Any IT contractors out there who might be able to help?

[SnowyHill]

We have ventured into IT Development work for a very large company. We are having difficulties managing invoicing. When we undertake work for them, we have no idea how long the piece of work will take. On the first occasion, we estimated that the work would take a week and it ended up taking three weeks. Effectively we worked free of charge for two weeks.

The second piece of work, we gave an estimate that the work would take three weeks and we would charge for any additional days on a per day basis. The piece of work ended up taking five weeks. The company concerned are not happy as they feel that it is more than they had anticipated paying. They only want to pay for the three weeks already invoiced for.

Clearly we are over-optimistic with trying to guess how long an IT project will take. It is virtually impossible to know really how difficult something will be. Unforseen snags arise and also clients want changes which seem trivial but take time to get sorted.

How do other IT Contractors manage re knowing how much to invoice? We are really struggling with this and are ending up doing lots of unpaid work in effect.

[marjorie25]

You need to have a set rate per hour which would make life easier for you and the company.
This does not necessarily mean that you will charge the company for every hour spent on the job.
For example if you have to do research, then that should be on your time, not the company's time.
If you are upgrading computers/software and you encounter serious problems, you need to determine, how much of this is lack of knowledge and how much stems from the equipment being old/slow Internet etc.

[Leylandi]

.

[LornaMumsnet]

We're just moving this over to freelancers/self-employed at the OP's request.

[SnowyHill]

Blueroses99
Yes, I must admit that the Panadoc template looks like it would help our client more than us. I am hoping that a solicitor might be able to draft something more in our favour.

[Blueroses99]

I have always worked for firms that have their own standard IT contract templates so I’ve never had to draft one from scratch. It’s good that you have arranged for legal advice - contracts can be very one sided in favour of the client. The Pandadoc template linked above is particularly unfavourable to the developer in a number of areas including a cap on fees (potentially working unpaid) and unlimited liability, and confidentiality isn’t even mutual. (I like to think my contracts are more fair)

[SnowyHill]

Oh no! Sorry!!!!! Used to be on Netmums many moons ago and transferred to Mumsnet due to a preference for the acidic, witty nature of Mumsnet!

[Ifailed]

Netmums How very dare you! I've never been so insulted in my life.
Probably.

[SnowyHill]

That template looks interesting. Thank you for the link. I have found a contracts solicitor close to our office that I will be contacting tomorrow.

Thanks to the brilliant advice of all you Netmums we are now much clearer about how we should be doing things. Just got to put all of the advice into practice now!

[Ifailed]

OP, there are draft agreements you could look at, like www.pandadoc.com/software-development-agreement-template/, seqlegal.com/free-legal-documents/software-development-agreement, or www.contractstandards.com/public/contracts/software-development-agreement. However, if you enter into negotiations about the contract, then best to take legal advice.

[BossyBitch]

Yes, definitely! I've been at this for years and I wouldn't dare draw up my own contracts in spite of being the one who understands them all on our projects. As a big firm, we have a dedicated department for this in-house, but for a small contract a good solicitor should do.

For the importance of this, have a look at the NHS megaproject disaster (it's on the Wikipedia horror projects list). I sometimes use it as a case study when teaching this kind of stuff. In this case, one of the contractors withdrew after losing money and 'got off lightly' in that they ended up only paying somewhere around 60 million in penalties rather than the 1 billion this could have cost them. The other big contractor initially looked as though they were on the winning side but had also been bleeding cash and ended up being fined in the triple-digit million figures by authorities for not declaring their losses.

It's a bit of a minefield.

[SnowyHill]

I presume that we need to consult a contracts law solicitor?

[SnowyHill]

Eve oxoftoads Blueroses99

Thank you for all of this extremely valuable information. Can I ask how you went about drawing up such a contract? Did you get a solicitor to help?

[Eve]

I’ve just been (as a supplier) asked to push to my contractors unlimited liability contracts.

Unsurprisingly we and they all said no.

@snowyhill you need a contract making your liability clear and then insurance backing that up.

[Blueroses99]

Agree that Eve raises very valid points. I mentioned ensuring clarity regarding IP earlier, but understanding expectations around maintenance is also very important to avoid misunderstandings that can undermine your reputation (eg they expect you to fix something for free, you don’t realise this and they get upset). Liability is our lawyer’s favourite subject, though it concerns us when we feel a (very small) supplier agrees to everything without question as it might be that they don’t understand and that isn’t ideal if we ever needed to enforce a contract in some way.

[boxoftoads]

Eve is completely correct - I have a legal agreement with all of my suppliers (I have to) which covers all Eve talks about.

It also details the dev/QA/live process and how each stage is progressed.

Once you are an approved supplier then I am able to discuss initial scoping, statement of Work etc.

You may need a lawyer for the legal agreements.

It's about protecting yourself mainly.

[Eve]

Apologies if already mentioned / but do not put your code on their IT system without a proper contract in place. That contract needs to specify clearly your liability and support arrangements.

Worst case your code breaks their it system and the lose millions , they can come after you for that? Also if it breaks at midnight - can they call you? Can they call you in 5 years time with problems? Who owns the IP? Could they sell your product on to other companies?

You need a contract defining all that and to protect yourself.

[SnowyHill]

:)

[BossyBitch]

I just remembered that this is so widespread that Wikipedia has a dedicated list of IT project disasters: en.m.wikipedia.org/wiki/List_of_failed_and_overbudget_custom_software_projects

Obviously this doesn't include the myriad smaller catastrophes that never made major headlines ...

[Ifailed]

We recommended to pull the plug on it

Agree, it's very rare for a project to be pulled once up and running - too many egos in the way. Only once in many years of PMing did I get a project pulled, and that was before any detailed design or actual build had started.

I made an enemy that day who always made things difficult for me then on, to the point I recorded all conversations with him and sent out a transcript after every meeting. Luckily he was a shining star and was promoted out of my depth and then was head-hunted by a rival company where he spectacularly failed! The Curse of an angry PM knows no bounds!

[SnowyHill]

Aah. Thank you BossyBitch..... That does make me fee a lot better! The guy who commissioned the work from us gave his bosses the idea that the work would be done by Christmas. We weren't actually told that they wanted it done in this time scale though. Now the guy who we deal with is getting pressure from his bosses. Although the product is finished, it is still being fine tuned to eradicate minor errors. Should be finished in days hopefully!

[BossyBitch]

As our project has not been completed in the time the company we are working for hoped, the reference would probably not be a good one anyway.

Congratulations! You've got yourself a bog standard IT project reference there.

Schedule and budget overruns are sadly the norm in the industry. I'm not saying this is a good thing, merely that nobody really expects anything else.

The worst case I've ever come across (not mine, luckily) was 7 years behind schedule and some 50 million over budget by the time we were contracted to perform an audit on it. They'd also only delivered about 40 percent of their scope by then.

We recommended to pull the plug on it. To nobody's surprise, they carried right on anyway. They're still not in production to this day, have caused mass resignations and must have wasted going on 100 million by now. Also, the guy responsible for it was promoted to senior god-mode executive somewhere along the line.

What You've got going there is by no means ideal, but it hardly clears even the minimum hurdle for inclusion in the tech project fuck-ups Hall of Fame.

[SnowyHill]

We thought that even if we didn't make loads of money, at least a technical reference would be useful to allow DH to sign up with agencies to work as a Contractor. As our project has not been completed in the time the company we are working for hoped, the reference would probably not be a good one anyway.

[SnowyHill]

HidingfromDD You are so right in your guess of how we estimated the work required in developing the product. Just thought about the time needed to do the coding and nothing else! So many rookie mistakes!

[SnowyHill]

They have already raised two POs for the work that we are doing. We signed their general Terms and Conditions. We have now been paid for both POs. Trouble is that because we didn't build in any charges for the testing phase, we are still working on it even though as it stands, we won't be paid any more. I know in the light of this thread we have completely and royally f**d up.

We are considering just handing over the product to them as it stands. There is meant to be a phase 3 of the work when they plug our product into their systems. However, we don't know if we want to sign up for another piece of work with them. We have set up an expectation where we work for peanuts, so I suspect that they would be shocked if we presented them with the request to be paid at proper market value.

[Ifailed]

I doubt they will raise a purchase order without a signed contract...

As far as I know, this is a requirement now in the UK under the anti money laundering legislation?