IT Project Management - contracting

#1
Long time poster, created a new account as I reckon this plus my posting history might make me identifiable.

Anyway.... I have managed to land myself a job as an IT project manager, in a consultancy. This is a decently paid job, but I’ve recently found out that the typical commission they take from the day rate we are charged out is normally over 50%.

I am tied into this contract for a while - I’m not complaining as I’m still earning more than when I was in the military, and with my experience I wouldn’t even have got through the CV sift for this role without the consultancy’s contacts/network.

However, I’m looking to plan for the future. If I can up the percent I take Home even to 60-70% of my daily rate I’d be ecstatic!

However- I may be being naive. With the IR35 changes I know it can be tough to be a contractor.

Anyone out there working as a contracting PM (IT or not) able to offer any advice on whether self-employment is a good way to go, or working for an agency? I guess the hard part is to build up the network to land the roles.

I have the right quals and by the time I’m looking to move will have 2-3 years industry specific experience, and more than that with more general project management.

Anyone out there working in IT PM field?

Not sure whether the best way for advancement is to try and go permanent somewhere as a PM, to try contracting, joining an agency, a consultancy where the rate is better.

Also don’t know at what point you can try and bump up to programme management etc, ie the next step up the ladder.

I regularly see IT PM roles advertised at £350-450 a day in London which is similar to what I know I am charged out at, but I only see between £150-180 a day. (Keeping the range vague). Is this a normal commission for an agency/consultancy to take?

Anyway any advice appreciated. Or piss taking, abuse etc as per normal Arrse drills.
 
#2
You need to look at the whole package not just the wage.
Do they pay into a pension pot for you?
Paid holidays?
Private medical cover?
Flexi hours?
Will they pay for courses?
Bonuses?
How long is the commute to work?
 
#3
The rule of thumb I use is .. if the daily rate is 750 per day, then I will be better being permanent at £110k
As the poster above mentioned .. holidays, 10% pension, etc but also stuff like life insurance, £25 pcm permanent, £300 contractor, then health insurance etc
It all adds up, being a permie gives you around £30-50k in extra benefits
And commission for contractors is around 20% but I have never gone through an agency always direct
 
#5
Also as a contractor you might not be working the full 224 days a year. It all depends on the contract/assignment.

You might find yourself only working 100 days X £350 a day.

Plus there is the whole tax issue too!
 
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#6
My mate worked for an agency covering many work types , they grossed 40% on top of what they paid the worker.
 
#7
Used to be about 20-30% commission when I was a contractor, many years ago.

A good PM should be on a lot more than 180 a day - I know one who is currently contracted to whatever Lloyds-TSB are calling themselves today, and she earns a lot more than that.
 
#8
Going back to my Civil Serpent days, 8 years ago, PMs were asking for a daily rate of £450 plus. I employed a PMO assistant at £280 - and she was considered cheap.

I’m professionally qualified as a PM (APM, PRINCE2) as well as academically having recently been awarded an MSc in Project Management. I’ve had a few agencies ringing up with attractive rates, but only 2 to 3 months. And the people who I’m in touch with are finding the contract market very hard at the moment.
 
#9
Used to be about 20-30% commission when I was a contractor, many years ago.

A good PM should be on a lot more than 180 a day - I know one who is currently contracted to whatever Lloyds-TSB are calling themselves today, and she earns a lot more than that.
As I said the day rate they are charging clients is £350-400.

Unfortunately I see less than 50% of that.
 
#10
As I said the day rate they are charging clients is £350-400.

Unfortunately I see less than 50% of that.
Contracting you should negotiate your rate with the agency and then they add their margin to that - you don't necessarily need to know or care what you are charged out at, but you should get the rate you are happy with.
 
#12
As I said the day rate they are charging clients is £350-400.

Unfortunately I see less than 50% of that.
Oh, and if the client is happy with you, and you are unhappy with the agency, it is possible for the client to "buy out" your contract and you to contract direct - I did this many years ago when, for personal reasons, it became impossible for me to continue to contract through the agency I was with, but both I, and the department head where I was, wanted me to continue doing the job.
 
#13
Without going too much in to detail, the way I got in to project management was a company who recruit (amongst others) ex-forces, train them up and get them placements. You get paid a salary, the company collects the day rate. You are then tied into a contract for two years with a very big penalty clause if you leave early.

You negotiate the pay before you start with them, not knowing what you’ll be charged out at, but they don’t tend to pay more than 50% of whatever people are being charged out at.

I guess they feel they have people by the balls, but at the same time you do get a good opportunity and training and experience in the field, so you can’t feel too bad about it!

I’m not bitter, just planning for when I’m out of my contract with these guys.
 
#14
Without going too much in to detail, the way I got in to project management was a company who recruit (amongst others) ex-forces, train them up and get them placements. You get paid a salary, the company collects the day rate. You are then tied into a contract for two years with a very big penalty clause if you leave early.

You negotiate the pay before you start with them, not knowing what you’ll be charged out at, but they don’t tend to pay more than 50% of whatever people are being charged out at.

I guess they feel they have people by the balls, but at the same time you do get a good opportunity and training and experience in the field, so you can’t feel too bad about it!

I’m not bitter, just planning for when I’m out of my contract with these guys.
How much longer do you have before you can go independant?
 
#17
Most decent agencies charge 12-17% tops.

Jobserve.com is your friend

The rates they quote is what you will get inside or outside of IR35. they'll add their mark up after that.

Estimate on netting 70-75% of the day rate after taxes etc.

Estimate on working 200 days a year in a good year.

Pension, holiday, etc all comes out of your cash but a good accountancy will minimise yr non deductible expenses
 
#18
Without going too much in to detail, the way I got in to project management was a company who recruit (amongst others) ex-forces, train them up and get them placements. You get paid a salary, the company collects the day rate. You are then tied into a contract for two years with a very big penalty clause if you leave early.

You negotiate the pay before you start with them, not knowing what you’ll be charged out at, but they don’t tend to pay more than 50% of whatever people are being charged out at.

I guess they feel they have people by the balls, but at the same time you do get a good opportunity and training and experience in the field, so you can’t feel too bad about it!

I’m not bitter, just planning for when I’m out of my contract with these guys.
So FDM then
 
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#19
Okay so its not an agency but a consultancy, 50% margin is about the norm. It’s not commission.
See your two years out and go and work for somebody with a better salary.
Ignore the clients daily rate, back in the day mine used to be £1800 I never received anything close to 50% of that
 
#20
So FDM then....Okay so its not an agency but a consultancy, 50% margin is about the norm. It’s not commission.
See your two years out and go and work for somebody with a better salary.
Ignore the clients daily rate, back in the day mine used to be £1800 I never received anything close to 50% of that
I shan’t confirm the name of the company, albeit if you know the industry it’s probably fairly obvious.

It is a ‘consultancy’ in the very loosest sense of the word. To all intents and purposes it acts like an agency providing people to fill jobs on sometimes a short term but often medium to long term basis.

They call you a consultant but you aren’t really ‘consulting’ you are filling a job in which they have shortages of permanent staff. You have no contact with the ‘consultancy’ on a week to week or even month to month basis. We aren’t employed on the basis of a task or a project we are employed on the basis of a job spec and a time period they require someone; and it’s early always because they don’t have the time
or resources to recruit permanent staff. To me, that says ‘agency’ not ‘consultancy’. The whole business model screams ‘agency’.

I think they call it a consultancy to justify taking more of a cut of the charge (as you say, not unusual for someone from the big 4 to be billed out at £1k plus per day but doesn’t mean they get that). To all intents and purposes while with the client you are working as though you were an employee of that client. You could almost forget you worked for the ‘consultancy’ barring the name on the payslip at the end of the month. That is very different to those I know who work in Deloitte or KPMG etc.

Ruthless business model but as long as after the initial period I can start upping my pay more in line with the going rate then I’ll be happy.
 

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