What is Contractor Management and Why It is Important?

What is Contractor Management?

Contractor management refers to working with external contractors with access to skilled professionals in the field and performing required tasks under the company's guidelines. Companies cannot train their regular employees in contractor management and can hire professionals to execute the tasks with clear obligations. There is no scope for confusion, worry, or dissatisfaction in the performed task in contractor management, as they consider every angle while dealing with the client or the contractor and keep the contract transparent. 

Furthermore, contractor management ensures that the work assigned to the contractor must be completed within the deadline and with perfection, as they are hired for their skills in specific areas. Through this, the budget or time of the company/stakeholders will not be affected. In any case, if a contractor does not follow the policies of the companies, they are charged with fines and penalties.

Why is Contractor Management Important?

There are numerous importance of contractor management, including

1. Assures contractors work in compliance with organizational policies and procedures.
2. Ensures that the task is completed on time and within budget.
3. Sometimes, companies need more specialized workers and seek expertise to perform in extreme conditions. In such situations, the contractors with the required knowledge and capabilities can benefit the company.
4. Helps in saving the training time.
5. Contracts provide flexibility in project management and workload.
6. Contractor management can aid in minimizing the legal and tax issues associated with regular employees. 
7. Specialized contractor brings the expected results, increasing productivity and efficiency of the task.
8. The head cost of regular employees employs additional costs, which need not be considered when hiring contractors. Thus, it benefits office space and equipment.

What are a Contractor's Obligations?

Regular employees and contractors do not have the same rights and obligations. Independent contractors are opposed to being employed by a person of business and just offer service for certain specific tasks. The contractor's rights can be simple or complex, implied or explicit. 

The contract of the project can be a verbal agreement or in a prescriptive or formal documentation form where all the responsibilities of the contractor and policies of the company are clearly mentioned. The basic rights of the contractor in their contract may include the following.

1. Risk mitigations and controls
2. Project deliverables
3. Loyalty to relevant legislation
4. Maintaining applicable licenses and insurance
5. Expectations around health and safety
6. Project deadlines and expectancies

The Contractor Management Process

The contractor management process involves the following steps.

Defining Contractor's Tasks And Specifications

When an individual or business hires a contractor to perform a particular task, the first step is to clarify the task in a detailed version. The step aids in understanding what the company is asking for and their expectations from the contractor. The contract specifies tasks, do's and don'ts, deadlines, company policies, etc.

Vendor Contractor Process

In this process, companies filter out received applications from contractors based on their requirements and choose the specific ones based on skills, experience, and the cost associated with the contractor. Suiting the requirement, they choose the best-fit contractor to execute their specific task in certain terms and conditions.

Contractor Screening & Qualification

After filtering to choose the best fit, the company always checks the qualifications and backgrounds to identify the fraudulency or authenticity of the contractor. If the experience, education and skills match their profile as shown, then they proceed to the next step of hiring the contractor for project management.

Contractor Agreement Establishment

Once the organization is assured of the contractor's status through the screening process, they generate an official contract or formal agreement outlining the important details of the roles of the contractor. 

A contract management agreement comprises clear information about the task, expectations, risks, policies, rewards, penalties, deadlines, health and security details, payments, payment procedures, safety guidelines, etc. The transparency of the promises from the company and contractor sides is enclosed in a non-disclosure agreement. 

New Contractor Orientation & Training

The step involves a minor training process for the contractors who need to become more familiar with the company's work environment and standards. The step is crucial and offers general information about the company along with the specific guidelines, policies, procedures, etc., to ensure that contractor work is aligned with the brand name, pattern and standards.

Ongoing Contractor Oversight & Management

The process involves investigating, acknowledging and supervising the contractor's work. The organization monitors the contractor throughout the contract management process to evaluate if the contractor is performing well and if its work is up to the company's standards. 

Furthermore, suppose they have certain concerns and issues during the project management. In that case, they can be addressed and resolved as early as possible without hampering the peace of contractor, task quality or company's policies. This particular step is important to ensure that contractor management is up to the mark.

Conclusion

Contractor management involves experts performing tasks that regular employees can not do with perfection. They assure you that they will get the task done perfectly. Managing the contractor with emphasis on all the linked characteristics like work delivery, speed, efficiency, work quality and so on is a part of project management. A career in this field holds promising opportunities. 

PGP Project Management Certification Training course with Simplilearn offers hybrid learning. You can start a new journey at the beginner level or transition your career to project management. The curriculum of the course encompasses basic to advanced knowledge with an opportunity for real-world introduction through projects at top companies!  

Choose the Right Program

Are you looking to take your project management skills to the next level? Look no further than Simplilearn's comprehensive project management courses!

Our courses are designed to help professionals at every level of experience to develop and enhance their project management skills, whether you're just starting out in the field or looking to advance your career. With our courses, you'll gain practical, hands-on experience in managing projects from start to finish, and learn best practices and industry standards that will set you apart from the competition.

Program Name	PMP® Certification Training Course	PMP Plus	Post Graduate Program In Project Management
Geo	All Geos	All Geos	All Geos
University	PMI	Simplilearn	University of Massachusetts Amherst
Course Duration	90 Days of Flexible Access to Online Classes	36 Months	6 Months
Coding experience reqd	No	No	No
Skills you wll learn	8+ PM skills including Work Breakdown Structure, Gantt Charts, Resource Allocation, Leadership and more.	6 courses including Project Management, Agile Scrum Master, Implementing a PMO, and More	9+ skills including Project Management, Quality Management, Agile Management, Design Thinking and More.
Additional Benefits	-Experiential learning through case studies -Global Teaching Assistance -35PDUs	-Learn by working on real-world problems -24x7 Learning support from mentors	-Earn 60+ PDU’s -3 year course access
Cost	$$	$$$$	$$$$
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Frequently Asked Questions

Q1. What is meant by contractor management?

Contractor management is hiring an expert in a specific field from outside the company to perform certain tasks on particular terms and conditions. It ensures that the contractor's work is aligned with the company's standards.

Q2. How do you manage contractors?

Contractor management is a necessary process that involves several steps. To manage contractors, companies must consider certain factors, including clear communication about the expectations, selection criteria and qualifications required, formal agreements with clear rules and company standards, training sessions, consistent communication and updates during the project management, quality assurance, performance evaluation, payment management and so on.

Q3. What are the duties of a management contractor?

The duties of the management contractor incorporate proper project planning, cost management and budgeting, risk assessment and mitigation, resource procurement, quality control, health and safety management, conflict resolution, regular communication, record keeping, client relationship management and project handover.