially when the client asks only for “code”

minimums and the consultant disputes the wisdom of these standards.

Redundancy The design contains added layers to provide safety margins and minimize downtime for

repairs and maintenance or scheduling surprises.

Durability The consultant will use such methods and materials, and anticipate downstream events, to

ensure the viability of the project beyond the planning horizon of the client organization.

Scarcity The consultant reminds the client that certain personnel and materials are, at the mo-ment, in short supply and must be obtained at a premium.

Guarantees The consultant or contractor warrants the products and service in some exceptional way,

removing some of the downside risk to the client by making all or part of the fee con-

tingent or refundable, or by guaranteeing later maintenance and support services at no

charge.

Top People The consultant has selected this project as a showcase, promising special attention from

the corporate leadership and pledging to staff it with star investigators and researchers

— in effect, assigning people who are overqualied and, therefore, exceed the specica-

tion.

Offset The project uses materials and methods that eliminate other costs, such as goods with

a much longer duty cycle, technology without consumables, or internal subsystems that

eliminate the need for certain external systems, such as inspection and security.

Job Creation The consultant or contractor promises to staff some of the project with local workers,

chosen in conjunction with the client (even though the local labor rates are not the most

attractive or the local workforce the best qualied), thereby providing a strong political

benet to the client.

Social Benet The consultant or contractor is a socially deserving businessperson, entitled either to

ofcial government set asides or to unofcial special consideration, the social benets

offsetting some of the diseconomies.

Implied Service The most delicate of all arguments is the notion that the project budget is high enough to

support changes and additions without the need for change orders or contract modica-

tions, an arrangement that especially appeals to many government clients.



ieee-usa eBooks28

useful to contrast these benets with the smaller

benets in the competitors’ offers.

The tenth appeal, Implied Service, also prom-ises to exceed the scope of work, but in a more

complicated and potentially inappropriate way. Itargues, in effect, that most projects will not proceedas planned by either the client or the consultant/contractor and that changes are inevitable, even inuncomplicated short-duration engagements. More-

over, it presumes that contract modications and

change orders cause anxiety for the client, and aresometimes even embarrassing or harmful.

But how can the consultant communicate this ar-gument? Surely, no one suggests telling the clientthe budget is deliberately heavy to allow for con-

tingencies. The only way to exploit this justication

for higher cost is to have a relationship in placewith the client, a record of past engagements, sothat the client understands the consultant’s attitudetoward changes and modications. In these circum-stances, the client — trading money for reducedanxiety — will be less put off by the price and lessinclined to shop for a lower bid.

A reputation for doing “only what is in the con-

tract” eventually harms contractors, even whenthey bid a lower price than their competitors. Mostclients, no matter what they say in public, prefer a

little higher price and the far lower stress associ-ated with a more loosely budgeted project.

Once a proposal is on the verge of acceptanceby a client, the consultant/ contractor is often asked

for the “best and nal offer,” the lowest price heor she will accept for the engagement. The conven-tional wisdom is that the winner will nearly alwaysdrop the price slightly. Most clients who buy profes-sional and technical services believe the estimates

are inated and can be trimmed. Over the years,

of course, this becomes a self-fullling prophecy as

bidders anticipate the best and nal transaction

and inate their estimates in response.

Consultants and contractors should always re-

duce their bids slightly at this point, but also shouldremove an item or two from the Statement of Work,typically items included in the plan for just thatpurpose. Of course, everyone knows that estimatesare imprecise and that implied service usually costs

extra. It’s still best, though, to sustain the ction that

the budget is austere and based on an objective

analysis of the tasks to be performed, rather thanon what usually wins: an intelligence-based esti-mate of the winning price.

Edmond Weiss, Ph.D., is a consultant specializing in

the design and implementation of effective execu-

tive and technical communication for companies

and organizations in a variety of industries. With

a focus on scientic, technical and management

communications, Edmond Weiss applies his 35 years

of real world experience to identifying and solving

communication and management problems.





Long-time IEEE member Bob Krause, who is cur-rently on a consulting assignment in Baghdad,Iraq, has taken on a personal project on behalfof the global engineering profession. Krause ishelping Iraqi electrical and electronics engineers

— repressed for decades under Saddam Hussein’sregime — to join or rejoin IEEE and form their ownnational Section.

On assignment with Bearing Point Inc., Krausediscovered that the engineers within the Ministry ofElectricity in Iraq wanted to catch up to the tech-nology and standards of the western world. Theyasked for access to current periodicals on engineer-ing, standards and best industry practices.” Whenhe mentioned IEEE, “their eyes lit up. Many weremembers years ago.”

“Iraq is a well-educated country, and a highvalue is put on professionalism,” Krause observed.“An Iraqi engineering organization existed and

there were no problems being a member. However,while contact with and membership in foreign or-ganizations were not outright forbidden, they wereextremely discouraged. And the secret police wereeverywhere; all activities of an outside nature were

observed and recorded.”

At Krause’s initiative, a Ministry of Electricity ex-ecutive sent a form to all Ministry engineers and toengineers at the university in Baghdad, and begancollecting names and information about those inter-ested in establishing an IEEE Section in Iraq.

“Having been very active in IEEE-USA beforecoming to Iraq, I had established many contacts.[When I got here] I got in touch with them to discussways I could help [the Iraqi engineers] get started,”Krause reported. As a result, “IEEE is already seek-ing out support from other Arab countries that haveIEEE Sections and is investigating possible ways tosupport creation of an IEEE section in Iraq by of-

fering initial member discounts and promotions.”Krause has found a contact and prime mover in theeffort locally and has volunteered to serve as amentor to start the process.

Krause notes that in Iraq, there are 5,000 engi-neers within the Ministry of Electricity alone. If only

ve to 10 percent join the future IEEE Section, it

would enjoy a membership of between 250 to 500engineers — on par with almost half of the otheractive IEEE Sections around the globe. In 2003, 142of 304 IEEE Sections had less than 500 members.

Consulting from BaghdadThis story is based on an email interview conducted with U.S. IEEE member Bob

Krause in mid-January 2004. Krause has been on a consulting assignment with

BearingPoint, Inc., a McLean, Va.-based business consulting, systems integration

and managed services rm. Krause is working on a BearingPoint contract with

the U.S. Agency for International Development (USAID).

by Barton Reppert



ieee-usa eBooks30

Engineering in Iraq Needs a Boost

Currently, Iraq’s unemployment rate stands at 50percent. Typically, engineers within the Ministry ofElectricity earn between $200 and $500 a month.Hyperination has devastated the local currency

and wages have remained low.

In addition, the plight of Iraqi engineering educa-tion is critical. “The country was once a strong centerof learning and culture,” he said. “But under years

of Saddam Hussein’s rule, university curriculumsdid not keep up, equipment was not maintained orupdated, professors’ salaries remained very low,engineering ethics fell by the wayside, and a cor-rupt system of paying for grades and extra lessonsbecame the norm.”

On Working in Iraq: Krause Recognizes the

Danger

Krause said that “because travel is highly dan-gerous, I work at the Ministry’s headquarters inBaghdad, and needed data and personnel fromoutside of Baghdad are brought here. My work

entails analyzing the ministry’s accounting, operat-ing and nancial records to determine the cost of

service that is allowable to be passed on to con-

sumers and to determine the proper rate tariffs bycustomer class that will fairly collect those costs.”

“I work in Saddam’s former Presidential Palaceinside the ‘Green Zone,’ which is now the CoalitionProvisional Authority (CPA) headquarters,” he said.

“I travel under heavy guard each day to the Minis-try of Electricity, which is temporarily housed in theMinistry of Oil building.”

“The work here is more dangerous than usual,but we take more precautions,” he added. To help

deal with shootings, bombings and other securitydangers in and around Baghdad, BearingPoint has

hired a private security rm with armed guards

and armored vehicles. In addition, personnel wearKevlar vests and helmets when they travel.

“I recognize the risks, but I feel they are beingmanaged. Personally, I feel that although it is inher-ently more dangerous here, I could just as easilystep off a curb back home and be hit by a truck.When my number’s up, my number’s up.”

A Fort Worth, Tex. resident since 1979, Krause ismarried and has ve children and six grandchildren.

Asked what his family thinks about his assignment,he noted, “My wife has her own business — a suc-cessful travel agency — and we both understandeach others’ dedication to our businesses and ca-reers. She would rather I work elsewhere, but sheis very supportive of my love of the work and my

decision to take on this assignment in Iraq.”

Relating His Iraq Experience to His CareerKrause said his experience in Iraq is contribut-

ing to furthering his professional career in several

ways. “International projects bring experts fromaround the world who come from different cultures.They get put together in a strange culture, fedstrange food, and are expected to communicatein a foreign language — with the expectation ofmiraculous results. The really strange thing is thatsometimes it works.”

“With all the problems [associated with workingin Iraq], I think that developing a lot of patienceand a sense of humor in working with both nation-als and internationals has been a key element infurthering my career,” he continued. “Half of what Ido is technical. That’s the easy part. The other halfis political — managing the people and the situa-tion under trying circumstances. Between the two,the second is more important and plays a greater

role in achieving success.”

Barton Reppert is a freelance science and technol-

ogy writer specializing in S&T policy coverage. He

previously worked for 18 years as a reporter and

editor with The Associated Press in Washington,

New York and Moscow.





You are a consultant or considering becominga consultant of engineering services — in simplerterms, a private practitioner. You are an IEEE mem-ber and you would like to be associated with other

Consultants. Where do you go?

If there is a Consultants’ Network (CN) in your

area, join it. Find out if there is one by contactingyour local IEEE Section ofce, the PACE chairman or

the editor of the local IEEE newsletter or the IEEE-

USA ofce. There are active Consultants’ Networks

in thirty areas of the United States and others arein the formative stages.

An IEEE Consultants’ Network is an invaluableresource for consulting information. You will meetexperienced practitioners as well as others new toconsulting. Speakers discuss such topics as taxes,

self-marketing, nances, fee setting, software and

liability insurance. The network is also a source ofpotential clients.

If there is no Consultants’ Network in your area,

consider forming one. Organizing a network can be

exciting and rewarding. This paper describes howto start a Consultants’ Network.

This is the procedure developed by the Allianceof IEEE Consultants’ Networks Coordinating Com-mittee (AICNCC), a standing committee operatingunder the Member Activities Council (MAC) of the

IEEE-USA. Their ofce is in Washington, D.C., the

contact is Scott D. Grayson at the IEEE-USA ofce,

telephone +1 202 785 0017, fax +1 202 7850835, e-mail [email protected].

For additional information, please feel free tocontact me or other members of the Alliance. Theaddresses and phone numbers are listed in theDirectory of IEEE Electrotechnology and Informa-tion-Technology Consultants.

OK, so how do I start a CN in my area?. The

following is a step-by-step procedure.Steps to Start a Consultants Network

1. Local Section/PACE Support — Contact thelocal Section Chairperson and/or local PACE (theProfessional Activities Council for Engineers which

How To Start A Local Consultants Network by Gary L. Blank



ieee-usa eBooks32

reports to the United States Activities Board) repre-sentative and discuss your intent to form a Consul-tants’ Network. All Section Chairpersons and PACErepresentatives have a copy of this procedure. To

nd out who these people are, refer to your lo-

cal newsletter. If all else fails, contact IEEE FieldServices at (800) 678-IEEE for the names of yourSection leadership. Make arrangements to attend aSection Executive Committee (EXCOM) meeting.

At the EXCOM meeting, request to be appointedTemporary Chairperson of a CN with authority todetermine whether there is an interest in the com-munity.

2. Funding Availability — There are some funds

available for postage, printing, etc. to help getlocal Networks started. Your local Section PACEChairman or your Region PACE Coordinator can becontacted for this help.

3. First Meeting Announcement — With the helpof EXCOM, schedule an initial meeting of the CN.Announce the meeting in the Section Newsletter. For

the rst meeting, try to get a good location with

some light refreshments.

In addition to the Newsletter announcement, make

personal contacts, and ask the EXCOM members tomake personal contacts. Do whatever is necessaryto let local consultants and IEEE members know aConsultants’ Network meeting will take place. Sendannouncements to local newspapers and maga-

zines.

4. First Meeting Agenda — At the rst meeting:

Determine interestGet inputs from attendees as to their needsand expectations from a CN.Agree to meet on a regular basis.Get names and addresses of attendees.

Get volunteers for the following positions:Vice Chairperson; Secretary; and ProgramDirector

••

••

•

Be prepared to schedule the next and later meet-ings. A good tactic is to schedule all the subsequentmeetings at the same location and at some easilyremembered time like the second Monday of everymonth at 7:00 PM. Announce the next meeting in

the Section Newsletter. Notify local newspapers,magazines and other appropriate places.

5. Publishing a Directory — A major activity ofall CNs has been the generation and distribution ofa directory of members listing their consulting ex-pertise. For samples of the existing directories callmembers of the Alliance asking for their directory.

Publishing a directory can be a major expense.

6. Activities for Future Meetings — Consider the

following additional activities for future meetings.These activities both help get business and improveconsulting skills:

Have members give ve-minute talks on

what they do and how they get business.Allow time for questions and answers. This is

the beginning of internal networking.Conduct an anonymous survey of consultingfees and make the results available to themembership.

Advertise in local newspapers and journals,and the Section newsletter. Write newsreleases for local papers. Later you maywant to start your own newsletter.

7. Type of Speakers for CN Meetings — Considerinviting the following types of speakers to yourmeetings:

AccountantsLawyersMarketing professionals

Insurance expertsIndustry leadersUniversity leadersIEEE leaders

•

•

•

•••

••••





It is easy to get speakers. Initially locate speakersthrough the members. The members have their ownnetwork of lawyers, accountants, insurance experts,

other consultants, university professors, city ofcials,

chamber of commerce and so on. These people will

usually be pleased to speak to a group of IEEEconsultants.

8. National Conferences/Workshops — Considerworking with the AICN to host a national confer-ence or workshop. Contact committee members fordetails.

9. Making Liaisons with other Organizations

— Now that you are a formal organization, con-

sider making liaisons with other organizations in

your area. A relation with a college or universitycould give you a platform for doing seminars. Of-fer to conduct seminars or workshops on technicalsubjects to these groups.

10. Membership Fees — Membership fees varyamong the existing CNs. To be part of a directoryof referral service, fees range from $50 to over a

$100. To attend meetings, fees range from $0 to$20. Currently, there is no standard fee. While youcan charge an annual fee, you cannot charge DUES

as that is what IEEE does.A directory for distribution or a referral system

requires a setup and a recurring cost that must bepaid for by those who use it. Meetings might ormight not have costs associated with them.

11. Code of Ethics — As IEEE members, we arebound to the IEEE Code of Ethics. As professionalconsultants, we should go a step further also followa more stringent code of ethics. A sample code ofethics for IEEE Consultants’ Networks is based on the

Code of Ethics promulgated by the National Soci-ety of Professional Engineers. The primary changeis using the term “Consultants’ Network Member”

rather than “Engineer” as membership is not limitedto degreed or professional engineers.

12. Bylaws — As time progresses, your CN will

need a set of Bylaws and a full set of ofcers and

committees. This will depend on the size and activ-ity of the CN. More detailed operating proceduresfor Consultants’ Networks will be available later.

13. Keep the AICN Informed — Keep the Allianceinformed of your progress. The AICN CoordinatingCommittee is available for advice and consultationto help you in the formation of your Network. TheAICN Coordinating Committee also will be plan-ning a joint meeting of all operating CN’s sometimein the future.

14. Afnity Group Status — As soon as you have

a nucleus of about eight members apply for recog-

nition as an Afnity Group.

Gary L. Blank has served as IEEE-USA’s vice presi-

dent for Member Activities and as chair of the

Alliance of IEEE Consultants Networks. He is an

electronics & control systems consultant and director

of the Engineering Update Institute.



ieee-usa eBooks34

Introduction to a Consultant’s Prole

As a consultant is preparing a proposal or nego-tiating a contract, one of the ongoing concerns is

deciding how much to charge. To establish a xed

price or a fee that is both competitive and fair,

the consultant needs to know what other consultantsworking in similar elds charge. In response to

this need, the Alliance of IEEE Consultants’ Net-works (AICN) conducts national fee surveys of theirmembers. This survey, completed in late 2004, isAICN’s third nationwide survey. AICN conductedprior surveys in 1998 and 2002.

This survey provides the prole of typical, self-

employed and independent consultants, includingtheir education, experience, business practices andspecialty. The data regarding the typical consul-tant’s median earnings and hourly fee may be ofparticular interest to readers.

Scope of the Survey

The survey was conducted by email and solicitedresponses from three groups of IEEE consultants:

Consultants on le with the AICN. This

direct solicitation included current and pastmembers who are or have been listed inthe IEEE-USA database. This database is a

searchable web directory of U.S. IEEE con-

a)

sultants who offer their services, primarily in

electronic and electrical elds. This sourceaccounts for approximately 230 responses.A random sample of IEEE members whohad indicated “consultant” as their title oroccupation when they completed their an-nual IEEE membership form.IEEE members/consultants who respondedto several announcements and invitationsthat IEEE-USA posted on its web sites and in

its newsletters. The responses from (b) plus(c) account for approximately 700 of the

total responses.Because of the inputs from data sources (b) and

(c), not all of the more than 900 consultants areself-employed or independent consultants. As theAICN is primarily concerned with those consultantswho work as independent contractors, the data

were sorted to remove those engineers who workmore than half-time as contract engineers (jobshoppers) and/or as regular employees of othercompanies. The remaining 756 consultants are clas-

sied as “independent,” and their inputs are usedin developing this consultants’ prole.

As the IEEE is the largest technical professionalsociety in the world, it is not surprising that this sur-

vey is the largest on technical consultants’ fees todate.

b)

c)

Prole of IEEE Consultants, 2004by R.H. Gauger, P.E.





The Experience and Background of an IEEE Consultant

The respondents showed a wide range of experience, with up to 63 years in the engineering eld. The

median is 26 years.

Consulting experience ranges from less than one year to 43 years. For many of the engineers, consult-ing represents a second career, or an opportunity to continue their career on a part-time basis.

Engineering Experience, in Years

39%

27%

12%

22%

0

50

100

150

200

250

300

350

Less than 3 years 3.1 to 10 years 10.1 ro 20 years More than 20 years

N u m b e r o f C o n s u l t a n t s

Consulting Experience, in Years

22%

39%

27%

12%

0

50

100

150

200

250

300

350

Less than 3 years 3.1 to 10 years 10.1 ro 20 years More than 20 years




ieee-usa eBooks36

The Education and Registration of an IEEE Consultant

Experience, advanced degrees and professional registration all aid in establishing a consultant’s imageas an “expert” in the engineering eld. Most of the IEEE consultants have at least a Bachelor of Science

or a Master of Science degree, and 21 percent have a Ph.D.

In some engineering elds, such as power, a professional engineering (P.E.) license aids in establishing

credibility. In other engineering elds, a P.E. offers little advantage. In this survey, 24 percent of the IEEE

consultants are registered professional engineers.

Consultant's Highest Academic Degree

3%

5%

7%

22%

32%

30%

2%3%

0

50

100

150

200

250

None B.A. B.S. M.S. M.A. M.B.A. Ph.D. Other

N u m b e r o f C o n s u l t n a t s

Professional Engineering Registration

24%

76%

0

100

200

300

400

500

600

700

No P.E. Have a P.E.






How an IEEE Consultant Works

The survey shows that most of the IEEE consultants work under more than one organizational structure,often depending on their client or the contract they are working on. As noted earlier, any consultants whoperforms more than half of their work as a contract engineer (job shopper), and/or as an employee of

another company, is not included in these data. The bars on the graph below show the fraction of all theengineering work performed in each organizational format.

Most U.S. IEEE consultants report that they their ofce is in their home.

How Consulting Work is Performed

1%

8%

1%

55%

35%

0

2000

4000

6000

8000

10000

12000

As an employee As a job shopper Incorporated With partners As an independent

H o u r s o f W o r k / W e e k

Location of Consultant's Office

18%

82%

0

100

200

300

400

500

600

700

Office in the Consultant's Home Outside Office




ieee-usa eBooks38

When working on their own as self employed consultants, engineers are at risk of being sued by theirclient or a third party. Because of this risk, professional liability insurance, also known as errors andomissions insurance, is usually recommended. As can be seen below, most of IEEE consultants do not carrythis insurance.

The IEEE-USA survey shows that most consultants bill for much less than 40 hours per week. This informa-

tion indicates that they may be part-time consultants, possibly in partial retirement and/or consulting asa second career.

Professional Liability (Errors & Ommissions) Insurance

71%

29%

0

100

200

300

400

500

600

No Yes


Average Hours Worked per Week as a Consultant

11%

23%

18%

22%

26%

0

50

100

150

200

250

10 hours or less 11 to 20 hours 21 to 30 hours 31 to 40 hours 40 hours or more






How IEEE Consultants Get Their Business

IEEE consultants were asked what methods they use to get business and to estimate how much of their

work is obtained by each method. This rst chart shows what methods they are using. For example, 82

percent of the consultants get repeat business, 53 percent receive business from networking, and referralsprovide business for 65 percent.

Note that most consultants use more than one method to get their business. Therefore, the percentages

on the bars add to more than 100 percent.

The next chart shows the survey results in terms of the man-hours of work received. On this basis,repeat business is, by far, the most important source of work.

Surprising in this report is that only eight percent of the consultants use directories and databases, andthat this use accounts for only one percent of the consulting work. This trend is probably explained bythe fact that less than a quarter of the consultants included in this survey are members of the IEEE-USAConsultants Database, who have the option of using the IEEE database and directory. To make a faircomparison, it would be necessary to multiply the one percent and eight percent numbers by four.

How IEEE Consultants Get Business

11%8%

65%

82%

53%

0

100

200

300

400

500

600

700

Repeat business Networking Referrals Directories Advertising

N u m b e r o f C o n s u l t a n t

s U s i n g t h e M e t h o d



ieee-usa eBooks40

How IEEE Consultants Bill for Their Work

If the total hours needed to complete a consultant’s assignment is difcult to estimate, the contract with

the client is often based on an hourly rate. An alternate method, used for ten percent of the contracts,

is to bill the client by the day. For those assignments where the scope of work can be well dened, the

clients usually prefer that the consultant quote a xed price. Seventeen percent of the consulting is billed

this way.

How Consulting Work is Billed

10%

73%

17%

0

2000

4000

6000

8000

10000

12000

14000

At an hourly rate At a daily rate By a fixed price

W o r k ,

i n H o u r s / W e e k

Source of Consulting Work, in Man Hours

60%

14%

18%

1%2% 2%

3%

0%

10%

20%

30%

40%

50%

60%

70%

Repeat

Business

Networking Referrals Directories Advertising Fee Paid

Service

Other

C o n s u l t i n g W o r k i n H o u r s / W e e k





How Much Do Other IEEE Consultants Get Paid?

The prime purpose of this survey was to determine what fees other consultants are charging. Everyconsultant needs to know this information to prepare a proposal or negotiate a contract that is competi-tive, yet fair.

Though many regional and less comprehensive fee surveys have been made in the past, this survey of756 independent consultants provides the most comprehensive picture to date. Engineers working as jobshoppers or employees are not included in this database if they receive more than half of their consultingincome from either of these sources. This deduction was necessary, as independent contractors typicallycharge higher hourly fees to cover taxes and overhead not paid directly by job shoppers or employers.

The following chart illustrates the range of fees charged in year 2004. The survey shows that themedian fee for all consultants is $110 per hour.

Again this year, the IEEE-USA fee survey asked the respondents for their gross annual income fromconsulting. Most provided this information, but some considered it private and reported no income or avery low value. Reported incomes of less than $1,000 per year were not considered typical, and thesedata are not included in subsequent analyses.

The median consultant income is $100,000 per year, with many of the part-time or occasional consul-tants reporting an annual consulting income of less than $25,000.

Current Hourly Rates for Consulting

3.2%

12.6%

15.8%

9.4%

5.3%

4.0%

1.3%

2.7%

0.3%

1.6%

0.0%0.7%

0.0%0.5%

20.5%22.0%

0

20

40

60

80

100

120

140

160

180

<$50 $50-

$74

$75-

$99

$100-

$124

$125-

$149

$150-

$174

$175-

$199

$200-

$224

$225-

$249

$250-

$274

$275-

$299

$300-

$324

$$325-

$349

$350-

$374

$375-

$399

$400

& over

N u m b e r o f C o n s u l a m t s



ieee-usa eBooks46

The next chart shows the effect of education on the consultant’s earning.

Consultant Fees vs. Education

$100 $100 $100

$105

$125

$110

$127$130

0

20

40

60

80

100

120

140


M e d i a n F e e s i n D o l l a r s / H o u r

Gross Annual Income from Consulting vs. Education

$120,000

$100,000

$90,000

$105,000

$93,000

$110,000

$89,000

$150,000

0

20000

40000

60000

80000

100000

120000

140000

160000


M e d i a

n C o n s u l t i n g E a r n i n g s i n D o l l a r s / Y e a r





What Is a P.E. Worth?

Though the IEEE encourages professional engineering registration, this survey showed that only 24% ofthe respondents were registered. In this survey, the P.E.’s dollar value appears to be about $18 per hour.Due to the spread of the fees and earnings, comparison of the medians is the most meaningful.

Which Engineering Field Pays the Highest Hourly Rate?

This AICN survey has provided only enough data to begin to answer this question. It cannot provide an

exact answer, as they were not asked for separate fees for each eld, and most consultants work in more

than one eld. The respondents were, however, asked to estimate their percentage of work in each eld,

as well as their billable work hours per year. This information provided the data needed to estimate therelative amount of consulting work being done in each eld.

This same estimate of the percentage of their consulting work performed in each eld is used as a

factor and applied to the engineer’s standard fee to develop an approximate fee for each consulting

eld.

The results are shown graphically below. The number after each specialty category (for example,Power-130) indicates the number of consultants reporting work in that specialty. The numbers are statisti-

cally signicant, with 47 consultants in the manufacturing eld being the smallest entry.



ieee-usa eBooks48

Comparison of the Fees by State

Many of the previous IEEE fee surveys were conducted on a regional basis, or at regional workshops.These surveys indicated some variation from region to region. In an attempt to provide data for bothstate-to-state and international comparisons, all consultants were asked to designate the location of their

ofce.

Fees by Engineering Specialty

$217

$156

$105

$123$116

$149

$121

$141$130 $125

$104 $106$114

$107$96

0

50

100

150

200

250

E x p e

r t W i t n

e s s &

F o r e n s i c s

- 1 2 3

M a n

a g e m

e n t - 1

5 0

Q u a l i t y

/ R e l i

a b i l i t

y - 5 0

T e

l e c o m

& I T - 1 1

7

M a n

u f a c t u

r i n g - 4 7

I C s &

D e v i c e

s - 5 6

R F - 7 8

O t h e

r - 1 0 4

M a r k e t i

n g - 6 5

P o w e

r - 1 3 0

S o f t w

a r e - 2

8 5

H a r d w a

r e - 2 3 7

S y s t e m

E n g

r - 2 0 1

C o m p u t e r

s - 7 7

C o n t r o

l S y s t e

m s - 7 7

A v e r a g e F e e s i n D o l l a r s / H o u r

Location of theConsultant’s Ofce

Number ofConsultants reporting

Minimum andMaximum FeesReported in $/Hour

Median FeeReported in$/Hour

Alabama 5 $75-200 $85

Alaska 2 $110-165 —

Arizona 21 $35-300 $125

Arkansas 2 $14-$85 —

California 158 $30-400 $120

Colorado 24 $45-250 $110

Connecticut 19 $40-475 $95

District of Columbia 1 $130 —

Florida 30 $30-250 $100

Georgia 21 $45-250 $120

Hawaii 2 $75-250 —

Idaho 2 $100-250 —





Location of theConsultant’s Ofce

Number ofConsultants reporting

Minimum andMaximum Fees

Reported in $/Hour

Median FeeReported in

$/Hour

Ilinois 29 $50-250 $100

Indiana 9 $68-150 $95Iowa 1 $82 —

Kansas 5 $50-145 $85

Kentucky 2 $45-100 —

Louisiana 5 $80-250 $100

Maine 1 $95 —

Maryland 20 $45-400 $85

Massachusetts 48 $25-313 $120

Michigan 7 $42-200 $125

Minnesota 11 $55-360 $125

Mississippi 3 $50-125 — Missouri 5 $75-200 $90

Montana 2 $50-95 —

Nevada 2 $135-375 —

New Hampshire 10 $61-250 $106

New Jersey 43 $45-375 $115

New Mexico 10 $40-238 $93

New York 46 $20-250 $110

Norh Carolina 14 $50-360 $120

Ohio 14 $40-130 $78

Oklahoma 3 $75-175 — Oregon 14 $40-250 $99

Pennsylvania 29 $50-300 $100

Rhode Island 3 $85-175 —

South Carolina 4 $75-110 —

Tennessee 3 $35-300 —

Texas 39 $35-300 $110

Utah 5 $45-105 $85

Vermont 5 $85-350 $115

Virginia 35 $50-350 $125

Washington 19 $40-250 $110

Wisconsin 9 $65-240 $105

Wyoming 1 $75 —

Belgium 1 $100 —



ieee-usa eBooks50

Similarly, the consultants were also asked to designate the state, province or country of the clients forwhom they do most of their consulting.

Location of the

Client’s Ofce

Number of Consultants

Reporting

Minimum and Maxi-mum Fees Reported in

$/Hour

Median Fee Re-

ported in $/Hour

Alabama 5 $75 - $200 $75

Alaska 1 $110 -

Arizona 11 $50 - $300 $125

Arkansas 2 $14 - $85 -

California 205 $30 - $475 $125

Colorado 22 $45 - $225 $100

Connecticut 14 $40 - $250 $100

Delaware 2 $40 - $100 -

District of Columbia 14 $45 - $350 $125

Florida 23 $50 - $250 $95

Georgia 12 $45 - $250 $80

Hawaii 3 $75 -$250 -

Idaho 1 $365 -

Illinois 26 $55 -$200 $100

Indiana 11 $45 – 150 $85

Iowa 1 $82 -

Kansas 4 $50 - $360 -

Kentucky 2 $100 -$125 -

Louisiana 4 $80 - $170 -

Maryland 22 $50 - $238 $95

Massachusetts 45 $25 -$185 $110

Michigan 6 $42 - $250 $100

Minnesota 13 $55 - $250 $150

Mississippi 4 $50 - $125 -

Missouri 7 $65 - $250 $100

Montana 2 $50 - $95 -

Nevada 2 $70 - $165 -

New Jersey 34 $60 - $250 $110

New Mexico 5 $40 -$140 $80New York 54 $20 - $375 $110

North Carolina 9 $70 - $200 $108

Ohio 12 $75 - $200 $100





Membership in the IEEE-USA Database

One of the new questions asked this year is “Are you a member of the IEEE-USA Consultants’ Database?”

This database is a web-based, for-fee listing of individual consultants and their capabilities. Access tothis database is free and readily searchable by clients, or anyone looking for consultants with particularskills. Examination of the response is shown below:

Location of theClient’s Ofce

Number of ConsultantsReporting

Minimum and Maxi-

mum Fees Reported in$/Hour

Median Fee Re-ported in $/Hour

Oklahoma 4 $93 - $250 -

Oregon 9 40 - $150 $80

Pennsylvania 23 $65 - $313 $100

Rhode Island 1 $50 -

South Carolina 4 $75 - $110 -

Tennessee 4 $55 - $120 -

Texas 43 $30 - $300 $100

Utah 3 $45 - $105 -

Vermont 2 $85 - $90 -

Virginia 35 $60 – 350 $110

Washington 15 $40 - $250 $125

Wisconsin 6 $75 - $250 $122

Wyoming 1 $75 -

British Columbia 2 $75 - $100 -

Ontario 3 $100 - $110 -

Quebec 1 $100 -

China 2 $120 - $250 -

Germany 1 $150 -

Great Britain 2 $60 - $175 -India 1 $300 -

Japan 6 $80 - $300 -

Mexico 1 $80 -

Netherlands 2 $195 -

Romania 1 $108 -

Saudi Arabia 1 $250 -

Taiwan 1 $150 -

Virgin Islands, US 1 $300 -



ieee-usa eBooks52

What is particularly surprising is the $15/hour higher median fee earned by consultants who are

currently or have been listed in the directory. Several further analyses did not provide a veri-able explanation.

Fifty three, or more than 29 percent, of those in the IEEE-USA Consultants’ Database state that

they do receive some work as a result of the listing.

These 53 consultants reported an average of 143 hours of work per year, as a result of the list-ing.

Problems Getting Paid

In the past, there have been reports of consultants having difculty getting paid. Questions were

included in this survey to determine how serious this problem is. As can be seen, 135 consultants reporthaving at least some trouble getting paid, but 44 of the 135 are not covered by a written contract.

a)

b)

c)

Current Database

Member

Past Database

Member

Never Been a

Database Member

Number of Consultants 180 52 522

Range of Fees in Dollars per Hour $25-$375 $5-$350 $14-$475

Median Fee in Dollars per Hour $120 $120 $105

The number of consultants whoreceive consulting work fromdatabase/directories

53 consultants, or>29% of the 180consultants, who are

in the current AICNdatabase

2 consultants, or <4%of the 52 consultantswho are shown as past

members

2 consultants of the 522non-members who havenever been in the AICN

database

Consultants Having Trouble Getting Paid

82%

6%

12%

0

100

200

300

400

500

600

700

No trouble Have trouble & no contract Have trouble & contract






Comparison of the 2004 Data with Data from 2002 and Earlier Surveys

Of the 23 questions asked in the survey, 19 are essentially the same as were asked in 2002. Thisrepetition makes a direct 2002-2004 comparison possible for most questions. It should be noted that twofactors probably have some effect on the responses obtained.

The rst is the background of the consultants responding to the survey. For 2004, we have a primarydatabase of 756 consultants, compared to 333 in 2002. Most of the added responses are from consul-tants not previously associated with the AICN membership or database.

The second factor is the lower salaries reported for the engineering eld in general. On 22 December

2004, the IEEE-USA released a news bulletin concerning their Salary Survey. It shows that the median sal-ary for electrotechnology and information technology professionals declined for the rst time in 31 years.

Though the IEEE-USA Salary Survey is based primarily on engineers who are employed by companies,self-employed or independent consultants can probably charge similar fees.

Some of the differences between the 2002 and 2004 surveys are noted below:

Though the median fees are $10 per hour higher in 2004, the 2004 median consulting earningsdrop by about $20,000 per year.Both the maximum fees and the maximum earnings are much lower in 2004.

The consultants in this 2004 survey report one year more experience than those in the 2002survey.In 2004, the consultants with a P.E. license earn $18 an hour more than the non-P.E. consultants.This difference was only $5 in 2002.Consultants with non-engineering degrees (Other) degrees earn the highest fees in 2004. Thisresult was surprising, until a study of the notes showed that several have legal degrees and ad-vanced degrees. In 2002, the “Other” category tied for fourth place.Not explained is why consultants with no academic degree (None) earn a median fee of $100

per hour, the same as consultants with a B.A. or a B.S. In 2002, the “None” category was at thebottom of the list, at less than $90 per hour.

•

•

•

•

•

•

Finding From the 2002 Survey From the 2004 Survey

Number of consultants providing data 333 756

Median years of engineering experience 25 26

Median years of consulting experience 7 8

Median fee Median consulting feeof $100/hour

Median consulting feeof $110/hour

Highest fee Four of 333 consul-tants (1.2%) received$500/hour or more.

Highest fee is $475/hour



ieee-usa eBooks54

Robert Gauger is a Professional Engineer and an

active engineering consultant. He received the 2001

IEEE-USA Divisional Professional Leadership Award

and the 2004 Regional Professional Leadership

Award “For providing guidance and leadership

to both current and potential members of IEEE.”

Moreover, he was one of the early founders of the

IEEE-USA Alliance of IEEE Consultants Networks.

Finding From the 2002 Survey From the 2004 Survey

Median earnings as a consultant (with

earnings of <$1,000/year censored)

Median earning

from consulting of$120,000/year

Median earning

from consulting of$100,000/year

Highest earnings reported from consulting Seven of 333 consul-tants (2.1%) reportedconsulting earnings ofa million dollars/yearor more.

The highest reportedearning from consult-ing is $900,000

Comparison of median fees for consultantswith a higher education

The highest educationdegrees of PhD andMBA receive the high-est fees at $125/hour.

“None” for higher edu-

cation is $90/hour.

Highest educationdesignated as “Other”shows the highest feeat $130/hour. In

comparison, the Ph.D.

is $127/hour andM.A. is $125. “None”is $100/hour.

Fees for P.E. vs. non-P.E. Median fee for a P.E. is$5/hour more than fora non-P.E.

Median fee for a P.E.is $18/ hour morethan for a non-P.E.





SAMPLE CONSULTING CONTRACT

PREFACE

This sample agreement is posted for educational purposes. It is meant to provide the technical consultant

with an outline of the important issues relating to the business relationship between a client and a technicalconsultant. This sample agreement is the result of a committee of experienced consultants combiningportions of agreements they have successfully used over the years. It includes issues that they felt neededto be addressed in such an agreement. The reader of this “template” is encouraged to learn from what ispresented here and to take into consideration the teachings of those portions that apply to the particular

relationship that the consultant wishes to establish with his client. It is important to note that each agreementto conduct business with a different client will need to be tailored for that particular client and will requiremodications from this “template.” You and the client may discuss and agree to some other wording for

any particular paragraph, or you will need to include special terms not included in the sample agreement.“One size does not t all,” but be sure that at least the issues covered in this “template” agreement have

been addressed in appropriate fashion.

To have a successful relationship, it is imperative that both parties agree to the terms of their relationshipbefore they start doing business with each other. A properly negotiated agreement will lay out allof the rights and obligations of both parties clearly and will seldom have to be referred to again byeither party and, hopefully, never by a court. Additionally, it is important to document as much of thisrelationship as possible to avoid any potential misunderstandings. However you choose to memorializeyour understandings, be certain that you and the client agree to the terms of a written agreement. Do notrely on some oral representations such as “don’t worry.”

Lastly, it is important to review any agreement carefully before signing it. Often, the client will have anagreement that was prepared for him by his lawyer. Be aware that an agreement offered by the client

may be incomplete or ambiguous, or worse, very one sided in favor of the client. There will probably besubjects omitted that the consultant needs for his/her protection. Moreover, if a “Purchase Order” is issuedby the client, be sure that it does not supercede or negate any part of the written agreement you chooseto use (see Section 10(c)).

BE AWARE THAT THE WRITERS OF THIS DOCUMENT HAVE NO LICENSE TO GIVE LEGAL ADVICE

IN ANY STATE, AND THIS SAMPLE AGREEMENT IS NOT INTENDED TO OFFER LEGAL ADVICE.

THERE ARE MANY VARIATIONS AMONG STATE AND LOCAL LAWS. AN AGREEMENT CREATES

LEGALLY ENFORCEABLE RIGHTS AND RESPONSIBILITIES AND WILL AFFECT YOUR OWNERSHIP OF

INTELLECTUAL PROPERTY.

NOTE, TOO, THAT THE SAMPLE AGREEMENT CONTEMPLATES THAT THE CLIENT AND THECONSULTANT WILL BE INDEPENDENT CONTRACTORS AND NOT EMPLOYER AND EMPLOYEE. THE

TAX COSTS AND REPORTING RESPONSIBILITIES DIFFER GREATLY BETWEEN THESE TWO FORMS

OF LEGAL RELATIONSHIPS. HOW THE RELATIONSHIP YOU ENTER WITH A CLIENT WILL BE VIEWED

BY THE INTERNAL REVENUE SERVICE WILL DEPEND UPON A VARIETY OF FACTORS, INCLUDING

THE FINAL TERMS OF YOUR AGREEMENT. FOR THESE REASONS, AMONG OTHERS, WE



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STRONGLY RECOMMEND THAT YOU ALWAYS HAVE AN ATTORNEY WHO HAS YOUR INTERESTS

IN MIND REVIEW YOUR AGREEMENT BEFORE YOU SIGN IT.

Copyright (2001) IEEE.

This Preface and the sample agreement are copyrighted. However, any part, or all parts of thisdocument may be freely reproduced and used by individuals for personal use. Anyone wishing to

reprint this document may do so only if this preface and credits to the copyright holder are printed

with them.

CONSULTING AGREEMENT

This Agreement, dated as of [Date], is between (Consultant’s business name and address)

________________________________________________________ (“CONSULTANT ”),

a[state] corporation, and (Client’s business name and address)

____________________________ (“CLIENT ”), a [state] corporation.

RECITALS

A. CLIENT desires to retain CONSULTANT to render consulting and advisory services for CLIENT on theterms and conditions set forth in this Agreement and CONSULTANT desires to be retained by CLIENT onsuch terms and conditions.

NOW, THEREFORE, CLIENT and CONSULTANT agree as follows:

1. Retention of Consultant; Services to be Performed

CLIENT hereby retains CONSULTANT for the term of this Agreement to perform the consulting servicesset forth in Schedule A for CLIENT (“Services”).

(Schedule A should list all services to be performed and deliverables to be provided, and a time schedule

for completion, if appropriate. Be complete. This section controls the scope of the work. All estimates or

xed price quotations are based on this statement of scope.)

In rendering Services hereunder, CONSULTANT shall be acting as an independent contractor and notas an employee or agent of CLIENT . As independent contractors, neither CONSULTANT nor CLIENT shall have any authority, express or implied, to commit or obligate the other in any manner whatsoever,

except as specically authorized from time to time in writing by an authorized representative of

CONSULTANT or CLIENT , as the case may be, which authorization may be general or specic. Nothing

contained in this Agreement shall be construed or applied to create a partnership. CONSULTANT shall





be responsible for the payment of all federal, state or local taxes payable with respect to all amountspaid to CONSULTANT under this Agreement.

2. Compensation for Consulting Services

For Services hereunder,CLIENT

shall pay toCONSULTANT

a fee of $xxxx per [unit of time].(Alternative: provide a table of fees and a schedule of payments.) The minimum time to be billed for anyone day for work performed at CONSULTANT’s location will be [number of hours]. The minimum time tobe billed for any one day for work performed at CLIENT’s location will be [number of hours].

3. Expenses

CLIENT shall reimburse CONSULTANT for all reasonable travel and other out-of-pocket expensesincurred by CONSULTANT in rendering Services hereunder. Travel expenses shall include the cost ofany travel by personal vehicle to a location more than [number of] miles from CONSULTANT’s primary

work location [or residence], the costs of any travel requiring public transportation, the costs of meals,and the costs of necessary lodging. The costs of time required for traveling shall be paid for all

time CONSULTANT is away from CONSULTANT’s primary work location [or residence], but excludingany time spent on personal business or at a place of temporary lodging. CLIENT shall pay suchreimbursement within 30 days after receipt of appropriate receipts or documentation of the expenses.(This paragraph may be replaced by travel and expenses terms dened in the statement of work.)

4. Billing

CONSULTANT shall invoice CLIENT [state billing schedule], providing a listing of labor terms andexpenses. Payment on invoices so provided shall be due within [number of] days of the invoice date.

(This paragraph may also be replaced by billing terms dened in the statement of work.)

5. Condential InformationCondential information of any nature that either party acquires regarding any aspect of the other

party’s business shall be treated in strict condence. Information so obtained shall not be divulged,

furnished or made accessible to third parties without the written permission of the other party tothis Agreement. Both parties retain the right to do business with third parties in matters that may be

competitive with the interests of the other party to this Agreement.

However, the condentiality constraints above shall be binding and have precedence over these

business matters. Upon termination of this Agreement, the terms of this paragraph shall remain in effectfor [number of] years.

6. Ownership of Intellectual Property

Intellectual property rights of each party shall be governed by the following: (See the

“Addendum - IP Alternative Provisions” below as the starting framework for negotiations between

Consultant, Client and their respective lawyers.)

a)



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CLIENT shall be responsible for verifying any property rights of any other parties prior to use ofany work product provided under this Agreement.

CLIENT acknowledges that the use of any design, advice, drawing or other service providedby CONSULTANT , its employees and agents does not relieve CLIENT’s responsibility [as a

manufacturer and seller] to execute sufcient testing and judgment to ensure that any resulting

product is suitable for usage in CLIENT’s market.

7. Term and Termination

Unless terminated at an earlier date, in accordance with Section 7(b), this Agreement shallcommence as of the date rst written above and shall continue until [specify date or term, e.g.,

one year].

This Agreement shall be terminated only for cause (dene), or for no cause when either party

gives at least [specify] days written notice to the other party of the intent to terminate this

Agreement. CONSULTANT shall be entitled to receive from CLIENT all fees and expensesincurred up to the date of termination in accordance with the billing procedures set forth inSection 4.

8. Indemnication

CLIENT agrees to indemnify, defend and hold harmless CONSULTANT against any and all loss, liability,

expenses and costs (including attorneys’ fees, judgments, nes and amounts paid in settlement) actually

and reasonably incurred by CONSULTANT in connection with any threatened, pending, completed orfuture action suit or proceeding to which CONSULTANT is, or is threatened to be, made a party arisingfrom, or related to Services that have been provided hereunder.

The terms of this Section 8 are irrevocable, and shall survive the termination of this Agreement.

9. Disputes

Any action based on this Agreement, including disagreement, disputes regarding the terms andconditions, alleged breaches of contract, and remedies under contract, shall be governed by the lawsof the State of [your State] and shall be adjudicated exclusively by a court of competent jurisdictionin [your city and State]. (Consider mediation, arbitration or another alternative dispute resolutionprocedure.)

10. Miscellaneous

Entire Agreement. This Agreement (including the exhibits, schedules and other documents referredtherein) constitutes the entire agreement between the parties with respect to the subject matter

hereof. This Agreement supersedes any and all prior agreements, oral or written, between theparties with respect to the subject matter hereof.

b)

c)

a)

b)

a)





Severability. If any provision of this Agreement is for any reason declared to be invalid orunenforceable, the validity and enforceability of the remaining provisions shall not be affected

thereby. Such invalid or unenforceable provision shall be deemed modied to the extent

necessary to render it valid and enforceable, and if no modication shall render it valid and

enforceable, this Agreement shall be construed as if not containing such provision and the rights

and obligations of the parties shall be construed and enforced accordingly.

Amendment, Waiver, Modication or Termination. No amendment, waiver, modication or

termination of this Agreement shall be binding unless it is in writing and signed by bothCONSULTANT and CLIENT , and dated subsequent to the date hereof. Performance of workby CONSULTANT and/or acceptance of payment by CONSULTANT for work performed and/or work to be performed for CLIENT beyond the scope of this Agreement does not constituteacceptance by CONSULTANT of amendments or modications to this Agreement nor shall they

be binding.

Assignment. This Agreement and the rights and obligations of the parties hereunder shall not beassignable by either party without prior written consent of the other party.

Successors and Assigns. This Agreement shall be binding upon and inure to the benet of the

parties hereto and their respective heirs, personal representatives and, to the extent permittedby Subsection (d), successors and assigns of the parties hereto.

IN WITNESS WHEREOF, CLIENT and CONSULTANT have executed this Agreement as of the date setforth in the rst paragraph.

_________________________________ Authorized signature for CONSULTANT

_________________________________

Title Date

_________________________________ Authorized signature for CLIENT

_________________________________

Title Date

b)

c)

d)

e)



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INTELLECTUAL PROPERTY

The following paragraphs refer to your intellectual property rights and may affect your royalty orother remuneration. Their content and wording depends on many factors, including the type of workundertaken. Our committee cannot make any recommendation at this time. In any event, the choice will

require negotiation betweenCONSULTANT

andCLIENT

and should be reviewed byCONSULTANT’s

attorney.

ADDENDUM-IP ALTERNATIVE PROVISIONS

Many CLIENT S will request an assignment of all intellectual property rights in the work productgenerated by CONSULTANT ’S Services. The following paragraphs, A through H, provide for a Cont-Ver01.wpd July 24, 2000 page 5 general assignment of rights, while still preserving certain rights ofthe CONSULTANT .

IP A

Grant of Rights to Client

CONSULTANT grants and assigns to CLIENT all rights to use any work product and to develop,manufacture, market or otherwise commercialize any product based on, directly related to or directlymaking use of the Services.

IP B

Disclosure of Inventions

CONSULTANT agrees to promptly disclose to CLIENT all ideas, designs, practices, processes, apparatus,improvements, inventions and discoveries (“Inventions”) by CONSULTANT made or rst reduced to

practice in the course of performing Services to CLIENT .

IP C

Assignment to Client

CONSULTANT agrees to assign, and does hereby assign to CLIENT , all right, title and interest in andto all such Inventions. CONSULTANT agrees to cooperate with CLIENT and to execute all proper

documents, at the expense (including time at the then current compensation rate), of CLIENT , to enableCLIENT to obtain intellectual property protection in the United States and foreign countries in theInventions.

IP D

LimitationParagraph C shall not apply to any Invention meeting the following conditions:

Such Invention was developed entirely on CONSULTANT’s own time

Such Invention does not relate (i) directly to the business of CLIENT , or (ii) to CLIENT’s actual ordemonstrably anticipated research or development; andSuch Invention does not result from any work performed by CONSULTANT for CLIENT .

1)

2)

3)





IP E

Consultant’s Right to Use Inventions

CONSULTANT retains the royalty-free right to use an Invention and incorporate it into any product in a

eld unrelated and non-competitive with CLIENT . CLIENT retains the right to sell or otherwise dispose of

the rights, title and interests granted by this Agreement as CLIENT sees t; provided that this Agreementdoes not limit the rights of CONSULTANT authorized under the foregoing provision. CLIENT is obligatedto notify CONSULTANT , in writing (xx) days prior to such transfer.

IP F

Copyright Rights

All rights, titles and interest in all copyrightable material which CONSULTANT shall conceive ororiginate, either individually or jointly with others, and which arise out of the performance of Servicesunder this Agreement shall be the property of CLIENT , and are by this Agreement assigned to CLIENT .CONSULTANT agrees to cooperate with CLIENT and to execute all necessary documents at the expense

(including time at the then current compensation rate) of CLIENT to assist CLIENT in obtaining andregistering copyrights on such materials in any and all countries. Where applicable, works of authorshipcreated by CONSULTANT for CLIENT in performing Services under this Agreement shall be considered

“works made for hire” as dened in the U.S. Copyright Act. (If the Agreement calls for the creation of

software, the parties should address specically the issue of copyright ownership in the software, the right

to register copyright rights in the software in the United States Copyright Ofce and any license back

to CONSULTANT, if CLIENT is to own the copyright rights or to CLIENT, if CONSULTANT is to own the

copyright rights in the software.)

IP G

Consultant’s Right to File for Rights in Inventions and Copyrightable Material

If, within 180 days after written disclosure of an Invention by CONSULTANT to CLIENT , CLIENT does not

le appropriate documents with the United States Patent and Trademark Ofce, or any other national

or international agency (USPTO+) for pursuing intellectual property rights, including, but not limited to,patents or database protection, CONSULTANT shall be free to independently le with the USPTO+

after notifying CLIENT of CONSULTANT ’S intended action. CLIENT retains the right to use the patent,if issued, upon payment of a negotiated royalty. However, CONSULTANT shall be free to sell rights tothird parties for use of the Invention.

IP H

Consultant’s Ownership of Material

CONSULTANT shall retain ownership and possession of all notebooks, notes, drawings and similarmaterials, including computer-generated documents generated by CONSULTANT in the performance of

Services under this Agreement. Intellectual property rights to all documents, drawings and instrumentsof service, whether or not delivered to CLIENT under the terms of this Agreement, shall remainCONSULTANT’s property until all terms of this Agreement are satised. Upon CLIENT’s request, copies



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of these items shall be delivered to CLIENT at CLIENT’s expense. All conditions of condentiality of

these documents shall be in effect as dened elsewhere in this Agreement. (Alternative Provision in which

CONSULTANT is the owner of all intellectual property rights with a license granted to CLIENT.)

IP I

Ownership of Rights by Consultant

CONSULTANT shall own all right, title and interest in any work product, Invention or copyrightablematerial based on, related to or making use of the Services provided hereunder. CONSULTANT grantsCLIENT the [non-exclusive/exclusive] right and license to make, have made, use and sell products inCLIENT’s eld which are based on, related to, or making use of the Services provided hereunder. Upon

the issuance of a patent, based on, related to, or making use of the Services, CLIENT and CONSULTANT shall negotiate and sign a patent license agreement, pursuant to which CONSULTANT shall receive amutually agreed-upon royalty from CLIENT for each product or part thereof which is manufactured by,

or sold by or on behalf of CLIENT and covered by a patent claim.

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