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AICN NEWSLETTER
(June 2004)
Alliance of IEEE
Consultants Networks (AICN) Chair's Remarks
As your new AICN Chair I send greetings to all consultants with
anticipation and enthusiasm! As you will see we have decided to turn to
a web based format for our newsletter to make dissemination easier for
our local networks. Our intent is to provide you with articles
that will assist you in your consulting practices, stimulate discussion
among your consultants networks and elicit comments from you. We
also, welcome and encourage you to provide
Scott Grayson with articles
written by local IEEE Consultants Network members. We want to hear
from you!
It was about
nine years ago that my Network (Chicago/Rockford) held its first
organizational meeting, and we now have a roster of almost 150 members!
At that time we were the third Network and today we have 31 Networks
within the U.S. and 4
internationally! The objectives for my term
of office will be to continue our growth and to assist all Networks with
ways of increasing their value to their consultant members.
As a first
step, we have launched this new newsletter, we will develop an on-line
resource library that may assist networks in developing discussion
topics for meetings. Please feel free to send me articles, web links and
discussion topics that you have found to be useful at your meetings. And
a reminder: one of our greatest assets in increasing our individual
client roster is our
AICN Consultant Database. If you are not yet listed, you may be
losing business! Make this one of your highest priorities: it works!
On behalf of
all of us, I wish to thank our retiring committee chair, Ralph Hileman,
for his excellent stewardship over the past two years, and our IEEE-USA
staff support person, Scott Grayson, for his insight and capable
handling of the day to day activities of the AICN. Enjoy the first
edition of our new newsletter format.
--Harvey
A. Brodsky, PE
Off Shore
Consultants
by Bob
Gauger
I am receiving
unsolicited offers of help from offshore consultants at very low rates.
I know that you are too. While talking with many of you about your local
networks, you were also telling me that outsourcing of both software and
hardware design and the industry use of H-1B and L-1 to import offshore
labor has been hurting. When added to the downturn in the economy, these
sources of cheaper labor have seriously limited the call for local
consultants.
I recommend that
you visit IEEE-USA’s Public
Policy website for more details about what IEEE-USA is doing to
protect your jobs. Then go on to
IEEE-USA’s Legislative Action
Center. They make it very easy to write or email your legislator
regarding your concerns.
A Skeptical Editorial
by Neil Clark
Consulting is
becoming more popular in the engineering profession, and the IEEE is
helping many engineers make this transition. It’s never an easy one
because it means, for real, you are on your own. This is very scary, but
IEEE-USA has organized many Consultant Networks and has held many
training and workshop sessions throughout the country. Many have taken
up consulting with good success. And, this independence with an
opportunity to do your technical best is very appealing.
Engineering
unemployment stands at about 7% which is very high for people used to a
steady job and income. IEEE members find consulting a good alternative
to being laid off, down sized or fired. but it’s no panacea.
Employers are
finding they can save money by firing engineering personnel and hiring
them back as consultants, part time with no benefits. The fact is that
employers like the abundance of engineers because they bid against one
another, and their salary goes down along with consulting fees. The fact
is, there are too many engineers!
This is
especially severe if foreign engineers are taken into account. They too
compete in this market with great success because they are just as good
as us and will work for half the salary. There is no way we can compete
with them in this employment market.
In my opinion,
consulting is a way of escaping the corporate world only to find you are
in the fire. I would maintain that 90% of consultants these days make
only about 70% of their corporate salary including benefits. And, it’s
only part time work with lots of time spend on marketing and self
training. Not all engineers are prepared for this life. But, you may,
however, have a gift waiting for discovery.
It’s clear to me
that under these conditions a new breed of engineer is required. I call
these guys gregarious engineers. This is an engineer who is collegial,
extroverted, sociable, outgoing and friendly. The hail-fellow-well-met.
Unfortunately, this is a personal characteristic for which engineers are
not well trained.
Nevertheless,
employers with job openings want engineers to jump through a few hoops
so they can see their form. What they really want are gregarious
engineers that will make the employer feel good about
hiring them. Technical expertise is, of course, expected. But, they want
the best. That is, they do not rely on logic to make their
selection because they believe that logic is how our minds catch up with
our feelings. And they believe facts are mainly useful to
distract the conscious mind while our emotions decide what is
true.
This is a
daunting prospect for engineers . . . to feel that “the best” is an
emotional selection by the employer. Yet, in the engineering sense, it
is a logical fact that employers believe this.
COMPARE YOUR
CONSULTING FEES WITH THOSE OF OTHER CONSULTANTS
by
Bob Gauger
Know the going
rate before talking fees to a new client. Also take a second look at
your fees before renewing your contract with an existing client. Do you
have any idea what the going rate is? What are your competitors
charging? You could search the internet or talk to all the consultants
you know. How about making a survey of hundreds of other IEEE
consultants? The IEEE has done just that for you.
In late 2002,
the AICN made their second nationwide survey of the fees charged by
independent IEEE consultants. They sent an email questionnaire to over
2000 IEEE consultants. About 400 responded. Perhaps you were one of
them. If so, thank you.
The preliminary
results were published in January of 2003. The complete findings,
including answers to the 18 questions, are now available as three
reports on the IEEE-USA Consultants’ Services pages
Consultants’
Fees and Business Practices
The report includes tables of
numerical data that you can use to compare your consulting fees with
those of other consultants. Hopefully, this will give you the basic
information you need in order to negotiate a fair, yet realistic rate
for your next contract. For example, you will find that independent
consultants with 21 to 30 years of engineering experience had an average
fee of $143/hour and a median fee of $115/hour.
Plots of
Consultants’ Fees and Annual Earnings is presented in four
scatter plots which show the wide spread of the data and earnings trend
as a function of engineering experience and consulting experience. These
plots are particularly useful if you are looking for a quick visual
overview of the data. What is particularly surprising is the wide range
of fees that are being charged. For example, three consultants were
billing at over $500 per hour, yet at the lower level, several were
charging only $50 per hour.
If you want to
justify a higher fee, take a look at the 6% of the independent
consultants who charged fees of at least $250/hour or the 14% of the
consultants who reported annual earnings exceeding $200,000 per year.
Profiles of
IEEE Consultants is the
most comprehensive report of all. It provides an in-depth
treatment of the full survey results. It analyzes and graphs the
consultants’ response to each of the 18 questions. These factors
included education, experience, business practices, billing, location,
and the field of consulting, making it the most comprehensive fee survey
conducted by the IEEE or any of the other engineering organizations.
Of particular
interest in this survey is the analysis of consulting fees for each of
the major consulting fields and locations. This is the first time that
sufficient data have been collected in order to permit a meaningful
projection of the fees based on consulting fields.
The 2004 Survey will be launched this
summer. If you would like to take the survey please let
Scott Grayson know and we will
add your email name to our invitation list.
Thirteen
Rules for Business Survival
by
C.B.Johnson, Johnson
Scientific Group, Phoenix, AZ
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Planning is
the least expensive part of running a business.
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Every
decision is a financial decision.
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Management
must manage. That means you.
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Work smart
and not hard. Knowledge is leverage.
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Always have
“storm cellar” plans in reserve.
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Know your
customers and be sensitive to their needs.
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Know your
competitors and be sensitive to their moves.
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You are your
own most important asset (and maybe your own worst enemy)
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Change and
grow or wither away and die.
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Good
management is hard work and positively not hassle-free no matter
what anyone tells you.
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Don’t talk
in jargon, buzz words, or faddish acronyms.
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Be nice to
everyone, but tactfully make it known that you have limits.
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While you
are sorting out your consulting practice, try to keep your job for
as long as possible. Make all your consulting mistakes while you are
still employed full time. Make your job work for a change.
Competing
With Asia’s Engineers
by Tom A. Freehill
I have been
asked to write an article on how to compete with the emerging, low wage,
engineering supply in Asia and the Pacific Rim. I believe this is the
3rd or 4th attempt, as the earlier versions had me coming across as a
rabid right-winger (even to me, an avowed right winger). While a
lot could be laid at the feet of the government, big business, etc., it
is unlikely to change without some serious new blood in Washington. So,
I will attempt to explain what has worked for me. Basically, stay in
your own back yard.
Pick on
somebody your own size. For
starters, you can pretty much forget about the companies who are doing
the outsourcing. Unless you have a specialty that they can’t find
in-house or offshore, you are probably wasting your time.
Large companies
are usually leery of outside help anyway. You are an unknown and asking
for more than they want to pay. They’ve probably already had the
offshore infrastructure in place for a while, so why should they use
American workers? If you insist on going after the big fish, try
marrying into the CEO’s family, the odds are about the same as marketing
your services.
The flip side is
this: there are still plenty of small to medium size companies here in
the US that aren’t going anyplace. Most have their own specialties and
don’t necessarily have the money to create an in-house position for a
part time requirement. They are less likely to be able to sponsor H1-B
types, or contract for offshore services (they may also be less inclined
to).
The decision
makers in the smaller companies are usually easier to identify and are
more approachable. Attending local or regionally based technology
councils is a good place to start. You might consider affiliating your
local network with some of these technology councils, as has been done
in the CT Consultants’ Network.
Look bigger
than you are. My own experience is
that your potential clients are probably want a prototype widget in
hand, something to show for their money.
What this
entails is developing a level of subcontractors who can handle the
portions of the project that you can’t do, or don’t have the time to
bother with. If you do hardware design, you’ll need a board fab house,
an assembly house and most likely, a machine shop. If you can’t do the
layouts or generate mechanical drawings, then you’ll need to hook up
with someone who an. If you do software, you’ll need a CD burner. Just
make sure that you can deliver more than paper.
The
relationships with your subs cannot be over emphasized. Use people that
you can work well with and that require no supervision. Get your subs to
bid firm/fixed price (assuming you don’t mess anything up) and pay on
delivery.
Most people are
used to “waiting on the check”. If you want them to drop what they’re
doing to handle your emergency, make sure they know that you pay quickly
and without having to be asked.
Even as a
one-employee (you) company, you need to look like a vertically
integrated conglomerate to the outside world. As in any field, it helps
to have a good niche, but the niche shouldn’t be too narrowly defined.
Once you have your subs lined-up, you can start playing the role of
program manager/systems engineer. You pick the interesting parts and
farm out the rest.
Expand your
capabilities by partnering with others in your network. Again, chose
carefully who you partner with. Partners and sub-contractors should be
people that you would trust on a date with your daughter.
Marketing.
This is an area in which I am not
well versed, since I consider myself to be exceptionally lucky. You need
to get your name out is about all that I can tell you.
Many people have
good luck with the
IEEE Consultants’ Database and/or their local network’s website.
Some don’t. It is hit or miss, but an inexpensive way to get maximum
exposure.
My company has
been listed on the IEEE-USA and CNC websites since its inception about 7
years ago. Early on, the “hits” trickled in and some became moneymakers.
I have not taken on a new client in the last 3 years, as all of my work
now is repeat clients or referrals (small to medium size American
companies).
I am still using
the websites and the “hits” continue to come. Unfortunately, they never
come when I have any free time, so I usually refer them to others in my
network.
What to do when
the “hits” come is a matter of style. A phone call or two, prior to any
serious negotiations, is good advice. A lunch over beers is even better.
No talk of money, just the project at hand. Anyone who can give pricing
without a few days to digest the requirements is looking for trouble.
The purpose is
to feel the prospective client out. Will you work well with them? Will
you be able to deal with them if things go in the tank? A little free
time can be an investment well spent.
Service.
If you’ve done everything else
right (or you’re just plain lucky), you’ve got the project. Now you need
to deliver and convince the client that you are the best thing since
sliced bread. If they need the widget next week and you know it will
take 4 weeks, tell them 6 weeks.
As long as you
can communicate the reasons for the delays, they can plan around it. If
you tell them that they can have it next week and don’t deliver, you’re
name is mud. If you tell them 6 weeks and deliver in 4, then you must be
pretty sharp.
The preliminary
phone calls (or lunch over beer) are the starting point for a hopefully,
long and prosperous relationship. You need to make sure they know that
you are in it for the long haul and any fire drills are your fire
drills. If you don’t mind phone calls on the weekends, tell them (but be
prepared to get them). There are many small to medium size companies out
there that are in the same bind as many engineers (outsourcing). Most
are not ready to throw in the towel just yet. Be they clients or subs,
they can be powerful allies. Your assembly house (or whatever) may get
RFQs requiring engineering work, who would you expect them to call?
(Disclaimer: As
the author has never been observed walking on water, the above
observations and recommendations are his and his alone)
For more information on IEEE-USA's Consultant
Services, the Alliance of IEEE Consultants' Networks Coordinating Committee, or how to
start your own local IEEE Consultants' Network, contact:
Scott D. Grayson
IEEE-USA
2001 L Street, NW, Suite 700
Washington, DC 20036-5104
(Office) 202/785-0017
(Fax) 202/785-0835
(Email) s.grayson@ieee.org
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