Moving from Permanent to Contracting in Project Management

Thinking of making the jump from permanent into contracting roles? It can’t be that difficult can it?

I have been in project management for around 15 years starting as a junior project manager. My latest role sees me running the project management of a housing provider.

Now I have decided that I no longer want permanent paid employment.

So I have handed in my notice with no job to go to. My colleagues have called me mad. Why take the risk they tell me.

Well there is a reason and that is because I want to make the jump into contracting.

Now this article is not about which is best permanent or contracting. This is about my experience of moving from one to the other. You will see some of the questions that I have had to answer along with some of the actions I have had to take. We will cover handing in your notice and being honest with your line manager. Other topics covered is day rate, CV, IR35 and setting up your own company. By the end of this article if you are thinking of moving into contracting you will be better prepared.

It Got Me Thinking

At the beginning of 2017 I started to think – would I prefer a contract project management role?

I have had a variety of project management roles over the past 15 years and some have been better than others. They have all been permanent positions within companies. My favourite roles have been where I have joined a company and given a project. They have said ‘Here is your project and team off you go, make it happen’ This is great. The company has clear direction and knows where it wants to go. Now I am not saying these projects did not have their challenges. All projects have challenges and that is what makes project management good fun. What I liked was being involved in projects that make a real difference.

But I found that once I had completed it the projects that followed were always not as good. They were often lower down the priority order. This may have been due to the company still getting used to the change from the last project. It could also be because senior management were unsure what project to do next. Either way they did not have the same enthusiasm as the first project. I have also sometimes had a project cancelled. Sometimes it feels like you are waiting around for the next big thing to happen, or in my case project.

I would often find that I would be waiting for a strategic decision to made on a project. In the meantime I would carrying on delivering the lesser projects while I waited.

As often happens as you become more experienced you go up the project pyramid. From project to programme and then on to the project portfolio. Yet I found that even as I moved into programmes and portfolio the waiting always remained.

So going back to the start of 2017 I started to think about project manager recruitment. Is companies having permanent project managers the best approach? Is it not far better to recruit a project manager as a contractor to run a project? Then once the project has finished they leave. You do not have to worry about paying them a salary while they wait for the next big project? I then started to think about my own situation would I not prefer to be a contract project manager? Would it be better to join a company manage their project then when it is complete move on to another company?

It might be a case of the grass is greener on the other side. It might be that contract project managers will tell me how I do not realise how good I have got it. While I am sure there will be negatives as well as positives until I give it a go how do I know? As the saying goes it is better to regret something you have done rather than something you have not done. So I decided to try contracting for my next role. What I was not prepared for is the different approach I needed to take.

What Have I Learnt So Far

Your Notice Period is a Problem

When you are in a permanent role recruiters do not want to talk to you. That is unless you want another permanent position. It does not matter how good a project manager you are. You also will not get short listed for any roles that you apply directly with companies for. There is a simple reason why and it is not because they are being rude.

The companies need a contract project manager now to start their project. They can not wait 3 months for you to work your notice period. I know some people will stay notice periods are not enforceable. But I am of the view I agreed a contract I will honour the agreement. I would also expect a company to honour their side of the agreement. Companies might wait a week or two but they will not wait months. So if you want to go contracting the first thing to do is hand in your notice.

I have a thing where I like to see projects through to completion. I decided to have an open and honest conversation with my line manager. Depending on how good your line manager is you may or may not want to do this. I spoke to them about wanting to move into contracting and go where the projects are. I also did not want to leave my boss and current company in the lurch. We both knew my project was due to be complete in 4 months and that I had a 3 month notice period. So I asked if I could hand in my notice in and leave at the end of the project. I was fortunate that he agreed so my leaving date was set.

My work colleagues when they found out did not get it. They asked so where are you going? I do not know yet. ‘You must be mad,’ they said. Then I started to think what if I do not get a contract? What if no-one is hiring? But this is the small part of your brain where fear lives and you have to ignore it. So I decided to believe in myself, my skills and the value that I could bring as a project manager and focused on that.

Rates of PayWhat on Earth is IR35?

Ask different people what IR35 is and you will get a different answer. I am no expert and you are better off asking an accountant rather than me. What I have managed to gather is it is not a new thing. It has been around for a while but recently the rules appear to have tightened for public sector roles.

I like to think of it as like paying income tax when you are a permanent employee. At the moment the tightened rules affect public sector roles. But this is a question you need to ask before accepting the contract. Is this role inside or outside IR35? I have noticed that recent roles do have a note stating if it is inside IR35. But it is best not to assume and always check before you start.

As a contractor you need to decide if you want to take roles that are IR35 or not. If you do then you need to expect to pay more tax. So you need to take that into consideration when looking at day rates. Have a rate in mind for how much you will be willing to accept for private roles. Then if you are willing to take IR35 roles then have another rate that is more to compensate for the tax.

Some people will talk to you about working for umbrella companies to avoid the tax. But it will most likely only a matter of time before the government cotton on to this and update the rules.

Take a look at Why Does a Project Management Job have Different Rates of Pay?

Set Up a Company

To be a contractor you need to set up your own company. There are many ways to do this either by yourself or through an accountant. Again I am not the best person to say which is best only that you need one. The approach I took was to ask a local accountant to set one up for me. After all I am a project manager and tasking is what I do best. It also means that the accountant can run a payroll for me so I can get paid for the work I do. My advice is get this set up along with a separate bank account before you start contracting.

Here’s some more tips that also might help – 10 Top Tips to Make You a Successful Contractor

What to do With Your CV

My trusted CV has served me well over the years helping me secure the interviews for my permanent roles. As time progressed I would add my latest role and keep it up to date. One question I have is a contract project manager CV different to a permanent one? After all a CV for a permanent employee has a career history along with projects done at those companies. Does a contract project manager CV need to focus more on the projects and less about the company history. Or does it not matter? I will let you know once I have secured my first contract.

Here’s some further reading about project management CVs here.

Reflection

It is an exciting time for me as I embark on this new challenge. I am very much looking forward to meeting new people and delivering new projects. But the move from permanent into contracting has unique challenges. As we know as project managers planning and solving the challenges is what we do best. It would be great to hear other people’s experiences on moving into contracting.

Please leave a comment with you good or bad stories it will be good to hear them.

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Project Management Contractor

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