Contractor management involves supervising the work of contractors hired for a project, along with all related activities. Its primary goal is to manage deliverables and maintain a strong working relationship with the contractors.
A contractor management system includes a set of rules to monitor contractor services, support operations, and performance goals. It also keeps all contracts in one place, thereby eliminating manual paperwork.
With the help of our experts, we’ll discuss the process of contract management, why it’s important, its benefits, and more.
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Successful Contractor Management Process
Successful contractor management relies on a structured process. To manage contractor work effectively, follow these key steps in the contractor management process:
- Devise contractor selection criteria
- Describe the job
- Assess the risks
- Go over the applications
- Train the contractors
- Monitor and ask for feedback
1. Devise Contractor Selection Criteria
The first step in managing contractor work effectively is to establish a clear selection criteria selection. This process, often referred to as prequalification, should begin well before a project begins.
Develop systems to evaluate candidates based on their qualifications, capabilities, and other relevant factors. This step is also critical for defining the responsibilities of both the contractor and the organization contracting their services.
By having a well-defined selection process, you’ll know exactly what you’re looking for when applications start coming, saving you time.
2. Describe the Job
When you determine the skills and qualifications needed for your project, create a detailed job description with a clear explanation of the type of services you need. The job description should clearly define the skills required, scope of work/duration of the services required, and payment structure.
3. Assess the Risks
Risk assessment is a vital part of contractor hiring and management. Some projects are more hazardous than others, particularly in industries such as construction or electrical work where injuries are common.
These risks can result in project delays and increased costs. It is important to conduct a risk assessment to identify potential hazards related to activities contractors will perform.
Managing contractor safety is the responsibility of the organization hiring the contractor, so all potential risks should be identified and efficiently managed by the organization hiring contractors. Contractor safety management and compliance protect both the contractor and the organization hiring them as it helps avoid legal troubles and potential project delays.
4. Go Over the Applications
Also referred to as the auditing process, this step ensures that contractors fully understand the project requirements and their responsibilities.
For this stage, develop a structured system to evaluate contractor applications and determine whether they are a good fit. Conduct brief interviews with potential contractors to go over the work requirements and confirm their ability to meet the project’s needs.
At this stage, the contractors should also be made aware of any potential risks related to the job, if any, as well as any permits and licenses they might require to complete the tasks.
5. Train the Contractors
If the project requires it, you should also plan and execute training sessions to prepare contractors for the activities they will perform. This includes health and safety training, and any other relevant training sessions required for the project. This especially applies to heavy industry jobs where safety is a priority.
During this step, you should also determine and clearly communicate the type of training your organization will provide and what tasks fall within the contractor's scope of responsibilities.
6. Monitor and Ask for Feedback
Schedule regular follow-up meetings to give feedback to your contractors and answer any questions they might have related to the project. Regular meetings help tackle any hurdles along the way and help increase productivity — it’s essential to be available to both give and hear feedback to ensure the successful completion of the project.
Companies that hire contractors, whether locally or internationally, often need assistance managing the entire process, from recruiting to service delivery. You can benefit greatly from a platform that streamlines all aspects of contractor management, from hiring to payroll.
Why Is Contractor Management Important?
Hiring and managing contractors effectively can be challenging, especially when it comes to scheduling and task coordination — which is why contractor management is extremely important. It ensures that:
- Services are delivered as ordered
- Communication between the organization and contractors is efficient
- The hiring organization has clear insight into the fulfillment of deliverables
Alternatively, you can hire an employer of record (EOR) to handle different contractor management tasks on your behalf.
3 Best Contractor Management Software
Using contractor management services can help you optimize workflows with contractors and better oversee every project you're collaborating on.
Here are three top contractor management platforms to consider:
1. Remote
Source: Remote
As one of the top contractor management software, Remote offers a comprehensive suite of services, including international payroll outsourcing, tax handling, and compliance management for companies hiring globally.
Remote’s solutions enable companies to:
- Hire contractors from 170+ countries
- Run payroll regardless of contractor location
- Expand globally — hire talent without worrying about legislation
- Provide country-specific benefits for your global employees
Remote offers the following services:
- Employer of record
- Contractor management
- Global payroll
- Remote relocation
- Consulting services
Remote offers a Contractor Management plan for $29/contractor/month and a Contractor Management Plus for $99/contractor/month.
2. Deel
Source: Deel
Deel is another excellent contractor management software. It is a great HR platform for international teams, allowing you to hire, onboard, and pay contractors seamlessly. Deel is a popular platform with over 20,000 customers, working with over 120,000 workers/employees to get paid globally.
Deel enables you to:
- Hire, onboard, and pay both contractors and full-time employees
- It offers comprehensive payroll features, from document management and invoice tools to wage access features
- Global reach — like Remote, Deel also enables worldwide expansion and simple business scalability
- Comprehensive and intuitive benefit management
The platform also offers the following services:
- Comprehensive employee/contractor hiring and onboarding processes with available background checks
- HR services with possible automation
- International payroll
- Contractor/employee misclassification management
Deel offers a Contractor plan starting at $49/month.
3. Omnipresent
Our third choice for the best contractor management platforms is Omnipresent. It helps companies recruit and employ remotely in a total of 160 countries with the ability to set up local entities.
With Omnipresent, businesses can:
- Hire and onboard employees and contractors
- Offer contractors/employees global payroll management services
- Take advantage of global benefits administration, tax management, and compliance adherence
While Omnipresent is mainly EOR software, it offers a wide array of services, including:
- Comprehensive employer of record services
- Professional employer organization
- Virtual employer organization
- HR support
- Global benefits and healthcare
Omnipresent offers a $29/contractor plan or an Employer of Record plan starting at $499/month/employee. There’s also a customizable offer as well, which can be tailored to each company’s needs.
Contractor Management Benefits
Some of the benefits of contractor management include:
- Legal compliance
- Streamlined payroll
- Less paperwork
- Improved communication
- Simplified reviewing and analyzing
1. Legal Compliance
Legal compliance is crucial when hiring contractors, as the risks and penalties for failing to comply with legislative requirements can be costly and damaging. The risks of lawsuits from contractors can vary from breach of contract or discrimination to intellectual property disputes, wage law violations, and others.
Contractor management services help mitigate these risks and avoid legal troubles as it ensures you are compliant with local employment laws and can monitor and update contracts efficiently.
2. Streamlined Payroll
Paying contractors can also be complex, especially if they’re remote workers. Payroll for independent contractors is made easy with a management system as they streamline payroll processing. Organizations can process payments quickly regardless of the location of their hired contractors.
3. Less Paperwork
A contractor management system helps minimize paperwork and manual work for both the organization and the contractor. By keeping all the relevant documents and information on one platform, both parties can have access to what they need with just a few clicks.
4. Improved Communication
Effective communication is essential for the success of any project. A contractor management system connects people and enables them to communicate efficiently by providing a chat option. It also gives organizations insight into tasks’ statuses.
5. Simplified Reviewing and Analyzing
Implementing a contractor management program helps streamline the process of hiring contractors, managing projects, reviewing work, and analyzing other work-related activities. Since everything is transparent and stored in the system, organizations can oversee all activities, spot and handle any irregular tasks, and improve productivity.
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Contractor Management Downsides
While contractor management offers many benefits, there are also some downsides to consider:
1. Lack of Commitment
One downside of contractor management is that it may not be enough to motivate contractors, who may not be as committed to the job as long-term employees. Since they don’t view the company in the same way, this can lead to challenges such as lack of motivation, missed deadlines, and difficulties in fostering a cohesive workspace.
To address these issues, consider implementing additional measures alongside contractor management to ensure continued productivity and engagement.
2. High Cost
Hiring contractor management involves paying a fee, which can be a few hundred dollars or more. While affordable options for a PEO company or other experts exist, the difference in price may reflect on the quality and comprehensiveness of the services.
Investing in a more professional contractor management system could lead to better results despite the higher cost.
3. Poor Communication
Contractor management requires overseeing contractors who are not part of the company, which means their working methods and communication styles may be different. This could lead to poor communication and misunderstandings.
Communication and integration are key elements for a project to succeed, but differences — even in the time zone — can disrupt it. This can be difficult for managers to ensure that contractors feel like a cohesive part of the team.
To address this, establish a clear communication protocol and schedule regular check-ins to align goals and expectations. These measures could help bridge the gap and ensure better coordination.
Key Contractor Management Takeaways
Hiring and managing contractors offers many benefits, including legal and safety compliance, streamlining payroll, reducing paperwork, and simplifying the review and analysis process.
A contractor management system can help you streamline processes and provide visibility and control over tasks and responsibilities. It is also important to follow the steps to a successful contractor management process we outlined above and be specific about the services and job requirements to build solid relationships with contractors who deliver quality work.
