Part One - Thinking of becoming a contractor?

Contracting can provide invaluable and varied experience as well as a great lifestyle. However, it does have its ups and downs.  The information here should help you to make informed choices, and hopefully assist in enabling you to maximize on your future prospects.

IT skills that are generally in demand in the Auckland area include:

ERP skills – consultants, analysts and implementation specialists who have been through at least one major implementation of a large system, for example, JD Edwards, SAP, Oracle or Peoplesoft
IT Support skills – helpdesk, desktop, PC Hardware and common software applications like MS Office
Network Engineering skills – solid background supporting Windows 2000/2003 servers, MS Exchange and working with network protocols
Programming skills – C++, C#, Delphi, Java, ABAP, XML and Microsoft.Net
Database development skills – Oracle, SQL Server, Sybase, Access
Database Analysis and Administration skills – Oracle, SQL Server, Sybase
Applications Support Analysts – Subject matter experts who have the ability to support a large user base in the use of major software systems including ERP systems, Medical systems, CRM systems etc
Business Analysts – SDLC, Data, BPR or web 

What type of person makes a good contractor?
Skills

If you have sound technical skills, good people skills and excellent communication skills you will probably make a good contractor.  However, your skills should be marketable.

Personality

Since contractors are usually called in to fill a sudden skills gap, you should be a self starter who can quickly adapt to working cultures, fit easily into established teams and above all, get on with the job.  Contracting calls for a mature attitude and confidence in your abilities.  Do bear in mind that there will be little if any job training.  On the plus side, contracting means you don’t have to get involved in office politics.  Good contractors stay clear of the politics for as long as they can.  After six months of a contract, permanent employees around you tend to forget you are a contractor.  Quite often, the gentle reminder “Remember, I’m still a contractor” usually does the trick.  A good sense of humour also goes a long way, as does a commitment to teamwork. IT systems are created by teams; well integrated teams are far more productive than a collection of individuals. A good contractor will understand the importance of teamwork and contribute openly with respect to knowledge and previous experience.  It’s a well known fact that good contractors are extended due to the fact that they add value and skills beyond those they were originally hired for.

Experience

The first contact a client will have with you is usually through your resume.  If they seek a contractor for a role they first check out your previous experience – have you done this kind of work before?  Where?  For how long?  Good contractors are well experienced at what they do – they are hired for their technical knowledge, business knowledge and the ability to apply it to a client’s project. 

Commitment

As a contractor, there are no bonuses or company benefits - you are only paid for the hours you work. However, contract pay rates are higher than those enjoyed by permanent employees which compensates for those sick days, holiday times and self funded training courses.  Typically, contractors would expect a gross hourly rate averaging between 1.25 and 1.75 times that earned by permanent staff.  The deeper the skills and broader the experience you have, the higher the factor.

Marketing yourself

It is often referred to as the “contracting market” for good reason.  Just as in any other commercial area, contracting is usually about availability, price and quality. Advertising your abilities is best done with an effective CV.  Clients want to be able to quickly establish the extent of your skills, knowledge and experience so your CV should provide that information in a way that is easily accessible and easily read.

For example check out our CV Guide on our “Contractor Information” page:

Availability

Do be available at any time for us to contact you.  A mobile phone is the best way to stay in touch.

“Price” or hourly rate is often dictated by availability of skills and the client’s budget. The general rule of thumb is that the longer the contract the more negotiable you should be on hourly rate.

Part Two – Getting Started
When you begin contracting, you are effectively setting up a business.  You should be aware of tax laws and your obligations regarding GST.  You have the choice of operating as a sole trader or of starting a limited company.

GST

If during the current financial year you expect to gross over $40,000 from your contracting work, you will be required to register for GST.  You have the choice of payment dates; we recommend that you either pay monthly or every two months.  This will ensure you won’t be charged for late filing fees or pay interest on overdue payments.

Sole trader

As a sole trader, you will be responsible for keeping records of your payments and GST, which can be done quite simply on a spreadsheet.  We will provide you with a “Buyer Created Invoice” at the end of each month which lists payment made for the month and will include the amount of GST we have paid you (if you are GST registered).  You should keep receipts for all your expenses incurred in pursuance of your work including costs of equipment, courses, software etc.  You are also responsible for paying tax at the appropriate rates.  It would be advisable to open two bank accounts one of which should be used to process your GST payments and receipts.  For further information see www.ird.govt.nz . 

Limited Company

When you form a limited company, we can make payments to your company account and will send a “Buyer Created Invoice” at the end of each month showing payments made (including GST).

Health

Since you are not paid when absent from work, it can be of benefit to take out some form of health insurance to ensure you are not on a long waiting list for surgery.  At work, you should also make sure you have regular breaks and exercise.  Your body is your most important business asset – look after it well.  Maintain an awareness of OOS (RSI) and stress.

Stress

Many people thrive on stress.  Remember, there is positive and negative stress.  Dealing with either depends mainly on your outlook on life.  When you start a new contract, usually, the pressure is not on you so much at the outset as it is towards the end of the project.  Consequently, it’s best to start at a good pace and get up to speed as quickly as possible.  In this way, you can avoid those end of project stresses.  Do get to know your colleagues and key people in the business as soon as you can. They will be valuable sources of undocumented information at key times. 

You are being paid by the hour – don’t take your work home.

Attitude

Be professional, calm and maintain your sense of humour.  It is important to be seen as part of the team from the first day.  Treat people as you would wish to be treated (unless you are a masochist).  Be tactful and diplomatic.

Communication

If real problems arise, deal with them quickly by talking to your client or manager.  99% of issues in the workplace can be traced back to poor communication.  Remember there are two aspects to communication – talking and listening.  If you do make a mistake, own up to it quickly.  Your permanent colleagues would much rather know what the problem is quickly.  It takes 95% of repair time to diagnose a problem, and the remaining 5% to fix it.  Your colleagues would much rather save that 95% of time and will be more forgiving as a result. 

Stay in regular contact with your agent.  If the work looks like drying up or things are quietening down, contact your agent at least four weeks before the end of your contract.  Unless you fancy a long summer break, try to have your contracts take you through to February.  A contract that finishes in December usually means you may be out of work for some time.

Confidentiality

As a contractor you will have signed a contract that states you will maintain client confidentiality and will not divulge learned information to anybody outside of the organization.  In the same way, your hourly rate is confidential to you.  Do not discuss your hourly rate with permanent employees – it just causes resentment.

Succession Planning

Your overall aim on every contract should be to have to have your client begging you to stay.  Even if they cannot obtain approval to extend, you will probably be top of the list and will be contacted well in advance when they obtain approval for future work.  A satisfied client will also be happy to act as a referee on your behalf.

Insurance

MTR provides professional indemnity insurance free of charge to contractors working at our client sites.  To qualify, you should check, sign and return all forms and contracts issued to you.

Part Three – Best Working Practices
“Clarity of perception leads to superior performance”

In this section we offer some helpful hints to IT contractors with the aim of improving communication with the people they work alongside.  Clear and professional communication leaves little room for ambiguity or misconception.

The Client

Usually the person who signs your timesheet on a weekly basis is considered to be “the client”.  It is important to maintain regular communication with the client as they will be answerable to a manager for the overall progress of the team.  If you are working directly for the client, it’s always a good idea to arrange regular meetings to exchange information and ideas and highlight issues that may need addressing.

Clarify

Understand the client’s expectations of you before you start the project.  Reflect them back in email form with added deliverable and timeframes.  If you make recommendations, do so in an email that you can refer to later should it be required.  Save copies of your emails in a file to maintain a paper trail as backup.  In this way you can keep track of changes and instructions.  For example, after every meeting, send a thank you email to all attendees for attending, and iterate notes about the key points raised in the meeting, the agreed deliverables, timeframes and who agreed to do them.

Reviews

As a contractor you are probably employed to complete a specific task or project.  As such you should not expect to have quarterly or six month performance reviews.  Your timesheet on the other hand is a very important document in that a signature from the client confirms two things; that you worked the hours listed, and that the quality of your work at least met expectations.

Documentation

Since you will know the approximate end date of your contract, it is important to leave as much clear documentation as possible for the benefit of the permanent employees who remain. This will help them understand:

a)      What you have achieved
b)      How you did it
c)      Passwords and the whereabouts of protected files
d)      General maintenance required  to keep things working

Too much is better than too little, use clear English and start your documentation at least one month before the end of your contract.