The keys to having great subcontractor relationship management are setting 1) clear expectations and, 2) maintaining great communication. As a contractor, what should you expect from your subcontractor? And, as a subcontractor, what should you expect from your contractor?
In this 3-part video series, Don Clark of FMProGurus and Susan Fenemma of BTC discussed the topic of Subcontractors: How-Tos and How Not Tos. Brandon Hayes from Kalos Consulting appeared in the first episode as well. This post takes that series one step further to help you successfully manage the subcontractor relationship.
Setting up contracts is the first step of subcontractor relationship management. They can set the tone (good or bad) with the subcontractor. NDAs (non-disclosure agreements) and/or Subcontract Agreements set the expectations with each other and with the contractor’s clients.
Contractors, note that NDAs should be mutual, not one-sided.
Subcontractors, understand that because of the required legal language, contracts are a bit dry. You won’t get a soft, fuzzy feeling reading them. But, dry or not, it benefits you to read them in full. If you have a question or concern, bring it up before you sign anything.
One of the most important things about subcontractor relationship management is setting clear payment terms that both sides agree to upfront.
As the contractor, when and how do you pay your subcontractor?
Here are some examples of how contractors pay, how subcontractors invoice, and how it affects the relationship:
Regularly-requested hourly invoices (e.g., every 2 weeks, 1st of the month), paid upon receipt or on a pre-determined net (e.g., Net 10, Net 30)
- This structured payment schedule keeps the contractor out of trouble by requiring invoices in a timely fashion and gets the subcontractor paid quickly.
- Subcontractors working in this environment will be happier and much more willing to work for the contractor – even prioritizing these contractors over others.
Hourly invoices paid upon receipt or on a pre-determined net, but not requested at regular intervals
- The onus falls on the subcontractor to invoice the contractor when s/he sees fit. Because many subcontractors don’t love the accounting part of their jobs, this could be very irregular.
- The contractor could be caught by surprise with a large invoice due to the subcontractor letting several months back up and be challenged to pay immediately.
Fixed bids, paid in full upon receipt of invoice at the completion of the job, in advance or part now, part later
- This method allows the contractor piece of mind to know how much the subcontractor will get paid in advance. Additionally, it allows both parties to set payment terms per project. Usually, requested fixed bids reflect that the contractor is also providing a fixed price to the client.
- The risk is not staying in scope or something unexpected happening during the project. However, if both parties commit to a fixed price based on a fixed scope, the subcontractor can keep both parties happy by raising his/her hand if something unexpected arises. This communication allows both to work as a team to solve the problem with the client.
Invoices paid when the client pays the contractor
I would warn against this practice for several reasons:
- It’s not the subcontractor’s responsibility to finance the contractor’s business.
- The subcontractor has innate permission to ask questions regarding the contractor’s finances, asking when the client pays and when s/he can expect payment.
- If the client delays payment for too long, the subcontractor might slow down – or even stop – work for the contractor since s/he can get paid faster by other contractors.
- In essence, it could be problematic for good subcontractor relationship management.
However, in certain situations (especially really large jobs), as long as both parties are fully on board, this method might be a requirement. But I would still suggest phased payments from the client to allow the contractor to pay the subcontractor in smaller chunks along the way.
Expectations of the Contractor
The following are the expectations for the contractor’s side of management of the subcontractor relationship.
- Make it clear how and when you prefer to be contacted. Provide all your contact information, with one being the preferred day-to-day contact, and the others for emergencies only.
- Be available to and/or make time to answer the subcontractor’s questions so s/he can continue working. Setting up office hours so each party knows when to expect communication is helpful.
- Explain how – or if – you want the subcontractor to communicate directly with clients. Each client might even require a different type of communication.
- Review any specific coding requirements or development procedures your team follows (never develop in production? comments? naming conventions?).
- Set the contractor up for success. Make sure they’re put into situations where s/he has the opportunity to succeed (i.e., don’t throw them in that briar patch because you don’t want to deal with it!).
- Share times when you or other team members will not be available (vacation, holidays, conferences, etc.) so they know when they can’t get assistance.
- Invite the subcontractor into your project management and time-tracking software, and give instructions on your policies for how to use it.
- Invite the subcontractor into your Slack or other chat tools if you use them.
- If you have a product (and the subcontractor will work on it or with it as a base), walk the subcontractor through it in detail.
- Explain your QC process.
- Clearly define any scope of work the subcontractor is expected to fulfill per project. Include the deadlines/timelines and any budgetary requirements. Be sure to include all the contact information for all the people involved in each project, especially the project manager and technical lead. Additionally, explain any confidentiality/security rules (i.e., is HIPPA a problem, etc.) applicable to the specific client work.
- Provide access to/documentation for license keys, access points, and files (licenses, VPN, servers, etc.).
- Explain status expectations (how often? status meetings? in writing? if writing, via what method – email, submittable PDFs, quick Slack/chat?).
Expectations of the Subcontractor
The following are the expectations for the subcontractor’s side of management of the subcontractor relationship.
- Respect the parameters set by the contractor on how to contact him/her.
- On timesheets, be sure to provide a brief description of projects worked on during hours logged (e.g., “data import, call with client, added pop-up windows to layout”. But, not “FileMaker development – 4 hours”).
- Notify the contractor of any vacations or other unavailable time periods in advance, especially if they affect the deadlines/timelines.
- Abide by the contractor’s check-in, status, time tracking, and project management expectations.
- Meet your deadlines!
- Provide estimates upon request for clearly scoped and well-defined work. And, if the client asks for work out of scope, notify the contractor before doing it.
- Understand and follow the workflow for communication for the particular project/client (e.g., contact client directly, go through tech lead, go through PM).
- Recap any client discussions with the project manager and tech lead, or include them both in the discussion.
- If you spend 30 minutes solving a problem, stop and ask for direction from contractor. (i.e., don’t waste hours)
- If you don’t have enough information to proceed with the project, notify the contractor immediately.
- Work the number of hours promised to the client. (Block them out on your calendar if you need to.)
- If you hear from the contractor and are not available, notify him/her when you would be available or when you can respond. (i.e., don’t ghost!)
- Check your work, from a user’s perspective, before turning it over to the tech lead or the client.
In short, not every relationship is perfect – that certainly goes for subcontractor relationship management too. However, setting the above expectations helps to pave the groundwork for better communication, streamlined processes, and more effective project development and management.
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