- Consultant rates and expense reimbursement
- EIC governance, operating costs and administration commission
- EIC membership fees, status and access
- EIC opportunity pipeline, business development and proposals
- Project roles and responsibilities
No, not currently. While EIC does want to reward people for working on proposals, whether won or lost, we currently do not have a good way of doing that at the moment. We encourage people to record the time they spend working on proposals in their timesheets so we can get a better understanding of the costs of developing proposals and potentially reward people that do a lot of proposal development in some way. The main way people are rewarded for working on proposals is by winning the proposal and being part of the team that deliver the work.
Some of the options we are currently considering for rewarding people for working on proposals includes:
- Credits (hours x discounted rate) that would reduce their membership fees
- Credits (hours x discounted rate) that would go towards equity ownership
- Credits (hours x discounted rate) that would be reimbursed in the event the proposal is won
- A finders fee or commission for each proposal won / sale generated
Please share your thoughts about these ideas on Slack and feel free to propose alternatives!
Generally, the point of EIC is to encourage collaboration and share risk and we consider the best way of doing that is to have everyone on the team responsible within their contract for the final deliverables to the client, rather than an individual scope of work. This is primarily because the collection of individual scope of works creates ‘scope risk’ whereby work that needs to be done on a project falls outside all of the individually defined scopes of work. However, we do encourage each project team to setup project roles for individuals and we provide guidance on what some of those roles might be.
The Subscribers membership fee is kept to a minimal to enable people to stay in touch with what the consortium is doing so that if an opportunity comes along that they really like and would be a value-added participant on, they can then elect to get more involved. Keeping fee’s low means not providing them with an EIC email address, which comes with automatic access to our Knowledge management system and is required for smooth integration with the collaboration platform.
On a fixed fee client project the client budget rate should be the sum of the consultants budget rates multiplied by their expected hours required to complete the project plus the EIC overhead. On some proposals where there is a large degree of uncertainty or the client budget is expected to accommodate some flexibility a project budget buffer can be added. The buffer is usually calculated as a proportion (e.g., 10%) of the total budget. As a result, the client fee is limited by the maximum consultant rate and the uncertainty related to the project.
Where the client’s preferred fee structure is unclear or the client is open to a variable fee structure the project manager can use their discretion in determining the client fee. In doing so the project manager should consider EIC’s remuneration policy and take steps to ensure the project has net-zero risk for the consortium (i.e., that consultants fees will not exceed client fees).
Yes, EIC is generally willing to assume the risk that the client may renege or default on their verbal agreement and will pursue the client for reimbursement in this event. However, this risk needs to be discussed and agreed by the team in the first case. All work that is to be remunerated by EIC, whether funded by client work or otherwise, must be captured in timesheets and in a project economics sheet.
An EIC Overhead Charge needs to be included on each and every project operated through the consortium or that uses the consortium brand or platform to prepare the proposal. The standard rate is 10% of the total budget but a lower rate can be used if the project budget is very tight or the project doesn’t rely heavily on the consortium.
In addition to the EIC Overhead Charge, EIC is setup to be a fee-paying membership organisation. Eventually, all EIC operating and support costs will need to be paid by either the admin cost or the membership fees. However, all HR costs in EIC are currently volunteer-based. Neither Damian (Founder) or Demelza (Accountant) or any of our other volunteers are currently being paid although some of our IT support has been and continues to be on a contractual basis. The aim is to eventually be a members owned and operated consortium!
In the event that EIC revenue exceeds costs in any given year, this profit will be retained in the company to be re-invested in the consortium. Currently, there is no dividend or profit distribution from the company to members or owners.
Becoming an Equity member is a little more complicated than other membership types, because it means you become a co-owner of the consortium. To become an equity member or a non-consulting investor of the consortium you will either need to buy an existing share from a current share-holder or obtain a newly-issued share. The process of issuing shares and inviting new Equity members or non-consulting investors to be co-owners of the consortium is a matter handled by the board. The transfer or sale of shares in the consortium are subject to the ‘right of first refusal’ by other share-holders of the consortium and the consortium itself, which means they must be given an opportunity to purchase the shares first before they are offered to others. These processes are governed by the EIC Constitution and the Corporations Act.
As EIC operates on a net-zero project basis all project expenses need to be charged back to the project and deducted from the client fee on the project (i.e., included in project economics calculations). Whether this is done on a per diem basis or on actual expense claim and reimbursement is up to the project manager. Unless extensive travel is expected on a project we encourage expenses to be claimed and reimbursed by submitting expense claims to the project manager and accountant who will ensure they are incorporated into the project economics sheet.
Opportunities are initially posted and discussed in the public #2_leads channel on Slack and if there is sufficient support for the project, it is qualified and a proposal developed by the interested consultants. While there is no formal qualification process the following criteria are taken into consideration:
- What is the potential social impact of the project?
- What is the budget?
- What is the proposal deadline?
- What is the project deadline?
- How many people are willing to commit to writing the proposal (i.e are interested in doing the work)?
- What is EIC’s competitive positioning
- Do we think we have a fair chance of winning the work?
- Have we worked for the client before?
- Do we have a unique sales proposition / clear value-add?
- Do the key consultants listed in the proposal have the availability to deliver the project
There are few formal requirements for a proposal to be developed under the EIC legal structure and brand. These include:
- The lead consultant must be a paid-up member of EIC
- The lead consultant must have notified an EIC director of the proposal and a review of the proposal by an EIC director needs to be arranged prior to submission.
- The proposal should be duly authorised by an EIC director
Directors of EIC reserve the right to forbid the submission of any proposal at any time if they deem that it poses a risk to EIC.
Non-Equity members still have a Board member voting right, although they have no financial ownership of the consortium. These voting rights mean Members get a direct say in the governance of EIC, including the strategic direction the consortium takes, the services offered, the problems we focus on addressing, the price of membership fees, how membership fee’s get spent and so much more. Without a voting right there is no guarantee of direct representation.
Membership fees are determined on a cost plus mark-up basis to ensure that the direct costs and expected administration costs for each membership type for the year are covered. Costs are covered by the membership fee’s and the expected administration commission charged on projects delivered under the EIC brand and legal umbrella.
The consortium is currently valued on a Discounted Cashflow (DCF) basis of projected profits from membership fee’s and administration commissions. The detailed assumptions and calculation of this model is openly available to Affiliate, Primary and Equity Members of the consortium. The DCF valuation model was chosen as standard industry practice despite expectations that it is not a good fit for the EIC business model given that the value of the consortium is mostly contained in the good will that its members hold with potential clients and the impact that our knowledge, skills and perseverance can have on society. Therefore valuation model and assumptions therein are susceptible to change and will be reviewed on an annual basis by the EIC Board.
Consultant rates are determined by negotiation between the project manager and the consultants in accordance with the EIC remuneration policy. The policy sets a minimum acceptable consultant budget rate ($30 USD p/hr) and advises on the kind of factors that project manager and consultants should take into consideration in determining budget rates.
EIC does NOT charge a direct commission on the income generated by individual consultants. EIC does charge an administration commission (Overhead Charge) on projects operated under the EIC brand or legal umbrella. We do not agree with the current way the HR Recruitment industry and Free-lance work portals like Freelance.com or Upwork.com tax their consultants sometimes in excess of 20% of income generated on a project when these portals are not actively engaged in delivering that work.
Consultants need to continuously communicate how much time they have for a project so that the project manager can ensure the project is resourced appropriately. Changes are possible but need to communicated as soon as possible. Consultants who frequently change availability or are unreliable are likely to lose respect with project managers and find it difficult to secure future projects.
Yes, there are bonuses. Any client project that is delivered under-budget will have an associated bonus which effectively represents a project profit distribution. The project bonuses are determined by allocating the profit share on each project based on the proportion of work each consultant does on a project. Only the consultants on a given project can participate in the profit of that project. EIC does not take any of the profit on a client project.
Consultant rates should be negotiated with the project manager on a gross basis – i.e., the total amount paid by EIC to the consultant. For example, if Consultant A is registered for Goods and Services Tax (GST) in Australia and is required to charge EIC 10% GST, the rate negotiated with EIC should be inclusive of the 10% tax. Therefore if the rate agreed with EIC on a project is $66 per hour, the consultant would charge EIC $60 per hour on the invoice + 10% GST ($6).
In most cases, for consultants outside of Australia, EIC should be considered a foreign company and therefore GST or VAT exempt. Consultants in Australia that earn over a certain amount per year will likely be required to charge GST to EIC. EIC is registered for GST in Australia.
All consultants are responsible for complying with the legal, tax and visa requirements of their country of residence. EIC is not an employer and does not withhold or reimburse tax of any form for consultants. As EIC consultants are not exclusive with EIC it is expected that all EIC consultants are engaged or seeking engagement directly with clients as well as through the consortium.
While pooling of members professional contacts in a central Contact Relationship Management (CRM) system is envisioned to be a powerful way of expanding and strategically identifying opportunities where we can have the most impact, we are still developing a secure and simple way of doing this. Over the next three years we expect to phase in different ways of enabling contact-sharing and cross-contact outreach that will culminate in the use of a centralised CRM system.