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Hi all,

I was discussing a hypothetical with a peer and wondered what standard practice is for the following:

Suppose a statistical consultant is working with a research team on a non-clinical trial that lasts say, two years, and the MAIN deliverables for the statistician are at the END of the study (no substantial reports or analyses needed before trial end).

What are the best practices for invoicing, supposing this is a flat-fee project?

It feels odd to ask equal payments every quarter since a lot of work will only be done near the end, but it also feels strange to go two years without payment.

Would it make sense to invoice every quarter and roughly weight the amounts by percentage of total work expected in that quarter? Or could only the first and last payments be larger than others, for example?

Just fishing for ideas.

Cheers!

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Jonathan L. Moscovici
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I normally bill 50% at project initiation and 50% plus any additional costs incurred but not in the original agreement when the final deliverable is delivered to the client.
Everyone has skin in the game that way and it smooths income a little.
Michael

Michael Latta, PhD, pstat
Professor of Marketing
Wall College of Business Administration 213-A
Coastal Carolina University
302-981-7338 cell

Sent from my iPad

------Original Message------

Hi all,

I was discussing a hypothetical with a peer and wondered what standard practice is for the following:

Suppose a statistical consultant is working with a research team on a non-clinical trial that lasts say, two years, and the MAIN deliverables for the statistician are at the END of the study (no substantial reports or analyses needed before trial end).

What are the best practices for invoicing, supposing this is a flat-fee project?

It feels odd to ask equal payments every quarter since a lot of work will only be done near the end, but it also feels strange to go two years without payment.

Would it make sense to invoice every quarter and roughly weight the amounts by percentage of total work expected in that quarter? Or could only the first and last payments be larger than others, for example?

Just fishing for ideas.

Cheers!

------------------------------
Jonathan L. Moscovici
------------------------------

Hi Michael,

I have worked this way in the past, because it seems fair, but i wonder if the scales are tipped in situations where the time between study start and first deliverable is very long.

If i would accept 50% right up front for work to be done in several years, is there additional risk or liability for either party?

At least, that would cross my mind if i were hiring a consultant under these circumstances.

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Jonathan Moscovici
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Original Message:
Sent: 07-28-2015 20:34
From: R. Latta
Subject: Invoicing practices for long projects

I normally bill 50% at project initiation and 50% plus any additional costs incurred but not in the original agreement when the final deliverable is delivered to the client.
Everyone has skin in the game that way and it smooths income a little.
Michael

Michael Latta, PhD, pstat
Professor of Marketing
Wall College of Business Administration 213-A
Coastal Carolina University
302-981-7338 cell

Sent from my iPad

As you describe this project, I would hesitate to pay too much up front simply because of the "hit by a bus" factor.  Can you guarantee that your client will not be screwed by your death?  Sorry, but these issues must be considered from a business POV.  Consider your client's self-interest.

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David Mangen
Owner
Mangen Research Associates, Inc.
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Original Message:
Sent: 07-28-2015 21:18
From: Jonathan Moscovici
Subject: Invoicing practices for long projects

Hi Michael,

I have worked this way in the past, because it seems fair, but i wonder if the scales are tipped in situations where the time between study start and first deliverable is very long.

If i would accept 50% right up front for work to be done in several years, is there additional risk or liability for either party?

At least, that would cross my mind if i were hiring a consultant under these circumstances.

------------------------------
Jonathan Moscovici
------------------------------

Hi David,

This crossed my mind as well, though I cheerfully call it the "abducted by aliens" factor.

I suppose my question is about balancing. i was considering eight quarterly payments. 15% first, 40% last, and the rest split evenly in between the 6 other ones.

I normally don't put this much thought into the payment plans (though maybe i should), but as you mention this is a special case i think.

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Jonathan Moscovici
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Original Message:
Sent: 07-28-2015 21:26
From: David Mangen
Subject: Invoicing practices for long projects

As you describe this project, I would hesitate to pay too much up front simply because of the "hit by a bus" factor.  Can you guarantee that your client will not be screwed by your death?  Sorry, but these issues must be considered from a business POV.  Consider your client's self-interest.

------------------------------
David Mangen
Owner
Mangen Research Associates, Inc.
------------------------------



Original Message:
Sent: 07-28-2015 21:18
From: Jonathan Moscovici
Subject: Invoicing practices for long projects

Hi Michael,

I have worked this way in the past, because it seems fair, but i wonder if the scales are tipped in situations where the time between study start and first deliverable is very long.

If i would accept 50% right up front for work to be done in several years, is there additional risk or liability for either party?

At least, that would cross my mind if i were hiring a consultant under these circumstances.

------------------------------
Jonathan Moscovici
------------------------------

Jonathon,

Based on what you've described your proposal seems reasonable.  I would suggest you propose whatever 'balance over time' you feel you can comfortably live and have faith that a good Client will trust your reasoning.  (However, I might suggest reducing the final % from 40% to 35% and the initial one from 15% to 20%, :) ).

Best wishes,

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Greg Maislin
Biomedical Statistical Consulting
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Original Message:
Sent: 07-28-2015 21:31
From: Jonathan Moscovici
Subject: Invoicing practices for long projects

Hi David,

This crossed my mind as well, though I cheerfully call it the "abducted by aliens" factor.

I suppose my question is about balancing. i was considering eight quarterly payments. 15% first, 40% last, and the rest split evenly in between the 6 other ones.

I normally don't put this much thought into the payment plans (though maybe i should), but as you mention this is a special case i think.

------------------------------
Jonathan Moscovici
------------------------------



Original Message:
Sent: 07-28-2015 21:26
From: David Mangen
Subject: Invoicing practices for long projects

As you describe this project, I would hesitate to pay too much up front simply because of the "hit by a bus" factor.  Can you guarantee that your client will not be screwed by your death?  Sorry, but these issues must be considered from a business POV.  Consider your client's self-interest.

------------------------------
David Mangen
Owner
Mangen Research Associates, Inc.
------------------------------

Based on your familiarity with the academic group you are working with, this might be the easiest...

A fixed price completion type contract where the price for the final report is pre-negotiated.  How you bill is between you and the client (monthly, quarterly, or when the item is given to the client).  The client expects the report at the negotiated price and delivery time, and if it costs more for you to do it than you figured, then you bear the risk and burden of completing it anyway.

Many groups like this contract type because it eliminates level-of-effort guesstimates and shifts the risk burden on the contractor to do things in a timely and price-determined manner.

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Mark Lancaster
Northern Kentucky University
------------------------------

Original Message:
Sent: 07-28-2015 21:18
From: Jonathan Moscovici
Subject: Invoicing practices for long projects

Hi Michael,

I have worked this way in the past, because it seems fair, but i wonder if the scales are tipped in situations where the time between study start and first deliverable is very long.

If i would accept 50% right up front for work to be done in several years, is there additional risk or liability for either party?

At least, that would cross my mind if i were hiring a consultant under these circumstances.

------------------------------
Jonathan Moscovici
------------------------------

A fixed price completion type contract is popular for NIH funded grants. We usually make budget at fixed % effort for biostatisticians at a grant application. After it is funded, we are used to send invoices quarterly or per six months to the client/PI. The biostatistician needs to get a reasonable and good estimates for the cost on the statistical work and negotiate with the client at the beginning of the collaboration. 

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Qin Liu
The Wistar Institute
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Original Message:
Sent: 07-28-2015 21:43
From: Mark Lancaster
Subject: Invoicing practices for long projects

Based on your familiarity with the academic group you are working with, this might be the easiest...

A fixed price completion type contract where the price for the final report is pre-negotiated.  How you bill is between you and the client (monthly, quarterly, or when the item is given to the client).  The client expects the report at the negotiated price and delivery time, and if it costs more for you to do it than you figured, then you bear the risk and burden of completing it anyway.

Many groups like this contract type because it eliminates level-of-effort guesstimates and shifts the risk burden on the contractor to do things in a timely and price-determined manner.

------------------------------
Mark Lancaster
Northern Kentucky University
------------------------------



Original Message:
Sent: 07-28-2015 21:18
From: Jonathan Moscovici
Subject: Invoicing practices for long projects

Hi Michael,

I have worked this way in the past, because it seems fair, but i wonder if the scales are tipped in situations where the time between study start and first deliverable is very long.

If i would accept 50% right up front for work to be done in several years, is there additional risk or liability for either party?

At least, that would cross my mind if i were hiring a consultant under these circumstances.

------------------------------
Jonathan Moscovici
------------------------------

What does your client expect?

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David Mangen
Owner
Mangen Research Associates, Inc.
------------------------------

Hi David,

It's a trusted client with good history working together, and who is open to reason.

Suppose the client proposes splitting into equal quarterly payments, does the statistician incur extra liability by accepting funds designed to pay for work done at the end of the study?

What if the statistician gets abducted by aliens (or other unforeseen circumstance..)? It seems like it could be an unnecessary risk for the client to provide a disproportionate amount of money to the work being done before study end?

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Jonathan Moscovici
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Original Message:
Sent: 07-28-2015 20:36
From: David Mangen
Subject: Invoicing practices for long projects

What does your client expect?

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David Mangen
Owner
Mangen Research Associates, Inc.
------------------------------

There are roughly a bazillion types of contracts and payment structures, with various carrots and sticks for motivation.  Here's some of the common government ones...

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/16.htm

Typically, you work this out payments with the group you are contracting with before work begins.

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Mark Lancaster
Northern Kentucky University
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