5 tips for independent consultants on contract negotiation

Contract negotiations are a huge part of being an independent consultant. Terms and conditions of the job can differ greatly between employers, which can include government agencies such as the U.S. Agency for International Development, an implementing organization, or a local NGO. Here are just some of the questions to ask before signing a contract: Does the project involve overseas travel? Will you require any special insurance cover? Is the scope of work manageable and when will you get paid? Devex spoke to a number of global development professionals with experience working as independent consultants in the sector. They shared their advice for contract negotiations, particularly as a first-time consultant. Here is what they had to say. “The best thing to do is to make sure you have a good sense of the workload, administration, reporting expected by the client and ‘on-demand’ requests that are anticipated.” --— Giles Dickenson-Jones, independent consultant, public policy and data analytics 1. Consider the workload Generally, consultants are not hired on an hourly basis and instead, are hired for the duration of a project or to support specific deliverables. They may be hired at the proposal writing stage or be brought on board later when the deliverables have already been determined. Before committing to a project, it’s important to evaluate the scope of work and the time it requires. While a flexible schedule is one of the perks of working as a consultant, it is also easy to end up working round the clock to meet deadlines. Often, the deliverables are totally unrealistic, said Craig Zelizer, a mentor with Nexford University's The Global Grid program, resulting in 16-hour days compressed into short time periods. “I’ve learned to better scope out the time I think it’ll take me and not just agree to something,” Zelizer said, who is no longer consulting full time but has done so in the past. Consultants tend to underestimate the time needed for preparation work, he said. Underbudgeting the time required for a piece of work can lead to resentment toward the employer, he added. “Like it or not, many times we’re hired to bring both the expertise and energy,” said Giles Dickenson-Jones, an independent consultant focusing on public policy and data analytics. In his experience, consultant positions are based on specific outputs and don’t stipulate the hours required, he told Devex in an email. “The best thing to do is to make sure you have a good sense of the workload, administration, reporting expected by the client and ‘on-demand’ requests that are anticipated,” he advised. Another thing to think about is the length of the assignment, and what other work you may be missing out on. This, in turn, can inform the rates you charge: “It’s typically reasonable to expect a higher rate for shorter consultancies,” Dickenson-Jones explained, “to account for the opportunity cost of it crowding out longer-term consultancies.” Importantly, don’t be afraid to decline work if the rates are not acceptable or the scope of work is not manageable, advised Abdirashid Hussein, an independent consultant based in Kenya. For some assignments where the workload is going to be too much for you alone, you may need to hire someone to assist you — an additional cost you need to account for, he added. 2. Travel and other expenses Some consulting gigs require travel to projects in the field, with additional costs to be covered. These kinds of costs tend to be negotiated on a case-by-case basis, Dickenson-Jones explained, as some firms will pay a per-diem while others prefer to work with an all-inclusive rate. “I’d say it’s important to make an up-front estimate of your ‘all-inclusive’ consultancy rate and start any negotiation from there,” he said. Going into negotiations, you might want to think about the intensity of the work, how much you will be required to work beyond your typical business hours, and the length of the consultancy, he added. Dickenson-Jones also recommended taking into account travel expenses on the ground: daily travel including car hire or taxi, costs of accommodation and meals, any software you may need to purchase, and what he referred to as “incidental project expenses,” including stationary, office hire, project-related events, or internet costs. “Hotspot consultancies” can involve travel to conflict-affected regions and different levels of risk, Zelizer explained, who has worked in fragile locations. Still, in some contexts, he admits he should have paid more attention to the fine print regarding insurance being provided by the contractor. For Hussein, who often works for local USAID-funded implementers, insurance is not always provided, it can depend on the organization. As an independent consultant, sometimes you are just on your own, Hussein told Devex, so it’s important to consider the cost of taking out individual insurance. Hussein also recommended being “choosy” about the work you take on. He specializes in conflict analysis and community engagement in Kenya, Somalia, and Ethiopia, and has extensive field experience working in these countries. If he were offered a job in South Sudan, for example, he said he would “think twice.” “[It would] depend on the rate, how that organization will take care of me and my security, and other needs,” Hussein explained. 3. Setting your rate Knowing your monetary worth can be one of the biggest challenges for independent consultants, particularly those new to the sector. When thinking about your daily rate, think about the market and who your client is, Zelizer explained. You have to be able to figure out the appropriate rate, he continued, if you are going to be working for a small nonprofit or local NGO, price yourself accordingly. On the other hand, if you are going to be working on a USAID grant or contract, you won’t have this flexibility and your rate is calculated based on your bio data, he said. Officially known as the contractor employee biographical data sheet, this mandatory government form requires the individual to provide basic information, including salary history. You also have to remember that as an independent consultant, you don’t have an employer covering your health insurance or a retirement plan, and you don’t have that same job security, Zelizer added. “Negotiate an upfront payment to ensure you’re at least able to finance any upfront cost.” --— Giles Dickenson-Jones, independent consultant, public policy and data analytics 4. Scheduling payment It’s common for employers to retain a portion of your fee until they receive the final deliverable. Payment can depend on the scope of work, whether you are working on research or a report, or providing training, Zelizer said. Generally, if your contract is more than 20 days, you can expect to get paid in stages and between 30-50 percent of your fee will be paid on the final deliverable. You can try and negotiate this, he added, but it can depend on who is paying and the levels of complexity involved, especially if you are being contracted by an intermediary organization. Reflecting on his own experience, Dickenson-Jones said he found it unusual for more than a third of the final contract to be paid upfront. In fact, most clients he has worked with prefer to pay nothing initially, “but it’s important to negotiate an upfront payment to ensure you’re at least able to finance any upfront cost,” he advised. “This might be less necessary if your contract stipulates a more regular and reliable payment schedule, such as monthly fees based off the time worked,” Dickenson-Jones explained, “but the key is to make sure it won’t impact the project and you’re not bearing all the risk.” 5. Ownership of work It’s important to clarify who will have ownership of any reports, trainings, or research you are producing. If not, this can lead to a lot of frustration further down the line, Zelizer cautioned. Zelizer cited two examples: a research project with a five-year negotiation process to let Zelizer and his team share some of their findings with the survey participants, and the ownership over training materials. While it is common practice that indefinite intellectual property is owned by the contractor, Zelizer insisted on modifying the contract to guarantee himself greater ownership. To navigate these situations, it’s important to understand that you have more leverage if the contractor needs you more than you need them — for example, if you have a specific skill set or expertise, Zelizer explained. Still, there will be rigid policies which the contractor won’t budge and instead, may want to find somebody else for the job. While the consensus was that everything is up for negotiation, consultants, particularly those less established, need to be smart and read the situation, and where possible, seek out advice from other consultants.