Engineering: A Viable Career Alternative
In today’s job market,
employment opportunities vary tremendously. While most engineers
still seek permanent, full-time positions, many have turned to
equally viable alternatives: contract engineering and consulting.
What’s the Difference?
Contractors typically work
through a contract firm that assigns them to companies for
particular projects. The contract firms pay the contractors an
hourly rate and then collect fees (generally 40 to 50 percent more
than the contractor’s hourly rate) from the third party company.
Perhaps one of the most attractive aspects of being a contract
engineer is that the contract firm finds assignments for you.
Sometimes, contract work opens doors that might
otherwise not be available to you. In fact, contract positions
sometimes lead to permanent full-time positions.
As a consultant, however,
no firm does your marketing or administrative work for you. You
are on your own. You have to find assignments, work the
assignments, bill and collect your fees and, of course,
continually market your services for future assignments. Wearing
all of these hats simultaneously can create time management
challenges, among other things. To survive, you have to be sure you
address these areas consistently. You can’t wait until you’re
nearing the end of one assignment to begin looking for a new one,
or to negotiate further work with your current client.
As a consultant, you should
explore incorporating or establishing a sole proprietorship.
Though not required, such business structures are worth
considering. One excellent resource for setting up your business
is the IRS Small Business Resource,
As a contractor, the company looking to fill
assignment positions will drive your hourly rate. You can set a target rate for yourself, but
you will have to negotiate your final rate with the contract
company representing you. Some contract firms set specific rates,
forcing you to “take it or leave it.” Often, the supply of
engineers and the demand to fill positions will play roles in the
Tax Incentives for
One advantage you have as a
contractor, rather than as a consultant, will be per diem. Contract
firms’ standard practice for the past few years has been to split
contractors' hourly rates into salary and per diem. For example,
they may split a $55/hour
rate as $33.00 in salary and $22.00 in per
diem. This practice can amount to a considerable savings for
contractors, since per diem pay is non-taxable income.
Coverage and Training
Some contract firms offer
access to or provide benefits such as 401(k) plans and medical
coverage. Most often, though, you'll have to pay for your
medical and life insurance. Some firms also provide training for
contractors, as do some employers. However, most companies look
for engineers with current skills, so be sure to plan on
developing skills on your own, if necessary. Monitor the
industry to be sure your skills are both current and in demand.
Do Your Homework and Be
can run from as little as 90 days to three years or longer. In
general, contract agreements are not firm, and contractors or the
company using them can end the agreement
— or extend it
— at any time.
I’ve had six-month contracts turn into three-year assignments and
12-month assignments end after just four months. Be prepared and
Before accepting an
assignment, research the company you’ll be working for and check
on the project you’ll be working on. Learn the company’s history
with using contractors and be sure you know up front how viable
the project is. Also, part of being a
successful contract engineer is to develop contacts within
companies and with contract firms. A good network will keep you
employed. Finally, many contractors experience slow periods.
Prepare yourself for the down times by having sufficient savings
to tide you over.
Contract engineering can
become a career in and of itself, or can be a stepping stone to
move into full-time consulting or a full-time position.
Contracting offers flexibility that will enable you to work for
— perhaps even
in different industries
— and to
develop a wide range of skills. And in times when full-time
employment is not available
— or is not
what you’re looking for
engineering can be a great career alternative.
For More Information
One of the best resources
for anyone interested in contract engineering is Contract
Engineer Weekly (www.ceweekly.com),
which lists contract firms and open positions. You can also
consult the IEEE-USA Consultants Network, a resource contract firms
is a principal at Air Direct Solutions, a systems
engineering services provider. He has served as chair of the American
Association of Engineering Societies (AAES), as IEEE-USA President
and as Region 6 PACE Coordinator.