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I have, and it's never very comfortable. For one thing, it means admitting that you can't do everything. But it's important not to over-commit.
...just hand in your notice period (make sure you've got one before you enter into any contract).

Learn from this mistake - you should have asked sufficient questions in advance to determine that this was not an outfit that took IT seriously. There are some jobs (and clients) for whom a successful outcome is unlikely due to attitude and lack of resources/commitment. In future, turn this kind of work down!
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I haven't had to do this a lot (limited consulting experience), but it has come up. Be up front, honest and communicate. Maybe try to wrap up the work you have done in such a way that it shows what value you have added to the process and makes it easier for the next person to take over. I think if you can show that the money they spent wasn't wasted that will go a long way for future work.

Bill
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Contributr
even if all you've done is to more clearly identify the problems, you've given them something for their money.
I think the key phrase you mentioned Chip is that "communicate the state of affairs accurately to your client". Because, even when you try to leave a client and you have not properly elaborated the reasons why then they can always shift the failure of the project on you and that gives a bad rap for your consulting business.

Organizing a meeting with them to clearly state what's going on and where they are not supporting you would definitely open their eyes as long as the key stakeholders are there in the meeting. From that point on, they would do one of two things - (1) help you exit and find a replacement or (2) help you help them fix what they didn't support you with in the first place.

Either way, honesty and integrity are the keywords; hiding or going MIA never plays well wink

Abid
Especially once you're gone, you're an easy target. But I agree with you that if in your meeting you can give them a clear picture of what's going on, then you will at least have improved your reputation for analysis.
Sounds like you've somewhat too many issues to deal with, all at once. Suggestions: if you want to continue supporting the client, draw up a list in order of criticality, of what needs to be done, in order to future-proof the IT foundations of their core business.

Say you're willing to see these developments through ( if you are ), & ask them for a mutually-agreeable financial arrangement, specifying what you believe is fair.

Put in redundancy failover. Increase storage space with SANs. Design, build, & implement a disaster-recovery programme, testing it in downtime ( on a Sunday ? ).

Get rid of Windows ( all the Win_Doze OSS are eminently hackable ). Install a Linux of choice, on clients, as a dual-boot option, to accustom users to the vast increase in speed, usability, & operating ease. Move 'em gradually over onto it, with a training session ( on a Saturday ? ) & one-to-one troubleshooting sessions. End dependency on WinDoze, switching off updates & migrating all key data onto a Mac server cluster or a Linux one.

Use transitional strategies to empower a few key Power Users, who can help their colleagues with minor problems ( financial inducements help here ).

Scripting server storage/backup tasks to run with CRON, will help the system purge older data, archiving it off onto the high-volume SAN drive arrays ( to run after midnight, once a day, once a week, once a fortnight, once a month, respectively, in order of importance ).

Alert the bosses to the need to allow for hardware replacements, and set aside a fund for this. Equally, there must a a fund for IT housekeeping, of the kind outlined above. That is fundamentally integral to their work: it is not a cosmetic ornament ! Unless their data and the systems hosting it, are maintained, there will at some defined point, be catastrophic loss of availability and even garbage output.

IT is the nerve structure holding business information in a coherent structure. It pays to keep this in a good state, else the main commercial thrust will find it cannot keep tabs on what it's up to, or calculate & adequately resource, future planning.

And you can give them the glad news, too: Linux will save them money on both client software, and hardware ( -- Linux does not burn out the hardware, as M$ WinDoze OSS do ). Good luck, matey !
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Seriously? You think ADDING additional projects on top of an already impossible task is going to help. You lost me when you suggested phasing out Windows. They can't afford any add-on tools and they won't grant the consultant proper access to the server AND they have no IT department. Some customers aren't worth having. Do you think any reference from this company will be worth anything. What's going to end up happening to this company is that there IS going to be a data breach and the consultant will get the blame. Run away.
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Perhaps if the consultant outlined a plan like what l.kobiernicki provided above, they might realize how far away from reasonable their IT plans are. Maybe they'd meet somewhere in the middle.

But if that doesn't change anything, then yes -- get out.
How many clients go to think to resign US from a contract? I wrote several months ago of an idiotic account I had where in the previous consultant was brought back in to configure a server and the client did not give a damn about how I felt about that. I had another client, years ago, sell his dental practice to a management firm that provided their own IT support (lousy of course) and they fired me with an email. I lit back into them for a severance fee and got it, and they now admit they miss me. Well, make me bleed tears for them. not.

This also almost smacks of project creep, where an assignments grows beyond it's nominal boundary. In that case, the consultant should fully recognize and document the operational parameters of the specific PROJECT so that it becomes something far worse, the thing can be renegotiated anew. Hey, this is NOT what I signed for. Or what we agreed upon.

The loss of the client mentioned above was a horrific financial blow, but emotionally I was damn glad to be out of his sight. He fell into the category of someone who "knew alot about computers but was not an engineer." Unfortunately, many tech-type professionals such as doctors THINK their knowledge extends outward beyond their medical field. These can be the worse clients to have.
... and if the consultant is to stay on the project, they need to negotiate terms that will adequately compensate them for their time.
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If you have not already, I would suggest, as the others here have, giving it one last shot. Do require a face-to-face meeting with the stakeholders. Since you clearly know what they need including possibly bringing in additional consultants, after the meeting, if your concerns have not been allayed, politely quit. That might get their attention and change their behavior, but be prepared to hand off the project without malice.

It is not worth your peace of mind.

I recently had a client that did not follow my advice on having multiple backup methods for their main mission critical application. Since I am not their IT guy, their local IT consultant did not put in place multiple backups, nor did he test their supposed great "cloud backups." Finally, the local IT guy did not, follow up with a simple test, when a key drive got replaced, to be sure that the existing backups were still working. Now I am faced with restoring their records from a intermediate transactions file. A very expensive proposition!

My only hope to drive home with the client that trusted advice not followed is a recipe for disasters. This is your situation too. If your client fails to listen to you take a cue from the move Forest Gump and "Run Forest! Run!"
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Contributr
Even in the most hopeless situation, it never hurts to ask for what would make it a good one. The worst they can say is No.
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"How do I leave the the training company without damaging them or me any further?" Face that there may be no way to leave without receiving a negative reaction from the client. Staying in order to avoid conflict is not a better choice. Nice or not they already know they are trying to get you to resolve their problem without investing any time in communication or any money in the tools and infrastructure resources you need to provide the solution. Making themselves available to you when needed is the very least they should have been doing. A working solution requires that the client be at least as interested in the success of their own project as their solution provider. Just say what you need to say and move on.
Actually
The original person should have never taken the job unless they made it clear that it was better to start from scratch. I'm assuming that there was no documentation with the original project.

A golden rule I use is that if it's already screwed up, there is no documentation and the owners are cheap, I can't use it. If they aren't interested in fixing the root of their problem, a crap system to start with, I'm not interested in trying to help.

I've seen whole shops go under on fixed bids on jobs like this. I've seen the companies that bankrupted them wizz literly millions down the drain and still be stuck with no results trying to save a P.O.S. system instead of chucking it out and starting over.

Another thing is don't let yourself get talked into anything you don't like. I know what I can do and what works. If someone is trying to tell me how to get it done, then I assess who listens to them and if MR/MS big listens to them, I think to myself, "If you know so much, how come you are talking to me?" and proceed with bail out plan A immeadiately and am happy to let them find someone else.

As far as refering... people like that need a B.S. artist to deal with them properly. If you know someone who will stick them good and make them happy to pay way too much to save their "precious" hack job, that is who you should refer them too. It's no place for an honest craftsman.

Dealing with clueless/agressively stupid cheapskates in possession of crap systems (no doubt because they were clueless and cheap to begin with) is a slam dunk looser and a run like hell red flag.
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