Is it time to go contracting? Weighing up the pros and cons
Projects are, by their very nature, temporary, so it is not surprising that a mature contract labour market exists for project management professionals. Perhaps you are considering this route?
It is a big decision – particularly for those used to the relative security of a permanent role and salary. So what are the benefits? Well, income is the big draw. In its simplest form, you accept more risk, and therefore you can receive more reward. But recognise that you are also accepting more risk.
Most contract roles have one-week notice periods, so your revenue stream can quickly disappear. Anyone who starts contracting should save a minimum of three months’ income beforehand because, at some point, your contract will end. Don’t expect to jump straight to a new contract. And consider how your mortgage or rent will be paid in the meantime. And what day rate should you ask for? I use a simple rule of thumb: take your annual salary and divide it by 100. So if you earn £45,000 a year, this equates to £450 a day. A good, long-term role for the right organisation that only pays £390 should still be attractive, though.
Is there anything else to consider? Your career development rests solely on your shoulders, so make sure you invest in yourself. Continue your professional development. Just don’t start multiplying your day rate by the total number of workdays that exist annually to convince yourself that you deserve that new car, or even worse, can afford that huge mortgage. Be conservative. Remember, you have holidays, get ill and need to have savings for when the project ends. Oh, and you will have a tax bill to pay.
Vince Hines is managing director at Wellingtone Project Management, an APM career development partner.
Other blogs in this series:
- Don’t be afraid to move industry. Your skills have universal relevance
- What are you worth?
- Being 'social' is essential to your career success
- Making the jump from project coordinator to project manager
- How good are your project management skills?
- Your career is your own personal project
Find out more about starting / developing a career in project management
Vince is the Managing Director of Wellingtone PPM; the project management consulting company based in Windsor, Berkshire. We retain a particular focus not just in the UK but Ireland and Spain. Wellingtone is the only organisation that is both a Microsoft Gold Partner with the PPM Specialisation as well as an APM Accredited training provider. Wellingtone is also the exclusive UK partner of the PMO Global Alliance and PMO Value Ring as well as PMOtto; the AI Bot for MS Project Online.
Wellingtone works closely with the APM and sponsors the Annual Salary Survey as well as the PMO of the Year Award. We also run our PMO focused annual conference; FuturePMO. We have developed courses in Legal Project Management and the PMO, both of which have been Accreditred by the APM as part of the APM Professional Courses route.
Our "PPM Intelligence" is also demonstrated by publishing The State of Project Management; the largest piece of annual reseearch of its kind in conjunction with UCL, the APM PMO SIG and the APM Systems Thinking SIG.
Vince is an expert Project Management Consultant, having worked with clients across the UK, US and Europe. He retains a number of professional qualifications including MAPM and has extensive real world experience of developing client project management maturity. As an active member of the APM community Vince is also a judge for the Annual APM Awards.
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Thanks for this useful post, Vince - especially the tips on day rates. I'm on the verge of taking the plunge and going freelance, so will keep you in mind if I do! @Rubikon_UK | LinkedIn
Hi Beverely,I agree - if you do want to jump into a new (possibly more lucrative or growing sector) you might first have to take a hit on your day rate. But once you are in that sector and shown to add value then you are off and running. For example I know some contractors who were keen to get into the banking sector so took a lower rate to start with but have then got credibility on their CV in that industry. They can build on this experience over time. The other associated point I woudl make is try to remain in a role for a minimum of 6 mths (if possible) and include a reason why you left an organisation on your CV.Cheers,Vince
Hi Vince. The tip about how to calculate day rates is really helpful. I have been contracting for about 4 years and agree it is a big step but it has allowed me exposure to sectors I would not have had I remained in permanent employment. One point I would like to make however is the fact that if you are new to a sector, or industry, you may need to re think the day rates in order get in to gain the expereince.