The Money Files

A new European law about using contract workers comes into effect in the UK on 1 October 2011. If your project relies on temporary staff, freelance workers, or contractors, you may find that your project costs go up.

What is the new law about?

The Agency Workers Regulations entitles freelancers, consultants and other ‘agency’ staff to equal access to benefits and equal working conditions to those of permanent staff. That impacts everything from maternity pay to annual appraisals and the right to attend the Christmas party.

Employing a temporary worker on your project means that they will be entitled to information about job opportunities in the company, access to the canteen and to use the childcare facilities if these are provided by the company: basically, they are ‘equal’ to permanent employees. It is likely to take some time to establish how far this goes: will they be entitled to a car parking space, for example? Or luncheon vouchers? (Although I’m not sure if companies still give out luncheon vouchers!)

These benefits apply from the first day that the person takes a role with the company. There’s another level of benefit for contractors, though. This level kicks in after the person has been in post for 12 weeks. At this point they become entitled to the same basic working and employment conditions as a permanent staff member.

That means that contractors become entitled to the same working hours, rest breaks, equal pay, overtime payments and bonuses. They also become entitled to annual leave, with parity to what is on offer to the permanent staff. One quirk of the new law is that they can choose to take the time off or receive additional pay in lieu of the holiday time – not all companies offer permanent employees the opportunity to do this, instead opting for a ‘use it or lose it’ policy.

What is the impact on your project team?

Contractors:

Contractor rates are typically higher than permanent staff rates because contractors are currently not entitled to holiday pay, sickness absence pay or other benefits. With the introduction of the new law, you could have the opportunity to negotiate a reduction in contractor rates to take into effect the additional payments required for holiday entitlement.

Overall, costs for contractor staff could be higher, and you would be advised to review the provisions of the law and plan this into your budgets, especially if your project needs contractors on the team for over 12 weeks. You may even find it harder to get approval for temporary team members, because the terms of the new law make it less attractive to employee short term contractors.

Permanent staff:

Don’t forget the impact of all this on the permanent staff in your project team. Contractors are generally on high day rates – and now they are getting holiday pay? Managing the morale of your permanent team members when faced with high earning contractors could be tricky, so think about what you can do to address the balance. What else can you offer in terms of reward and recognition to support the permanent team members?

You may also find that permanent team members who have been thinking about contracting decide that this is the push they need to leave employment and set up on their own as a project management contractor.

What next?

First, find out if the rules apply to your company. Talk to your Human Resources department. This is the result of EU regulations, but even if you are working in a non-EU country, it could have an implication for your project if you have a European division. Normally, the rules of engagement in the hiring country apply so even if you are working elsewhere, team members based in the EU could be affected.
 
Second, find out if the rules apply to your contractors. In my company, The Otobos Group, I have a number of part-time staff – including an accountant and a virtual assistant. The Agency Workers Regulations do not apply to these people because I buy services from their companies, I do not have the individuals under my direct supervision on a day-to-day basis. There might be contractors or freelances to whom this applies, but given the cost, time and reputational damage that going to court incurs, it is best to be careful. This article is not meant to provide specific legal advice for your situation, so the best thing to do is to check now about how the new regulations will affect your project team!

Arras People, the specialist project management recruitment company and the people behind How to Manage a Camel, have just released their latest Project Management Benchmark Report.  This is an annual, ‘state of the industry’ UK project management study, and each year it includes information about salaries and corporate budgets.  Here are some of the highlights from this latest report.

Training budgets cut

• Over one in five employees say that there is no training budget for this year.
• Only 15% of employees have an agreed training budget or plan.
• 15% of employees state that they would think about funding their own training this year, if they felt they would see adequate returns. This goes up to 47% for contractors, many of whom take advantage of courses run at the weekend.

Salaries static

• Salaries across all respondents was flat: 41% of respondents said there was no change in their salary against last year.
• Some people were lucky: 17% of respondents reported an increase of more than 5% (up from 12% last year).
• Some weren’t so lucky: 18% saw their remuneration fall (down from 27% last year – at least this is improving).
• Nearly a quarter of people reported an increase of between 1% and 5%, but this is mainly employees, not contractors.

As well as looking at salary movements, the survey gathered data on salary amounts.  The mode salary for project practitioners in the public sector is £30k to £40k: 36% of respondents fit in here. In the private sector the mode salary is the £40k to 350k band.

Benefits

Part of a remuneration package is benefits: cycle hire scheme, childcare vouchers, season ticket loan, pension and so on. If you get these, consider yourself luck: 52% of employees reported that they receive no benefits.

The full 36-page Arras People Project Management Benchmark Report 2011 is available on line here.

Want a new job?  The growth areas for new jobs are outsourcing, business transformation programmes, shared services and offshoring, according to Wellingtone Project Management.

Vince Hines from Wellingtone Project Management summarises the state of the PM recruitment world every so often, and his latest update shows that people are still hiring staff for project work.  I’m not at all surprised by the outsourcing and offshoring comments – I spoke about the impact of the economic downturn and the increase we’d see in these types of projects at the APM conference in 2008.

Many large organizations kicked off business transformation efforts as a result of the recession, and they are now part way through their programmes.  If your organization is doing this, and you have the chance to get involved, Hines recommends that this would be a “good career move”.

He says:

Cost reduction and efficiency improvements are, perhaps not surprisingly, strong areas for project growth... Equally other areas of particular interest within the project management industry include:

• Recognising need to improve project selection & Portfolio Management
• Demand for improved resource management
• Drive to establishing / developing PMO capability to leverage benefits

However, Hines reports that confidence overall is reducing.  August was a busy month, but things are tailing off now as we get closer to the end of the year.  The total number of employers who have declared themselves out of the running for new hires through recruitment freezes has risen from 30% to 37%.  Hines thinks that we’ll see this level of cautiousness for quite some time.

So, in a climate where we’re seeing more people put the brakes on recruiting at all, how can you make yourself as hire-able as possible?  Companies have realised (finally!) that project selection is a key area in getting return on investment for their projects.  Pick the right projects, and you’ll get the benefits.  Pick any old project, and your company could spend a lot of money doing something that won’t really make that much difference.  Project managers and PMO staff who understand the business case process, can identify benefits and compare projects will be in demand. 

Hines also believes that companies want to manage their people more effectively.  Project managers who can people-manage as well as project manage will also be sought after.  Resource leveling and resource forecasting, combined with predicting how projects in the pipeline will change the demand for project and other staff in the future, are also key skills to highlight on your application.

Unsurprisingly, all this boils down to is that project managers who have kept up to date with the way in which the world has changed as a result of their not being lots of money to slosh around on failing projects, and who are highly skilled, personable, and able to help their businesses achieve the corporate objectives, will be targeted by recruiters.  If that sounds like you, good luck with your job hunting – there’s a job out there for you.  If it doesn’t sound like you, what are you going to do to improve your chances?

Want some help brushing up your project financial management skills?  Then take the Learn Something New Team Challenge from Safari Books Online.

All you have to do is use one of their books to help you deliver a project of your choice.  Send them the details of your project, the challenges you are facing and some information about the skills you need to do the project - project accounting, help with budgets or whatever.  Then look up what you need to learn on Safari and do it!  There are over 140 financial management books, and a load more on other topics.

The prize is an e-reader or a Starbucks espresso machine (I know which one I would rather have).  The downside is that the e-reader prize is only for a maximum of a team of four, so don't get too excited about being able to dish out iPads to your entire department if you win.

I have used Safari online through a corporate subscription and it is very useful.  In particular, when we needed to assess different software products in order to select the best fit for us, I found A Guide to Software Package Evaluation & Selection: The R2ISC Method by Nathan Hollander which was perfect for the job and a great help.

Essentially, Safari Books Online is an on-demand digital library that delivers thousands of books (and videos) from a variety of technology and business authors from massive publishing houses like O'Reilly and Microsoft.  It's not the easiest thing to read management and technical books on a computer screen, but if you are scanning a contents page for the section that might just save your project, it's certainly worth a look.

I'm not affiliated with Safari in anyway, but I thought this competition was something useful to share - the closing date is 9 August, so get your skates on!

For every £1 spent on change management on large projects, organisations get a return of £6.50.  

That’s the headline research from a new study by Changefirst, a company that helps organisations implement change more effectively.  You would expect a change management company to advocate change management, but their study shows massive returns on doing change management properly.

The project started as a discussion on LinkedIn and over time developed into a short survey.  Financial outcomes and ROI are difficult to establish, so survey respondents were asked to look at projects 6 to 9 months after completion to see whether the change had ‘stuck’.  

"Delivering successful change projects is a key strategic issue for organisations and it has a significant impact on the bottom line,” says David Miller, Managing Director at Changefirst. “Our research shows that on large projects over 40% of change managers believe that at least a third of the financial gains could be attributable to change management activities alone.

In my opinion, only the large projects have dedicated change managers.  Otherwise project managers are left to do the change management activities too.  The research still stacks up for small projects: on these every £1 spent on change management generates a return of £2, which is still pretty impressive, especially when you think that dedicated change management budgets are just a small part of what it costs to deliver a project.

Over 77% of the 2,500 respondents reported that the proportion of implementation budgets spent on change management activities was less than 10%. “This is a little under the norm,” says Miller. “The proportion of spend on change management is usually about 15% for the larger £1 million plus implementations. It may reflect the economy and type of projects. But it may also indicate that organisations don’t have to spend huge amounts on change management to get a very attractive return.”

How do you know if the return on investment is purely down to change management activities?  The Changefirst survey looked at that too.  On projects that cost over £1m, the savings generated were about £2.5m after 9 months.  Personally, this seems as if companies are choosing exactly the right projects to work on, if they are getting benefits generated so quickly at such impressive rates.  Over 40% of respondents managing large projects, believe that more than 30% of these results could be attributed to change management activities. Essentially that means that for projects costing over £1m, change management  is responsible for over £800,000 worth of value in the first nine months.  For smaller projects the numbers drop, but they are still impressive.

I’m pleased that the study shows that change management is a good thing, and that as well as helping the outcome of projects to stick, it also contributes to financial return.  But I can’t help feeling slightly sceptical about the survey results.  I don’t doubt that Changefirst is reporting exactly what people answered – they have been very transparent and you can read the whole report here) – but the picture seems overly rosy to me.  Either I’m a cynic, or companies really are getting the hang of portfolio management, and in the middle of the economic downturn, really were working on projects that delivered massive benefits over the short term. Good for them.  What do you think?  Is this the experience you’ve had in your company?