Ten Stupid Contractor Tricks and How to Avoid Them
You negotiated hard. You spent days and nights working on the bid. Now you’ve signed the paperwork and it’s going to happen. Or is it?
Of the many post-mortems (note that the word “mortem” is Latin for “death”) in which I’ve participated, the lessons learned ranged from easy (we needed more coffee) to tough (several hundred thousand dollars in rework, three employee terminations, post-arbitration litigation pending, and even sliced tires).
I’ve worked with great professionals with credentials from the Project Management Institute, as well as many “old salt” program managers. A commonality between them is not only keeping their eye on the ball—the goals of the projects and programs—but also ensuring that contractor eyes are looking at the same balls and therefore, goals. Some contract management processes require constant realignment, while others are surprisingly smooth.
The basic facts of contract management are that they follow time-lines that mesh skill sets from two or more organizations. The life of a contract and its contractor are about the life and work described by the contract, its impact, then “goodbye.” Call it lifecycle because in many ways, it’s a living document. With perseverance, tenacity, and clear instructions, many projects start, work, and everything’s accomplished according to plan. The contract lived a good life. Others, however, had something change in the middle, perhaps expected, or unexpected. This is about preparing yourself for both kinds of changes: expected and unexpected.
Program and project management personnel have seen a lot of interesting contractor tricks. Some involved bid/tender execution basics. Others are more novel and ingenious. We’ll cover the top ten.
Contractor Trick #1: Contractor turnover causing additional costs through constant retraining.
The trick was a possible “bait-and-switch” between possible work candidates and the ones actually supplied. There are multiple possible solutions.
During the bid/tender phase, discover the typical turnover rates for individuals in the work categories that you need. If it’s possible – and sadly, it rarely is — try to learn what the certifications were for the individuals. Some contracting organizations have a cadre of high profile, experienced, and highly certified staff working for them. But these individuals are “mastheads” and give you the perception that these individuals may work for you. Watch for re-orgs just after the onset of the contract period.
Also, you may have caused this yourself by beating the contractor’s margins down too far for them to able to provide specifically skilled employees, and the second string has to be used. Face it: Contractors need margins to stay in business. Really low bids are always suspect, as there also might be a disconnection between the bid/tender description and the actual processes involved.
Use post-bid, pre-award conferences to ensure that finalists are very well aware of what’s needed to complete the work. Be very, very specific about the minimum skill sets that you require, when, and for how long. Build in delay time in your estimate, as even the best-laid plans are a gravitational point source for horrible weather and ugly cases of the flu.
Contractor Trick #2: Payment requests made off-schedule.
As in the second solution above, smashing awarded contract margins can lead to payroll problems for contractors. They are likely to be smaller and less well-heeled than your organization and thus tighter with their own budgets. Your accounts payable department may also be paying on terms that stretch the relationship without you, or the accounting people, realizing its impact. Major projects, especially those involving capital asset procurements, may cause problem for even the best A/P people, who often must budget cash flow months in advance.
Before contracting, ensure that the payment flows of a successful contract can meet your organization’s budget needs. Think about tender needs over the lifecycle of the contract. Great or even mediocre project management software can help you understand monetary dependencies in the timelines of your projects. Beware of the points where contractors are going to need funding if it’s not explicitly written into the contract.
Contractor Trick #3: Higher security access desired “so we can work more quickly.”
In a word, you must answer: No. Although handing out session passwords and using long strings of hex values to logon to systems infrastructure seems painful, security processes are implemented for a reason. Contractor liability is often limited; should something go awry, responsibility arbitration can become gruesomely expensive.
If you are so unfortunate as to have a breach of systems security, you don’t want to need to include contractors in mind in the breach review, too. The added processes and scrutiny can be expensive, because contractors come and they go. Procedures might go more quickly, until they explode or turn your security plans into Swiss cheese.
Contractor Trick #4: The Audit Problem—Weak or no QA process or version control.
Even the largest and most advanced organizations try to get away without code review, and they sometimes maintain a single code branch for a given application (we’ll go without names here, to protect the guilty). Although many revision control systems are long in the tooth, having one that’s accessible is better than finding that your code tree is on a system that now currently residing on another continent. Code vaults and periodic code review cycles are good practice, and for some applications, expensive as it can be, the QA process is mandated. Of course, the same can be said for understandable documentation.
Contractor Trick #5: Buying time through He Said, She Said.
If your organization is loose-and-fast about interdepartmental commitments, wait until you deal with contractors! Although contractors are often at a disadvantage because they are outside your business’ normal communications infrastructure, contractors can use this against your organization and the goals of the contract.
A variant of the trick is to use personnel who might be qualified according to contract specifications, but who use English as a second language or whose written and oral skills in contract-specific languages aren’t easily demonstrable. Qualification and sampling procedures for compliance are often necessary, especially where international communications is mandated.
Contractor Trick #6: Newly found culture shock.
Or, put another way: The contractor feigns lack of understanding regarding regulatory processes.
It’s true that the domestic and international regulatory atmosphere changes with the weather. However, compliance often is both mandatory and required, sometimes in evil ways. Multinational organizations are well advised to bring contractors up to speed on compliance issues. Otherwise you will discover that educating them regarding industry-specific, program-specific, or ethically-specific behavior is expensive, time consuming, and a near-guarantee of project delays.
The best practice is to sample a prospective bidding organization’s experience with compliance and regulatory procedure within your organization’s industries. Failure can be expensive, and it should be another important qualifying component of the bid/tender process.
Contractor Trick # 7: Dodging “invisible documentation” as a defense.
A contract administration office we worked with had a full-time arbitrator. The arbitrator had the wisdom of Solomon, the tenacity of an accountant, and skills of a seasoned detective. I was called into a meeting with her, and an otherwise really productive contractor and its liaison personnel. The meeting had been called to address progress—in this case, lack of it—in an important, yet sometimes unbelievably boring area: documentation.
There were four stacks on the meeting room table, but she placed a sheet of paper with a large X marked on it next to the stacks. She greeted everyone, smiling, and then the smile ran away from her face.
“I would know just how well this project is going if someone had documented that fact. Right now, it’s all hearsay. I hear rumors that things are going greatly! That’s great news, but I cannot know that factually until there is the requisite documentation that proves that fact. I have to report to management that while it’s rumored that things are going well, there’s not a shred of documentation to prove that fact. Management will tell me: no more payments until we really know. Then they’ll close that folder, and yell: Next!”
The responsible party for making that documentation had little to no defense. Periodic stakeholder documentation review is mandatory. Everyone comes with “the docs.” Absent of docs means you’re non-performing. Non-performance often has penalties—for either party. “The Invisible Documentation speaks loudly in deference to its size,” she said, looking at the guilty party.
Contractor Trick #8: Changing the rules and overstepping the mandate.
“Well, we discovered stuff that we really had to fix first before we could proceed,” claimed one contractor, who had the effrontery to bill for the time.
Once in a while, overstepping a contract’s mandates is acceptable. A little give and take helps to make workflow progress. On a totally different plane are contractor moves that set themselves up for circumstances that are vastly in their favor. One organization cited a near wholesale operating system infrastructure setup and deployed “because our developers are familiar with it.” No thought was given to post-contract lifecycle, maintenance, or even product familiarity, despite assurances that the contracted line-of-business product met all of the criteria. The cure is to specify what contractors can change, if anything, and by doing so, also what cannot and must not be changed.
Contractor Trick #9: The expansion of time.
Solution #9: While it’s true that life is unpredictable, organizations that don’t project and track workflow based on project or program management software become victims of contractor interaction dependencies. Having one contractor wait on another is an expensive but common problem. Using agreed-upon timelines can shift in both directions, of course, but using a central resource management application can show progress by allowing organizations to plan resources with you rather than against you and your staff. Here, project management staff that are certified or tenured pay handsomely. Collaboration tools provide inter-organizational nexus for decision-making. Hell, even a good calendar will do.
Contractor Trick #10: Lip service: telling tales out of school.
There’s an old joke regarding how you can tell if a computer salesperson is lying. The answer is that his lips are moving.
Contracted employees are often of the highest caliber, but some are less so. Yet SEC, Patriot Act, and HIPAA rules still apply in the U.S., as do numerous EU and country regulations.
While age-old professionalism mandates keep relationships between organizations private, this is the age of social networking, and people are used to communicating via Facebook, texting, and a variety of other unicast and multicasting methods.
Social communications knows no border. Making contractors intensely aware of corporate communications policy and the ramifications of violating communications policy has become mandatory. Yet people (especially younger people) continue to blurt out an amazing variety of seemingly interesting communiqués (such as staff changes, inside information regarding criticisms of the employing organization, and patient information). Even without naming names or other identifying information, the kind of software used for an application or process, or movements of a CEO can be the crux of regulatory violations if published and unwittingly may be very inappropriate given the current international regulatory atmosphere.
These are but a handful of Stupid Contractor Tricks. There are more. I encourage you to add your own in the comments.
Don’t assume the contractor is always at fault. Engagements must work both ways. Describing details in bids/tenders with great articulation takes skill, as does describing reasonable flexibility. Contractors have to provide value, and still make a reasonable living. Finding the right combination of skills and values through planning, job costing, and estimation is sometimes more art than science. But in the end, there’s a job to be done, and done well.
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