Managing Freelance Help

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Startups often have needs that are best met by short-term contractors rather than full-time employees.

Outsourcing projects to programmers, marketers, project managers and the like can come with their own perils, however, so be sure to build in safeguards to keep your project on track and trouble-free.

You don’t want to use a freelancer to avoid the expense and paperwork of hiring a regular employee. The IRS may consider your freelancer an employee if you require them to work on site or put in regular hours, if you pick up the cost of their expenses or benefits, or if you require mandatory training. Break the rules and you could be on the hook for the cost of Social Security, overtime and penalties.

Be sure to sign a written agreement with freelancers at the start of the project. The contract should include a “scope of work” that outlines the work you expect and when you expect it to be completed. Include “circuit breakers” that require your contractor to check with you before going over budget.

And be sure to understand your contractor’s availability so you’re not left hanging at a critical point in your project. Freelancers often choose independent work so they can enjoy the freedom to travel, spend time with family, or pursue hobbies. Knowing their availability ahead of time can help keep your project on track.

Adapted from How to Prevent Foul-ups with Freelancers by Joe Taylor Jr. at Small Business Computing.

2 comments
workerwise
workerwise

The big problem in employing contractors and freelancers is the lack of control over work hours are reported.
I found the solution to this amazing product called WorkerWise.com , that  allows me to verify the hours of my contractors. Recommended!

Anne_Ominous
Anne_Ominous like.author.displayName 1 Like

As a contractor myself, I would like to throw in my 2 cents.

A "Scope of Work" is very important. Last year I started in on a new, large project for a client for whom I had previously done quite a bit of work. But all of that had been smaller projects that needed little in the way of oversight, or existing projects that needed maintenance or a new feature here and there.

So imagine my surprise when, for this new large project, he expected me to start without any kind of "scope of work" document, or even a full description of what was required. It was just "start here, do this" then "do that", etc., without any kind of higher-level view of what was going on. Just a collection of smaller tasks to undertake.

Well, when doing that way, he was assuming the role of project manager. (He had to, since he was not giving me enough information to manage it myself.) And to my surprise, he turned out to be an utterly incompetent project manager. Communication to me (doing the actual work), from HIS client, who was the ultimate customer, was haphazard at best. If I had questions, it sometimes took weeks to even months to get them answered through him. And so on. And he frequently just completely ignored my advice about what to do.

 THEN, he started to get angry that the project was falling behind schedule (which he had never explained to me, so I did not know what was due, when), and because it was costing more than it should. Well, duh. If he had done his job, and simply presented me with a scope of work or semi-complete project description in the very beginning, I could have just done it and gotten it over with.

In any case, the project was a disaster, from my point of view. All because he did not do the proper homework and present me with a proper scope of work in the beginning. When you don't know what you are doing ahead of time, it's pretty hard to make any kind of responsible estimate, or promise anything on a particular delivery date.

And for the most part, you can forget fixed-cost quotes for anything of any size. Most experienced contractors (at least in my field of software development) won't give you one. Instead they will give you an ESTIMATE based on the scope of work document. In my case, the estimate is based on total work hours. It also includes a clause saying that if problems arise and something looks like it will take more than 10% more time than estimated (20% in some cases), the contract can be re-negotiated. And, conversely, if there are major changes in the requirements, or something is required that was not foreseen in the scope of work, again there will be re-negotiation and adjustment of the final estimate.

That usually keeps everybody happy. The contractor (me) won't get screwed over because of constantly-changing requirements ("Hey! That wasn't in the scope of work!"), and the customer won't get soaked due to cost overruns.