OT: Any BCIT EET Grads Here?

Hi Jon,

Agreed, although it's not an unreasonable expectation that you and the customer will *share* some risk either. :-) Of course, the specifics are always open to negotiation -- a consultant taking on what he thinks is a, say, year-long, full-time project at an hourly rate is still taking a risk by perhaps largely eschewing actively seeking new clients, even though there's a risk the project could be cancelled at any time.

I probably am, yet -- at least in my experience -- the most useful consultants are the ones who can come in and fix projects that are often already over-schedule and over-budget and just not working. Realistically those guys have to charge by the hour, but ironically that often makes would-be customers wait until they're in even more dire straits because they don't know who's going to be worth their $100-$200/hr and whether or now they'll really be able to fix the problem anyway. (And heck, consultants often have a problem in that they're contractually bound not to be able to advertise that, e.g., if it weren't for someone like Joerg fixing and replacing a circuit on Boeing's 777 it would have blown up on the very first test flight... oh, and he reduced the cost while he was at it too... but Boeing won't let him publish this fact on his web site... :-) )

That's certainly a good argument and I agree.

Right, but how much risk there is is very subjective -- you're a good consultant if you're able to pretty accurately estimate what it really will be for you, regardless of how easy or hard the customer things the job "should" be.

This is certainly how some small contract engineering companies operate: Try to get a guaranteed manufacturing contract and then figure it can, if necessary, subsidize any missteps in predicting the NRE costs.

If it's that or not being able to put food on the table, yes. But in general, heck no! :-)

---Joel

Hi James,

If Obama were looking for cabinet-level advisors, I suspect you'd be a smart choice as someone who's entirely level-headed and can disagree without being disagreeable... and of course has a very different viewpoint.

Would you take the job if offered? :-)

---Joel

The moving companies are a good source--they charge more in the most popular directions, since it costs them to get the equipment back to the place people are leaving.

I just went to U-Haul's site (they rent moving equipment).

To rent a 26' truck on April 1, 2010:

from Los Angeles, CA to Dallas, TX: $2,180.00 from Dallas TX, to Los Angeles CA: $945.25

Q.E.D.

-- Cheers, James Arthur

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No. I see an ingenious, almost magical feedback system, a virtuous circle of liberty, that has produced the greatest wealth and highest standard of living in any people in the history of the world, that has lifted so many from poverty and disease and misery.

Properly directed, with the lightest of hands, I see such great things that it has done and could yet do.

He doesn't see it.

-- Cheers, James Arthur

I've been there, done that, but I don't want to get into an argument about what is (or isn't) "most useful." That is beyond my pay grade.

I take it you mean these "most useful" types who are jumping into the "difficult situations" I mentioned, earlier. Yeah, that would be wise.

So, to coax them out it's best to offer them a fixed price bid?

This sounds more like a negotiation tactic to me to get you (or someone) to accept their risk for them than something real. If they don't want to spend $100-$200/hr, then they can just ask me to reduce my hourly rate for them. I will at least listen to that and may very well agree. But to ask me to take on significant and unknown risks that do nothing for me, no matter what happens, and where they are the only ones who stand to gain from such risky ventures? Not unless I'm convinced they have something worth some risk and cut me into the deal should it succeed. Perhaps a percentage of the gross sales, for example? If they want me to share the risk, I need to share in the upside, too. Assuming they can convince me the whole endevour has a shot at it, of course.

Otherwise, stop with the sad-sack negotiation tactics and ask me to reduce my rates. I might agree to that.

A fixed price isn't the answer here. It really isn't.

Contractual limitations on advertising is a different topic.

:)

Of course. Judgment is important. Luckily, I've gained a little more than I've lost, so far.

That's confusing wording, so my response may be at cross- purposes. But I think you are bringing in a strawman of sorts -- talking about accurately assessing _hours_ required. You might want that skill if you are making fixed priced bids, but I'm actually arguing that fixed-priced bids is a taking of risk that usually shouldn't be accepted. So whether one has that skill, or doesn't, really is off the topic for me.

Besides, I don't entirely evaluate how "good" a consultant is on the basis of their being able to precisely predict how long it takes to perform some task, long or short. It might be done on time, but done poorly. There are other things to focus on.

Yes. Seen that.

Grow a garden. Better for you and you'll live longer.

If I were a bookie, I might run around looking for and rating risks and buying into them here and there. But I'm not and I know my limitations there. Besides, the service consumers usually aren't offering a piece of the action, anyway.

...

It's really pretty easy to understand. If you want me to take risks, offer me an upside to it that I can believe in. This can be a share in the business, if I'm convinced, or it can be paying me what I imagine is close to three std-devs over and above my best guess as to the likely case so that I'm convinced yet another way to take the shot. If you don't want to share and aren't willing to pay the insurance rate, then the simple answer to that is to pay me for my time and expenses. (If there really are no material risks involved and I can see that clearly enough for myself, then I'm open to providing very reasonable fixed price bids.)

Jon

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Check out the Wiki article on Ronald Regan. Their policy is to present a balanced opinion, and you will note that many respectable economists didn't think much of Regan's economic initiatives. The massive US trade deficit that first started building up under his administration isn't a legacy that anybody celebrates.

-- Bill Sloman, Nijmegen

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Perhaps because the housing price bubble that burst was driven by US banks giving ninja loans to US borrowers?

The housing price bubble was at it's worst in the US, and when it burst it took more credit out of the US economy than any other.

But Jim-out-of-touch-with-reality-Thompson won't be conscious of this.

-- Bill Sloman, Nijmegen

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Since James Arthur seems to think that banks making ninja loans to house owners who can't pay them back constititutes a positive form of wealth creation, his opinions on economics aren't to be taken seriously.

Which is why you were against the Obama health bill? Despite the fact that it seems to be the only lever available that might offer a means of controlling the extravagantly high US expenditures on health care?

Up to now, the US spent half as much again per head more on health care than their nearest rivals (France and Germany) without offering the universal health health care available in both France and Germany, and without achieving anything like comparable statistics for the health of the population as a whole.

It's difficult to imagine a better example of destroying wealth and creating untold misery.

-- Bill Sloman, Nijmegen

Are you better off now, or during the Reagan years? ...Jim Thompson

Be _very_ careful with that. I don't do that and one of the core reasons is this: If one or more of your other clients worked on a gvt contract then your services were internally billed to that account and there will eventually be the usual audits. If for some reason they find out (and they might just ask you and you have to truthfully answer) that you provided a 30% discount to this other non-gvt client they may ask for that portion of the money to be refunded to them by your client. Then your phone will ring ...

I know. The Laffer curve has come alive. But don't count on Bill understanding that :-)

You should at least read what others have researched before such statements. See James' post yesterday evening in this thread. He presented the hardcore proof, with exact Dollar amounts.

All presidents have plenty of behind-the-scenes "support" in shaping policies, speech-writing, etc. So even if you Reagan had a lot more "help" than other presidents, would it really matter? The president is the public face of all those people, and it's the results that count -- not whether or not some specific idea originated with the president himself or with one of his advisors. ...and it's clear that a goodly number of people liked the results of the Reagan administration...

Hi Jon,

What I meant is that many companies won't even pick up the phone and call a consultant because they're worried it won't be a good value for the money; that's all. (And just as with employees, the "bang for the buck" of consultants is all over the board anyway -- some aren't worth half of what they charge, others could easily double their fees and still be just as in-demand).

I don't consider, "here's a project we think is well-defined and hence would like you to bid it at a fixed-rate" is a sad-sack negotiation tactic. Of course, I also don't expect you to do anything at a fixed-rate if you don't think it's in your best interest. However, I believe that most companies negotiate in good faith in the sense that while they need to work to contain their own costs and get the best bang-for-the-buck, they don't want to work with consultants who aren't making enough money (fixed or by-the-hour) to feel they're getting a good deal as well: Long-term, consultants (and employees) who think they're getting a raw deal just aren't worth it.

Agreed, I'm just pointing out that such limitations make it a bit more difficult for a consultant to demonstrate his own skill set/competencies at times -- and hence obtain a contract under the desired terms in the first place.

The discussion started based on some idle speculation that, with the current economy, some consultants might find that only going after the less-risky pay-by-the-hour contracts might not get them as much work as they desire.

I mean, as I've mentioned, I think pay-by-the-hour contracts are great if you can get them, and it's certainly what I'd want as well. But from a customer's point of view, they're not as desirable as a fixed-price contract -- although certainly many customers will accept them because they understand that many types of work are too open-ended/ill-defined to be viable at a fixed-price.

I think a consultant (or employee, for that matter) who can accurately predict how long it takes to perform some task is most definitely of more value than one who cannot. :-)

(Again realizing that it's not always a reasonable question to ask: "How long will it take to fix it -- we've tried for weeks without any improvement?" "As long as it takes." vs. "How long to design this circuit with these well-defined specs?" "One week.")

I'm actually a bit surprised that more of Jim's contracts aren't done by the hour -- the fact that he can make money on fixed-price contracts suggests to me that he's very good at ferreting out any tricky/risky parts of a design and then still coming up with accurate time/price estimates.

True enough -- food alone is not that expensive. Losing your home is probably the bigger "incentive..." (I know a guy who almost did lose his house after bidding a contract at a fixed-price and finding that he had very seriously underestimated the scope of the work!)

The deal is that a company that, say, has no electronics background just figures they're hiring you to do what they cannot: Design some electronics. They realistically can't evaluate the risk, and it's really not asking that much *if the project is well-defined* to ask *the purported expert -- you!* to

---Joel

I'm not sure I understand the point there. Are you talking about two different gov't contractors who each, separately, subcontract to me but get charged different rates?

In any case, I'm not sure how this situation may apply to the cases that Joel brought up, where a company is having trouble with 100-200 dollar rates and is otherwise also in trouble with their project, too. I think I can ignore this issue for my circumstances, but I don't really understand your point, yet.

I'm not sure it was clear in my earlier writing, but I generally don't initiate such a discussion or offer. They have to make the suggestion to me and I then have to make a decision about it -- which depends upon a lot of factors at the time. But I'm open, at least, to such a discussion.

Jon

That either requires zero errors on the part of the client or an iron-clad spec with a change order handling procedure in the contract. Case in point: I had a design recently where the actual value of an injector inductance was 15% versus what I was told (and what was simulated). Also, the thing ended up needing 200% of the power simulated. Just normal engineering stuff, and I sure was glad I was paid by the hour :-)

There is an easy way to find out if the guy knows what he's doing: Most consultants will give you 30 free minutes or so to discuss a project and will gladly sign an NDA. There, they will typically tell you or the team how they think they'd attack the problem or design. Unlike an employee or a signed fixed-bid contract you can later always cut off an hourly guy if not happy.

I had exactly such a discussion recently, new client. During the phone conference I also mentioned a few things like "I've seen installations that were different in the following respects and then your product would not fit, we'd have to do it a bit differently". The reaction was pretty much "Oh, shazam, thanks!" Could almost hear the beads of sweat dropping ...

It's pretty customary for IC design. But not so much with hardware and certainly not for noise fixes and such.

When was the last time you saw an electronics project so well defined that no architectural changes were needed? Wonder if that's even possible on any complex stuff :-)