Working as a consultant in Industrial Automation Field

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Thread Starter

babar jamil

Hello Friends:

I have worked in SCADA field for all kind of companines in last about eight years. The list includes system integrators, Engineering conuslting companies and major oil and gas companies (end user of the scada system).

Now that I have moved to Canada from USA I am having a hard time finding a job that will pay me as much as much I was making back in USA. So I am thinking about doing consulting work. However, I have no experience in that. I know that I can do the technical part of the job. No problem there. My problem is that I don't know what to charge, how to establish a contract and what to include in the contract so that all of my basis are covered and I am not taken advantage of by anyone. Can someone give me a guideline to follow.

I would appreciate all the help that I can get.

Regards:
BJ
 
This doesn't surprise me. I work for a large US company who has been using this as a cost reduction strategy by eliminating jobs here in
the US and hiring replacements in Canada. Apparently, the cost of an engineer in Canada (salary + benefits + infrastructure) is about 1/2
the cost of an engineer in the US. From what we have 'heard' the salary alone is about 1/2 of what a US employee will make.

Obviously this 'strategy' has many here highly upset. Others, outside of the company, have commented on the possible long term negative
impacts of a US based company using this tactic.

What do you (A-List members) think?
 
M
First, get a good accountant. There are issues related to protection of personal assets from law suit, filing estimated tax returns etc. A good accountant could be better than a good lawyer and certainly cheaper.

Someone once told me to take your annual salary as an employee, divide by 1000 and then bill that as your hourly rate. This covers you for times without a contract plus your medical etc. Personally, I don't charge quite that much and I am doing well so far.

Now I am assuming the US marketplace. Canada may be very different considering public health, etc.
 
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Shah, Dharmesh

Can you brief me more about your background, experience, nature of industry you have been working for in USA, your skill sets and areas of interest.

Dharmesh
 
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Another book is the Handbook for Consulting Engineers by Mueller. A little dated now but still a good guide.

In starting a business it is advisable to design your activity as best you can at first. Call around and solicit feedback from the market. Most often the market doesn't know what the market wants, but their information creatively rephrased in the form of your business approach has a better chance of selling.

Innovative approaches/services and niche specialization are some things to consider. Competing in a "me too" arena is more difficult. When you are an innovator, you have a monopoly of sorts. When you strive for innovation, you retain your customer base as they'll grow with you.

When you feel you have a good strategy, then jump in full bore. Don't go half way. Get a good logo, name, and even though you may be starting as one person, don't limit your thoughts to just yourself. Be frugal at the same time. Don't advertise lavishly. Consulting is sold on a personal basis. Use existing contacts - they will be your best source of business - the people who know you.

Intelligent letter or proposal writing is as important as how well you execute.

Don't get too stressed out and make it fun!

Paul Jager
CEO
www.mnrcan.com
 
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Ian Verhappen

I have always worked and lived here in Canada and agree that we are "cheaper" than some engineers in the USA. However, the REAL reason we are cheaper is the exchange rate. At present, $1.00 US is worth $1.50 CDN.

Ian
Ian Verhappen
 
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Anthony Kerstens

Also, if you're operating within Canada, check with your provincial engineering association.

For example, in Ontario, www.peo.on.ca has online guidlines on fee schedules and legal requirements for liability insurance.

Another site, www.ospe.on.ca/cchome.htm, has extensive professional links.

Anthony Kerstens P.Eng.
 
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Michael Griffin

I am not working as a consultant myself, but I can give you a few bits of advice which may prove helpful.
- You will want to incorporate. You didn't mention which province you are in, but in most (if not all) this can be done quite cheaply and quickly as a numbered company.
- Someone else mentioned talking to an accountant. You will definitely want to do this first. The accountant can give you the needed advice on setting up the financial (records, tax, etc.) side of the business which you will need to take care of before starting your first contract. He should also be able to tell you how to incorporate.
- Keep all your receipts, and pay close attention to tax deductable business expenses. Get some good advice on this as well.
- You will need to get a Worker's Compensation (or whatever it is called in your province) rating as you are self employed (an employee of a company has this taken care for them). This rating is an estimate of the degree of risk your occupation entails. This in turn determines the worker's compensation premium you need to pay (this is insurance which covers you if you are injured on the job). You obviously don't want an unnecessarily high rating. Since the worker's compensation board won't have a classification called "SCADA designer", you will have to see what classification you can fit into. Someone else on this list may have some suggestions there.
- Your customer *may* require you to have liability insurance if you come onto their site to do some work (as opposed to just attending a meeting). This is intended to cover you in case you accidently set fire to their building, or something similar.
- When dealing with your customers, work out a clear definition of the project with them *in writing*. This has been discussed on this list previously.

I hope the above doesn't sound too daunting. It can't really be all that difficult as people do it all the time. I know someone who recently became a self employed computer programmer, and his accountant guided him through the process in a fairly short period of time. The accountant isn't an ongoing expense, as this consultant looks after his own books (actually, his wife
does) after they were set up.

There have been several major oil and gas related projects announced in the news recently. I can't give you any suggestions on business contacts or project timing, but there may be some significant opportunities arising from them. These include oil sands, offshore oil, and gas pipelines. Someone else on this list who is involved in the oil business may be able to give you some more information about this.
 
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Michael Griffin

I think it sounds like a terrific idea. You forgot to mention where we're supposed to apply for these new jobs though. :)

 
Go to the library and get a book such as "How to Succeed as an Independant Consultant". There are several similar titles relating to this.
 
Another book is the Handbook for Consulting Engineers by Mueller. A little dated now but still a good guide.

In starting a business it is advisable to design your activity as best you can at first. Call around and solicit feedback from the market. Most often the market doesn't know what the market wants, but their information creatively rephrased in the form of your business approach has a better chance of selling.

Innovative approaches/services and niche specialization are some things to consider. Competing in a "me too" arena is more difficult. When you are an innovator, you have a monopoly of sorts. When you strive for innovation, you retain your customer base as they'll grow with you.

When you feel you have a good strategy, then jump in full bore. Don't go half way. Get a good logo, name, and even though you may be starting as one person, don't limit your thoughts to just yourself. Be frugal at the same time. Don't advertise lavishly. Consulting is sold on a personal basis. Use existing contacts - they will be your best source of business - the people who know you.

Intelligent letter or proposal writing is as important as how well you execute.

Don't get too stressed out and make it fun!

Paul Jager
CEO
www.mnrcan.com
 
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Greg Schiller

Welcome to the madness.
I've done this twice now in my career.

Top Ten Consultant Tips.

#1 DO NOT INVOLVE LAWYER$$!
Project specifications vary from a simple conversation to a multipage government proposal. Unless you are a lawyer you'll spend lots of money tailoring each contract to each of your clients specifications. Some companies will hire you under contract(you sign). Keep in mind that your quotes and invoices are legal documents. They become binding upon the transaction. You will keep 99% out of trouble by keeping your project scope somewhat flexible. Just be verbose about the per diem charges and that the customer is to pay them over and above your hours. Don't be afraid to negotiate.

#2 See #1.

#3 Get a good accountant. Declare yourself as an S-Corp or C-Corp. Not sure about Canada but in the US it isolates your assets from the business. You work for your corporation. One thing you will have to do though is act like a corporation. Shareholder meetings, Minutes from these meetings, publication of bylaws. They also come in handy for Personal Tax and Business Taxes and how they mix.

#4 You can do a lot worse than QuickBooks Pro. You'll need the Pro package to get job costing.

#5 Diversify your clientele. If there is one hard lesson I have learned it is that you will not survive with one good large account. You are better off with 10 smaller accounts in different industries. Business by definition changes day by day minute by minute - be prepared to change with it.

#6 If you do not have #5 you should be on the phone now. Unless you already have a staff of sales, marketing etc. a good deal of your time will be spent on hustling up sales. Consultants that don't make it do so because they don't know how to market themselves, sell concepts and ideas. Web sites are good but not necessary. Shaking hands works the best of all.

#7 Insurance Errors and Omissions and General Liability. I have been told that these are not worth the paper they are written upon. The only way this helps is to get both policies from the same company. Otherwise what can happen you can have a law suit (because you have a nice reward) over something that can be covered by either policy. Then they will pass the buck back and forth stating that it is dual coverage or something like that. Be prepared to pay $2-$3000 per year for a 1 million dollar coverage(this is actually small). If you find a company that will do both. Please send it my way. This also is some what why you do #3.

#8 Health insurance. Unless you have more than 2 people working for your corp. You are most likely going to have to buy a personal policy. Now, I'm not quite sure but I think the premiums are deductible expenses.

#9 Do not spend money you do not have. Wait until the cash is in your hand before spending to create a bunch of deductions and expenses.

#10 Hope you like road food.

Good Luck.

Greg Schiller
Automatica Inc.
[email protected]
 
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Bouchard, James [CPCCA]

Remember that the exchange rate is $1 Can = $0.65 US so that you cannot just compare dollars for dollars. Also you have to remember that many things are less expensive in Canada than in the US often due to the fact that Canadian laws do not provide enormous damage claims etc. Also things like medical care and energy cost less ( we have lots of Hydro and gas ) and so on. I find I live quite well here in Montreal and to get the same thing in the US I too would have to make a lot more. So if you are doing comparisons look at all the costs and benefits not just one side.
 
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Anthony Kerstens

It's not just a difference between the US and Canada.

There are differences between cities. For example, living in LA vs Buffalo, Toronto vs Winnepeg, etc. (and New York vs everywhere :).

Anthony Kerstens P.Eng.
 
Having been there......
Do NOT hire any employees (including yourself as an employee for a corporation of one) unless you plan on having 10. The legal consequences, tax consequences, unemployment, workers comp, payroll, sexual harrassment, group health plans, pension plans, discrimination, hiring, firing, and everything else that comes along with
having employees is a REAL PAIN. If you plan on having one employee, plan on having a dozen to make it worth your time. Otherwise, stick with being a self-employed consultant.
Rick Lamb
SpecPlus! Automation Consultants
 
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