Protect Your Interests When Hiring Subcontract Management Consultants

In an ideal world, management consultants would be able to do it all. But in reality, no one can be in two places at one time. For some engagements, it makes good business sense to hire a subcontracted management consultant to assist with specific aspects of the project. Using subcontractors can be a great way to get the job done, add expertise and extend your geographic reach – without the commitment of hiring a full-time employee. But, it can also open the door to a world of risk.

No matter how much you trust your independent contractor, there’s always room for him or her to make a mistake that could have a negative impact on your business reputation, client relationship or liability. That’s why the No. 1 rule in working with subcontractors is: “Document Everything!”

Before you bring an independent contractor onto a project, do your homework. You may be able to prevent any misunderstandings by clearly establishing your expectations in both a subcontract management plan and a 1099 independent contractor agreement.

What Is a Subcontract Management Plan?

A subcontract management plan spells out the relationship between you and the independent contractor you employ, as well as the contractor and your client.

Such a plan usually includes a detailed overview of the project your independent contractor will work on, including any areas of concern where issues may arise. This statement of work can clearly define the tasks, services and deliverables for which the subcontractor will be responsible, as well as any scheduling and budget constraints in which those objectives should fit. The statement of work can also include clear quality measurements for the subcontractor’s deliverables.

Often, management consultants will include an organizational chart in the plan, detailing the various team members who will touch the project, and what their roles will be. These team members can include primary consultants, subcontract consultants and client staff members who will be involved in bringing the project to completion.

The plan can also define how these people will interact with each other. For example:

• Who will serve as the primary contacts?

• Who will be the major decision-makers?

• Who will be in charge of risk management, and what processes will be used?

• What processes will be used to track and resolve issues that arise during the project?

The subcontract management plan is also an excellent opportunity to document your expectations for communication with your independent contractor during the course of a project. For example, you can define:

• How you prefer to communicate: by videoconference, phone, e-mail or in-person

• How often you wish to receive progress updates, and in what form

• How often your client should receive updates, and in what form

• The frequency of management status meetings

• The budget for any necessary long-distance travel or communications

As with any management consulting project, some factors are just out of your control, so there’s always a risk that a project’s requirements will change once work is under way. A subcontractor management plan is a good place to spell out a process for how proposed changes should be submitted and evaluated, who will be responsible for making decisions about them, and what process those individuals will use.

At the same time, the plan can define the parameters by which the subcontractor’s work will be considered complete, as well as any long-term support that he or she may need to provide to the client once the work is done.

A Contract for Subcontractors

While the subcontract management plan is an excellent tool for ensuring that your subcontractor is clear on the work to be done, there’s one more important document you will need: a subcontractor agreement, signed by both you and the contractor.

Such agreements contain clauses designed to prevent your independent contractor from taking a job with your client, as well as language regarding who owns your company’s intellectual property, exactly what your subcontractor is responsible for delivering, and more. Getting your subcontractor’s signoff on the contract protects your interests and reduces your liability should anything go wrong during the course of the project.

To learn more about subcontractor agreements, see the related article. “Got Subcontractors? Protect Your Interests with a Subcontractor Agreement.”

By giving your independent contractor a clear understanding of your expectations before work begins, you can avoid management consulting project pitfalls, boost client satisfaction, and help to make your contractor a valued, long-term extension of your team.