Contractor Jackpot – How to Cash in on Opportunities

Contractor Jackpot
Contractor Jackpot - Moneymaking Opportunities

Contractor Jackpot

Most IT contractors do not see the opportunities for making really big money at a company. That’s because they are not looking for them. We look here at one way to hit the contractor jackpot.

IT contractors (and even employees) can see that a lot of the code at a company is a load of old garbage.

They know that it is badly written, it is old fashioned and it now hangs together by a string.

The company would probably like this to be rectified, if in fact they know it. However, perhaps they don’t think that they have the budget for it.

Contractor Opportunity

This is a contractor jackpot opportunity for you. What you have to do is to put together a case for re-writing the part of the system that you know. Then you will offer to do it for a fixed price.

Contractor Money Opportunities Advice
Contractor Money Opportunities Advice

What is more you will show them that it would not be as expensive as they think. It might even save them a lot more than it costs.

You are going to make a case for the company to allow you (and perhaps some others) to re-write part of the system for them.

You’d like to re-write the whole system for them, but don’t go crazy at first.

If you prove yourself with this part of the system then they may give you the opportunity to re-write the whole lot later.

Work Out the System Problems

The first thing to do is to work out what the problems are with the sub-system. You have to see the problems through their eyes.

Does it fall over in production all the time?

Is it slow in production?

Does it do what the business users want (ask them)?

Is it hard to maintain because the code is written badly?

Contractor Jackpot – The Solution

Now you must work out what the solution should be.

Should toy write it in something more modern?

How would you write it to make it more maintainable?

Why would there be fewer bugs in it and production fall-overs.

How would it give the business users more than they had before (ask them again)?

If you can give them more than they had before, so much the better.

So, you may be able to convince them that they have a problem. However, now you have to convince them that they really need to have this re-written – and give it to you to re-write.

Cost / Benefit Analysis

The next thing to do, therefore, is to write a Cost / Benefit Analysis exercise.

Obviously on the Cost side you would put how much you are going to charge them.

The mistake that most contractors would make here is to be too generous to the company and just multiply the length of time to build the sub-project by a little more than their current rate.

What will happen here is that you will be knocking yourself out when the project overruns a bit because of X factors just to make pretty much what you did before. The company will also knock you down from your original quote so you have to factor that in too.

The company understand that you are now taking a greater risk so a risk premium is built in.

They don’t care so much anyway as long as you can prove that it is beneficial to them.

I would just give them a straight cost for the different parts of the subsystem without breaking it down into X cost per hour for Y hours.

The Contractor Jackpot Clincher

Now is the crucial bit. You have to be able to show them that this will save them more money than it will cost them. Preferably it will be a lot more.

Most companies say that any money that they spend on systems etc. must pay for itself in either 2 or 3 years. Assume 2 years and make sure that your Cost Benefit Analysis brings that out.

So how you can you save the company money? What are the factors?

Production Costs

Find out how many times that this part of the system has fallen over in the last year. Try to ascertain what the costs of fixing the problems have been.

You could find out from someone in Finance what they work out are the cost of their IT and production employees are per day. In this they include the total costs such as shared building costs.

Then try to ascertain how much effort was spent by everybody when the system fell over, in ascertaining the problem, and in putting it right.

Also work out what it may have cost the company in lost opportunities (if any) from the business users who use the system.

They will be happy to tell you what it costs them (and have a good whine at the same time).

There will still have to be some costs factored in for your new part of the system falling over. Just make that the average for the rest of the system. Presumably that doesn’t fall over as much as your part.

They won’t believe zero fall-overs for your new part

Maintenance Costs

Find out what it has cost in the past year to maintain that part of the system when changes have been made to it.

Again work this out (if they don’t have this info already) by using the standard daily cost for IT employees there times the days spent on it.

The give a reasoned argument as to how much this would be cut down by your re-writing the sub-system

Business Opportunities

Find out from the users how much time they could save if the sub-system was much more efficient to use.

Even more importantly, find out from them how much more business they could win if they had a sub-system which would have the extra facilities that you are now going to give them.

This could be quite substantial

Runs more efficiently

If you think that you can re-write the code so that the system runs more efficiently and could save on Production costs, factor this in too

Pay for Itself

Hopefully you will be able to show them that the changes that you will make will pay for themselves within two years.

Remember that they are going to try to pull your case apart. So, hopefully, you should have some slack built in that won’t take it past two years.

If you can make a case that it would pay for itself even more quickly than that then you really are giving them an opportunity.

If the savings could be made just out of this year’s budget then they are not spending anything at all. They may not have to get permission from a higher authority.

Financial Clout

So, what about the problem that they might not want to give it to you because you are a one-man show?

Well, hopefully, the work is substantial enough for it not to be a one-man show. You will be able to hire a few contractors yourself to help you re-write the sub-system.

If you have come to the company through an agency, as most contractors have, then use the financial security of the agency as a back-up for you.

After all, you will almost certainly have to cut them in somehow. So you might as well take advantage of their financial clout to get the work.

Dealing with the Agency

There’s a number of ways that you can make an agreement with your agency.

For instance you could just cut them in for a percentage of the project. This would be lower than their current mark-up as you have found the work for them.

Another way would be to allow them to supply at least some of the extra bodies that will be needed on the project.

Don’t let them have all of them, because you will want to be able to create a new business using people that you have brought in.

You might be able to get away with promising them that they can be the sole agency for the project. They will be able to supply all of the people that you can’t.

A Contractor Jackpot Opportunity?

Once you get this sub-system built and implemented successfully you are now the man (or woman) and the rest of the system is now open to you. That’s especially if you built the sub-system in a brand new, more efficient, technology.

You can hit the contractor jackpot.

So, have a think now.

Is there a part of the system that you know something about that would be much better if you re-wrote it?

Could you do it for them at a cost that would actually same them money in a set period of time of two years or less?

If you can answer yes to both of those questions then there is an opportunity going a-begging at your workplace. It’s just waiting for someone to take advantage of it and hit the contractor jackpot.

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