From: ed@titipu.resun.com (Edward Reid)
Newsgroups: misc.jobs.contract
Subject: Re: contract payment methods question
Date: Fri, 25 Dec 92 13:45:16 EST(-0500)
Organization: Accuracy, Ltd.
Reply-To: ed@titipu.resun.com (Edward Reid)
X-Mailer: uAccess - Macintosh Release: 1.6v0

pdh@netcom.com (Phil Howard ) writes:
> One method of payment which gets some bandwidth on here is the salary/1000
> hourly rate.  I assume if one travelled around, this rate would also have
> to reflect the costs at the geographic location of work.

Remember that the salary/1000 formula is a *very* rough guideline.  Yes, you
definitely must adjust it for the sort of expenses you will actually incur, be
these living expenses, travel, equipment, insurance, interference with other
work, etc.

> However another method would be a negotiated fixed amount for delivery of
> the completed project ...  My question is whether or
> not this is in common practice where the parties would agree to it.  I would
> expect this to be most applicable to small or medium development projects
> generally involving a single person.

In general, fixed price is the rule rather than the exception, and more so as
the contracts get larger.  However, large contracts usually specify milestones
which trigger partial payments.  Personally, I like fixed price contracts, as
they give me the freedom to organize my work as I see fit without worrying
about whether my client is receiving value hour-to-hour.

> Does sysadmin work occur on other than an hourly rate in practice?

I have no experience with sysadmin work, but what you describe sounds ideal for
a retainer contract.  For a fixed amount per month, you agree to keep the
system running, install new releases on a pre-arranged schedule, etc. 
Unpredictable tasks, such as user support, would be charged per-hour above the
retainer.

bobert@informix.com (Robert Murphy) writes:
> Well, over 80% of the bugs that have been reported against our project
> have turned out to be in the client's libraries.  ...  In the future, what
> should we do?  Should we build an automatic price increase into our
> contracts for extra work caused by client screw-ups?  Are there other,
> better ways of dealing with this sort of thing?

Well, the obvious thing -- in 20/20 hindsight, anyway -- is for the contract to
state how client screw-ups will be handled.  For example, when you suspect a
client bug, you report it, they must investigate and fix it in a certain
timeframe.  You keep track of how much time you spend documenting client bugs,
and they owe you an hourly rate if you go over a certain number of hours.

I can see, though, that it would be difficult to see in advance when you need to
be this paranoid.  If you anticipate any possibility of the situation
recurring, I'd advise seeking an attorney's advice.  A good contract lawyer
might have standard boilerplate available for you.

I'm not sure what you mean by "automatic price increase".  If you mean what I
described above, then yes, I think that's how to handle it.  But give the
client some latitude before penalties kick in.  If you mean adding a percentage
to your bid, I think you run into too many problems of competitiveness and
predictability.

Edward Reid  (8*}>
  eel:   ed@titipu.resun.com  or  nosc.mil!titipu.resun.com!ed
  snail: PO Box 378/Greensboro FL 32330