Many IT project managers find that using subcontractors is an excellent alternative to hiring full-time staffers. IT project managers may choose to hire independent contractors to assist with one project, or bring them on-board on a long-term basis. Either way, using subcontractors gives clients the support they need while extending your company’s presence – without your company having to pay for employee benefits and other perks.

However, working with subcontractors isn’t risk-free. That’s why the No. 1 rule in this situation is: “Document, document, document.” Before you formally begin a subcontractor engagement, be sure to thwart misunderstandings and missteps by clearly documenting your expectations with both a subcontract management plan and a 1099 independent contractor agreement signed by both you and your contractor.

If It Matters to the Project, Put It in Writing

When creating a subcontract management plan, no detail is too trivial. According to project management expert Karl Wiegers, any plan for working with freelance subcontractors should include as much information as possible about your subcontractor’s project. For a Subcontract Management Plan Template and other resources by Karl Wiegers that you can adapt for use with your own projects, see the free downloads at the end of this article.

First, Wiegers says, your plan should include a brief overview of the project that your independent contractor will be involved in, including any concerns or potential problems that might need to be addressed.

Then, you’ll need to define the human resources components of the project:

- Who will be involved?

- What roles will each person play?

- Who are the primary contacts?

- Who are the major decision-makers?

- What processes will those decision-makers use to resolve issues related to the project?

Be sure to document the way you expect to communicate with your independent contractor:

- Will you work primarily by videoconference, phone, e-mail or in-person?

- How often do you want to receive project updates, and how detailed should they be?

- Will there be regular technical peer reviews or management status meetings?

- If these interactions will take place long-distance, how much has been budgeted to pay for them?

You might also wish to outline a strategy for project tracking and oversight:

- How often do you want your subcontractor to update your client company, and how?

- How will the project be measured (time, size, cost, defects, status)?

- Who will be in charge of risk management, and what will that process entail?

- How will commitments and problems be tracked and resolved?

- When will periodic senior management reviews be scheduled?

As with any IT project, there’s always a chance that project requirements will change. Before that happens, it’s a good idea to have a written strategy that details how changes should be submitted and evaluated, who will be involved in decision-making related to change management, and what process those decision-makers will use.

To avoid confusion, many IT project managers also include in their plans a clear definition of when a project will be considered complete. Requirements tracing is useful here, as it gives you a methodology for ensuring that all functional requirements your client asked for are actually addressed in the end product. You may also wish to establish a plan for how you’ll transition the resulting IT solution over to the client, and how you and your team will support it over the long term.

Subcontractor Contracts

Once your independent contractor has agreed to your plan and is ready to begin work, there’s still one more important detail you need to address: securing his or her signature on a subcontractor agreement.

These types of contracts contain specific language to prevent your independent contractor from being hired away by your client. At the same time, your contract can be designed to protect your company’s intellectual property; outline your subcontractor’s responsibilities; and help to ensure a healthy, longstanding business relationship with your subcontractor.

Creating a contract from scratch is a costly proposition, especially if you need to do it every time you outsource work. Many IT project managers simply buy standard 1099 independent contractor agreement form templates. Such form contracts are designed to be customized and can be used repeatedly for a single, low price. Once you adapt your contract to fit your needs, you may want to pay an attorney to look the agreement over, just to be sure there’s nothing you overlooked.

By providing your subcontractor with detailed information about your expectations before a project begins, you can avoid misunderstandings, pave the way for smooth project implementation, and strengthen your professional relationship with your contractor. Most importantly, you can avoid many of the project pitfalls that can result in a dissatisfied client.

Author's Bio: 

Jim Cochran is the President of TechInsurance, a company specializing in errors and omissions insurance for IT companies. Jim has been providing insurance to IT companies for over a decade, making him an excellent source of information on risk management for IT companies.