What does it take to make moonlighting work? 9

[geosavvy]

I currently work at a municipality doing... well, all the things that a city engineer does. Previously I worked with a geotechnical consulting firm for 5 years.

In discussing "moonlighting" with our HR director, I was informed that our policy is not to perform any engineering work "on the side" within the county (for various reason primarily relating to the potential appearance of conflicts of interest).

I have the opportunity to do a few small jobs primarily involving things like percolation tests (and septic system design - residential), and potentially some aspects of small subdivision design such as driange studies... or even developing full construction plans for small subdivisions.

All of this work can easily be performed on nights and weekends given that I am smart enough not to take on more than can be accomodated on nights and weekends.

I guess my primary question is this: How much revenue do you generally have to generate to make it worthwhile to moonlight. I'm not sure how insurance premiums are set initially if you arent sure how much revenue you will be generating; but I'm hearing that it could costs between $5,000 and $15,000 per year just to do around $50,000 worth or work. This, of course is not to mention computer/software upkeep, printing fees, etc.

Based on what I have read in other posts, I expect 1/2 to 2/3 of the responses here will be discussing the ethical aspects of "moonlighting". I welcome posts of this nature as well.

 

[MacGyverS2000]

Unless I've signed a contract specifically stating "no moonlighting", I'll do what I damn well please when I'm not on the clock. Ethical lesson over...

This is a question more for you than anyone else... how much work are you willing to put in for X amount of money in return? If I had to work an extra 35-40% hours a week to make 35-40% of my salary, I'd look for another job that allows overtime pay. At least that way I can decide when to make the extra cash without worrying about the fixed cost of insurance, etc. every year. If it only cost me a few thousand in fixed costs, however, to potentially pull in $50k for a minimum of hours, that's a different story.


Dan - Owner

http://www.Hi-TecDesigns.com

 

[tygerdawg]

ditto macgyvers. Your employer is always your primary responsibility, and you must abide by their ethics restrictions, time requirements, etc. But my personal time is mine, and what I do with it is not their business. I work for them, but they don't own or control me.

Your field may require certain liability and Errors & Ommisions insurance, maybe not. That will determine your costs vs. revenue required.

You may consider starting small, doing minor problem solving gigs with low liability issues so that you can work out the kinks of the moonlighting method. Also to develop a reputation so that you can get repeat business and referrals. With enough nuturing, your moonlighting biz can go full time. It's worked for me.


TygerDawg
Blue Technik LLC
Advanced Robotics & Automation Engineering

http://www.bluetechnik.com

 

[geosavvy]

Are you suggesting that for some things that I put my stamp on, I may not need E&O insurance? If this is true, that is the type of information I am looking for.

Assuming I was paying for E&O insurance, how it is typically quoted? Obviouly, if I only generated $1000 of revenue, I would be losing money by not covering my overhead. What I'm trying to find out is where the 'break even' point typically is. Will $20k of billing cover overhead for night&weekend home-office work?

I know some people don't play by the rules and don't get insurance, pay taxes, used licensed software, etc... but I'm wondering how difficult it is to make it work if you play by the rules.

The unknown variable for me are: What typs of insurances I need and how much they will cost (versus the type of work and magnitude of revenue I'm generating). Aditionally, what other fixed overhead costs might I be missing?

 

[zdas04]

The government (and PE boards) are mostly silent on insurance after your vehicle is insured and you've provided Workers Comp for employees. The place where it comes in is (1) how much risk can you tolerate? and (2) what does your Master Service Agreement require? In Oil & Gas, MSA's generally require $1 million liability on any vehicles that go on site and $3 million general liability. None of the contracts I've signed (19 to date) even require E&O insurance. I only have it because a lawsuit would bankrupt my company and me personally, not a risk I'm willing to take.

You need to talk to your potential clients about their insurance requirements--if they don't require liability insurance then E&O is much less expensive.

My liability and E&O cost about $18/thousand in gross billing. The first year I guessed at my future gross billing and the insurance rate was $35/thousand because the guess was so low. At the end of the year they audited me and billed me in arrears for the under-estimation (the second bill was larger than the first, but my actual billing put me into a different bracket so the second year rate was $25/thousand, the per thousand rate has gone down some every year as my billings have gone up).

The other fixed costs are pretty small. You'll need a phone number for your business (voice over IP can work good for that), a fax machine (e-Fax works), and my biggest cost was quality printers (I went with a Xerox printer/copier/scanner combo for most stuff and got a wide carriage Canon for prints). I relied on Office Max for wide carriage prints for a while, but it was really inconvenient and the quality mostly sucked.

When I started I got a loan from my 401K (again that mitigates risk since if your business doesn't make it you don't destroy your credit by defaulting to someone else, you just screw up your retirement) to cover the start-up costs and the payments on the loan are still (4 years later) the biggest single recurring monthly cost my business has after my salary.

If you're going to claim a home-office deduction on your taxes then you need to have a committed space for the business and if the auditors come you have to demonstrate that the space doesn't double as a kids play area or your family financial center.

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

The harder I work, the luckier I seem

 

[GTstartup]

"my personal time is mine, and what I do with it is not their business. I work for them, but they don't own or control me."

No but they can fire you.

 

[BJC]

Look at this from the view of a client.
Jurisdiction may be the key but city engineer, county engineer are the same to a lot of people.
You come out to my place and design a septic system. The county engineer kicks it over. I am going to complain that someone in the "goverment" approved it.
Someone in the county goverment complains to the city, right or wrong your going to be explaining things.
You get more work than your competition, they are going to complain that you use your connections to get "their" work. Do you see and know of building projects before they do?
I am not against moonlighting, it just in your situation I see more "mines" in the minefields than other situations.

 

[geosavvy]

David, thanks for the input. A plotter is something I would only consider if I found out I really needed it after a couple of medium sized projects. I am basically just trying to find a way not to pass up small jobs as I get offered by word of mouth. Currently, I pass on these small opportunities because I am not setup to confidently/legally perform the work. I have no intention of doing this full-time.

I enjoy design work, especially when it varies slightly from project to project. I am looking for a way to do some of this work during some of my free time without a big risk of losing money in the process.

If my place of employment did not allow work of this nature, I would not do it. It is as simple as that. They don't allow me to use any city property for personal use; So I don't do it. For me, these rules are not difficult to abide by. I enjoy my work I do now and I stay busy doing it. I think I would enjoy doing some additional engineering work during my free time as well... that is the motivation behind this thread.

 

[greenone]

Even if you did not sign an employment contract which forbids moonlighting, you may have an Employee Policy Manual that covers it.
I do think that as a municipal employee the appearance of a conflict of interest is very real, if you perform work within the municipality's jurisdiction. Fox guarding the henhouse and all that.
You have been told by HR that the policy is no moonlighting. If discovered, you have no defense. Is the extra income worth the risk of losing your job?

 

[MacGyverS2000]

Can you do the work in adjoining counties instead of the one you're working in?


Dan - Owner

http://www.Hi-TecDesigns.com

 

[geosavvy]

"Even if you did not sign an employment contract which forbids moonlighting, you may have an Employee Policy Manual that covers it.
I do think that as a municipal employee the appearance of a conflict of interest is very real, if you perform work within the municipality's jurisdiction. Fox guarding the henhouse and all that.
You have been told by HR that the policy is no moonlighting. If discovered, you have no defense. Is the extra income worth the risk of losing your job?"

For some reason, when it comes to the topic of moonlighting, everyone on these forums makes bold assumptions about other engineer's ill motives.

I clearly stated that the HR director outlined the areas in which a city engineer is not to perform professional services. This is also clearly stated in the policy manual. I thought I clearly implied that I did not intend to do work in those restricted areas. I have plenty of opportunity in the adjacent counties, which are within very short driving distances (10 minutes in one direction or 20 in the other). The City neither has any jurisdiction outside of the county we are in, nor does the policy restrict work in adjacent counties.

I will not break any rules or practice unethically in any capacity. I think it's sad that I am not given the benefit of the doubt on a professional forum. If I had stated something that indicated I would be unintentionally practicing unethically, I would definately want to know about it... but you are merely being cynical at this point.

Nonetheless, its still great getting feedback from other engineers, and I appreciate your time spent responding to my posts.

 

[GTstartup]

I think you need to re read your original post. Nowhere does it imply that you were considering work only outside your county. You can tell by the replies that it's not clear that you were not going to work in the "restricted" areas.

 

[geosavvy]

You are correct. I apologize for being unclear.

Regarding E&O insurance: Can one policy cover two engineers working in a parntership (ie- A policy that covers the entire LLC or Corp)? Or does each engineer need seperate coverage?

 

[GSTeng]

Like Geosavvy I am also interested in moonlighting, maybe not now, so soon in my career, but in the near future. What I am wondering is how much does it cost to run a small business out of your home? 5K/year, 10K/year... With all the insurances and liabilities and that kind of stuff. Or in other words how much do you need to do to make it profitable? 10hr/wk, 20hr/wk... @ what rate 80$/hr, 100$/hr... I know this will vary from state to state and from industry to industry, but an idea of what people have experience in their industry and their area would be a great help.

So even another way to ask the question would be when you started your business out of your home, what was your overhead in the first year? and did you have a hard time being profitable?

I have asked this question of other people around my area that are in the oil and gas business in New Mexico and they said that 13K was the bare minimum overhead for a small business out of your home. This took into account legal stuff, software licenses for CAD and other programs and other minor overhead stuff. The legal included the one million liability that zdas04 mentioned. I was wondering if others on this forum experienced similar things when starting up their businesses.

 

[swertel]

Get out your spreadsheets and do the math.

Get quotes for software you think you'll need.
Get quotes for insurance, which you should be doing anyway.
Get quotes for computer hardware and any other office supplies.
Find out how much it costs for your lawyer/accountant to set up your LLC or whatever corporation structure you're going to use.
Find out how much the firm registration costs annualy through your local professional engineering board - because you must be licensed to perform engineering services.

Add them all up and that's how much money you are going to need. Figure out how much time you can work billable hours per week/month/year and that determines the rate you can charge. Is your rate competitive in the market?

There are plenty of posts dealing with this topic on eng-tips, do a search. There are plenty of free websites devoted to starting your own business, do a search.

--Scott

http://wertel.eng.pro

 

[tygerdawg]

No but they can fire you.

My experience is that it could happen when you're NOT moonlighting, too.

I've decided to build my own safety net. The financial freedom and confidence it provides is thrilling. It's clear some folks aren't up to the task.

TygerDawg
Blue Technik LLC
Advanced Robotics & Automation Engineering

http://www.bluetechnik.com

 

[DRC1]

In my part of the woods if you are a government employee working for a contractor you could end up with a new career making licese plate for 5-10 years depending on your behavior. Workig for a contractor that does business in your county can create huge conflicts of interest. If you do have a firm you could work for with out a conflict, you may want to talk to them about being a part time employee. You would not be eligible for benifits, which is okay, but you would probably be covered by there e&o and have access to their resources. This would give you minimal start up costs. Even though you would be classified as a part time employee, you would be acting as a consultant.

 

[MacGyverS2000]

DRC,

That's like saying the bottom-rung employees of Enron should go to jail just for working there. They didn't do anything wrong, they didn't even know something was wrong.

...now the guys on the top rungs, well, that's a different matter...

As long as geo is conscious of the choices he makes and ensures they're all without conflict, he'll be fine in any potential court case.


Dan - Owner

http://www.Hi-TecDesigns.com

 

[DRC1]

My poit is that different standards (and laws) apply to interaction between government employees and government contractors than people in the private sector. Simply working for a contractor that works in the same municipality, even if the part time work has nothing to do with the full time municipal work, could be a serious violation. I am not questioning anyone's integrity, but some places have very strict government ethics laws that as a municipal employee, geosavy may need to consider.

 

[RDK]

As someone who has ran a small consulting business, I think that it is unethical to moonlight in competition to small consultants.

You have to be very careful about not using any of your employer’s resources to promote your business. If any employer’s resources are used in your side business that is unethical conduct.

For example

Looking up something at work or taking home a reference book to look it up at home.

Taking phone calls related to business at work.

Even spending time thinking about a business problem when you are supposed to be thinking about your work.

Giving out moonlighting business cards while being paid for your time (i.e. at an employer paid conference for example.)



Since most business is done during normal business hours then how can you service your clients ethically while your employer is paying for those same hours for you to do your job.


If you want to be a consultant then quit your day job, get the necessary advise spend the necessary money to hang out your own shingle and become a consultant full time.




Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com