What is Contractor Management? Software, Solutions, Common Challenges & More
Contractor management refers to the managing of outsourced work performed for an individual company. It is increasingly common for industries to rely upon independent contractors for specialized skills and knowledge. By utilizing outside contractors, companies can achieve three main goals: accessing specialized expertise that is not continuously or routinely required, supplementing limited company resources during periods of unusual demand, and providing staffing increases without the overhead cost of direct-hire employees.
Challenges Associated with Contractor Management
Because independent contractors are not a regular component of the company for whom they work, there are some unique challenges that must be addressed by companies conducting contractor management. Increasingly, companies rely on outsourced contractors for field service work. This poses challenges in maintaining consistency in service delivery and customer experience, as well as in maintaining visibility and sufficient control over scheduling and other facets of service.
Some of the most common day-to-day challenges associated with contractor management include:
- Senior leadership commitment
- Project managers’ understanding of their roles
- Team members’ understanding of expectations
- Scheduling and task management
- Control over labor costs
Companies also must determine how to access the independent contractor population and minimize costly penalties that often result from improper classification of workers and independent contractors. Moreover, companies need to consider how to evaluate independent contractors. On-boarding and administration programs must be in place for successful contractor management.
Other aspects of contractor management that must be considered are risk assessment and identification, issuing 1099s on behalf of the client, and document completion, collection, and maintenance. Many challenges associated with contractor management can be overcome by employing best practices for contractor management.
Best Practices for Contractor Management
Freelancing and independent contracting especially are popular among small businesses. Independent contractors are able to fulfill needs that the small business workforce otherwise could not. Contractor management is necessary because of the nature of the independent contractors’ work; independent contractors, particularly field service contractors, often work away from the office and are not under direct supervision. Under these circumstances, even experienced CEOs may find it difficult to manage independent contractors. There are some best practices that help companies and executives handle their contractor management:
- Clearly define the services that you need to have provided
- Draft a job description to serve as a reference point when drawing up a contract
- Determine payment schedules and compensation rates ahead of time
- Set up a straightforward and clear written agreement at the contract’s start
- Ensure that you are firmly within legal grounds and document a work arrangement meticulously so that you are correctly classifying your independent contractor
- Keep in mind that experts recommend that you determine the what and the contractor determines the how – you outline specific goals, but the contractor must provide his own tools, equipment, and facilities to complete the work
- Guide productivity and ensure that the contractor will produce high quality work while meeting key deadlines by specifying the deliverables in the agreement, making yourself available to answer follow-up questions, and scheduling regular meetings for progress updates
Communication is Key to Contractor Management
Independent contractors, program managers, and company executives not only have a professional duty to communicate effectively, but they must communicate in a way that ensures the contracted work is completed well and in a timely manner. Effective communication is a key component of contractor management throughout the business relationship, from defining services and writing the agreement, to meeting with the contractor throughout the project’s completion. There are several solutions for contractor management available, including mobile management software and solutions, to connect everyone and ensure successful contractor management.
With comprehensive contractor management practices offering visibility and control over the complete service chain, enterprises managing field service contractors and other independent contractors are able to reduce labor costs, obtain proof-of-service, gain real-time visibility into the status of jobs and tasks, and ultimately, provide a more consistent experience that increases end customer satisfaction.