Fellow friends, I would appreciate your valuable advice on how I can strike a good deal on a proposed ( seemingly generous) offer.
I have been unemployed for various reasons over the last year. How ever this time round an attracting offer seem to come from a junior construction company I knew some years back.They want me to handle the management of their projects, i. e they proposed to relinquish the over all management of their projects including procuring new contracts by contacting potential sources of contracts.
In return they would pay me a certain amount of percentage from the NET PROFIT of every project executed.In my previous experience I used to handle similar work relationship, how ever I used to earn a certain amount of percentage commission from the GROSS contract price of every project. Getting paid from the GROSS is easy as there is no major issue that arise during payment. How ever the recent offer seem to be generous, but it could be complicated too.
I would like you to share me your experiences or suggestions on how I can strike a good deal that would ultimately benefit the company and I. I would appreciate to pre - consider issues which I need to seriously consider before I commit to sign the deal.
Many thanks Saving Changes...
Sort By:
Eric SimmsSenior Program ManagerBaltimore, Maryland, United States
I’d be wary of this arrangement, because there are various ways the company could cheat you if your pay is based solely on net profit . For example, the company could claim a number of questionable expenses, or work in collusion with suppliers to claim unexpected increases in material costs that reduce the project’s net profit or eliminate it completely, meaning you could end up getting paid nothing for all your hard work. One option is to sign a contract that gives you a percentage of the project’s net profit, but also guarantees you a certain minimum amount of pay. If the project goes well and its net profit is high, you would make what amount to a performance bonus on top of your guaranteed minimum pay amount. Saving Changes...
Dear Eric
Very valuable perspective. I am grateful for your insight.
To clarify the point further the company has committed to pay me a substantial percentage fee. How ever they want me handle my accommodation, travel and other living expenses including those which are incurred during project activities. They said I can get some advance payment that is refundable during commission payments.
Do you think it would be advisable a minimum commission percentage? That would enable me to get a fair pay at the worst of times.
I would also love to see other views.
Many thanks. Saving Changes...
Anish AbrahamPrivacy Program Manager| University of WashingtonAuburn, Wa, United States
I concur with Eric on this.
One option is to have some minimum amount upfront (like an advancement payment) and then the net profit percentage after the project is completed. This will help to minimize your accounts receivable and keeps the cash flowing while you’re working on the project.
...
1 reply by Aklilu Tekle
Feb 07, 2018 10:54 PM
Aklilu Tekle
...
Anish , Kiron, Vincent and Sante
Thank you for taking time to share your thoughts regarding the issue.
As we all know projects unlike permanent operations have so many variables that make them prone to conflicts.I am trying to take the offer in a way with minimum conflicts. The idea of getting a minimum pay at regular interval of time is the theme I got from your advices. It well taken & I will negotiate for it.
What happens if the project gets cancelled or if the company for one reason or another doesn't make a profit on the deal?
Unless I have a high degree of trust in the company and have done a solid risk management assessment, I'd go with Jerry Maguire on this one: "SHOW ME THE MONEY!!!!!"
Run away from this deal. Any serious company is going to pay for your work, as you work. The fact they want to pay a percentage of the project means they are not confident the project will be completed. Saving Changes...
I concur with Eric on this.
One option is to have some minimum amount upfront (like an advancement payment) and then the net profit percentage after the project is completed. This will help to minimize your accounts receivable and keeps the cash flowing while you’re working on the project.
Anish , Kiron, Vincent and Sante
Thank you for taking time to share your thoughts regarding the issue.
As we all know projects unlike permanent operations have so many variables that make them prone to conflicts.I am trying to take the offer in a way with minimum conflicts. The idea of getting a minimum pay at regular interval of time is the theme I got from your advices. It well taken & I will negotiate for it.
Project profits have a direct correlation to how they were tendered. if you are not in control of how the proposal was put together and understand the basis of the estimate you will never accurately know what the expected net profit should be.
I fully agree that you should negotiate a base salary and milestone bonuses. Saving Changes...
