It's one thing to be a good consultant. It's another to know how to use one. Sooner or later you will run into a situation where you need to subcontract out some work. Or maybe you'll need to hire an attorney or accountant. Being on the other side of the equation will teach you the sources of discomfort for your clients and can teach you how better to obtain business in the future. This column should also be useful for managers considering hiring consultants.
The first step is finding the consultant. I usually only work with people I know. Over the years I have developed a large network of consultants, and if there is a job too large for me to handle by myself, I know whom to call. If I don't know the right person, I look for referrals from people I trust.
The next step is to clearly identify what needs to be done. A good way to do this is to develop a statement of work, which can often be a bulleted list of items, rarely longer than a page. Such a statement forces you to define the job exactly and prevents miscommunication later. It can also be easily inserted into an agreement. Now make sure that your consultant really has the time to do your job and has not already over committed to other clients. Ask what will happen if the job doesn't start on time. Will the consultant still be able to deliver, or could the delay interfere with some forthcoming commitments?
You will need to decide whether you prefer to pay a fixed fee or be billed on an hourly basis. Generally, I prefer paying the consultant on an hourly basis, as this way I am paying only for the amount of work actually done. To prevent any surprises on the number of hours, request a time estimate in advance. If the project requires more than one phase, request an estimate for each phase. Once the project is under way, monitor the consultant's progress, including the progress made against the estimated schedule. Also ask the consultant to inform you whenever anything unexpected might affect the duration of the project. After each milestone, even if it comes before the completion of a billing cycle, ask how many hours the consultant has used. When consultants know that you are taking estimates seriously, they will take them seriously as well and will report their time in an honest fashion.
You will also want to take care of all the appropriate paperwork. Foremost, use a consulting agreement. I use the same format as I use for my own clients when I supply the agreement. (See the July 31 Consultant's Corner.) This letter simply includes a description of the relationship, the statement of work, the deliverables and the delivery schedule, the amount to be paid, and the invoicing and payment schedule. I always pay my consultants promptly. The value of holding on to the money is generally negligible, and I'm looking for good long-term relationships. Remember, if you pay any consultants more than $600 for their services during a year, you will need to issue a 1099 federal tax form to them and to the IRS. Your accountant can do this for you. Just make sure you ask her for a time estimate.