Project Delivery

This message has been cross posted to the following Discussion Forums: Project Delivery and Practice Management Member Conversations .
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I have a one man firm where up until recently all I required was part-time, contract labor and contract architects whom worked in my office space to complete projects.

Fortunately, I have picked up enough work to consider a full-time architect to work with me as a Project Manager.

I have a guy working for me that is doing a good job, however, in this unpredictable economy I am still reticent to hire this person full time. At the same time the strategy of contracting PM work has some issues. For example:
- If he is contracting then he could contract with others at the same time.
- Keeping track of hours is hard to do and it also runs the risk of busting the budget if the hours get out of hand on a fixed fee deal
- Do I give him business cards with my firm on them?
- Cell phone cost, etc.

Other options I have considered are:
- putting him on a retainer
- asking him to come up with a fixed price to do the whole project and then marking it up as required to cover my overhead and make a little profit.
- salaried employment  contract for a six month period or so to be extended as possible.

Any input would be appreciated.

Berry





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S. Jones AIA
Owner
S Berry Jones - Architects
Memphis TN
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Hi Berry - I don't know why, but I felt compelled to respond to this - I'm looking at it from the perspective of this potential Project Manager, and [please forgive me] also add some "Dr. Phil-esque" commentary on how it looks from us here on the outside:


"If he is contracting then he could contract with others at the same time."
Yep, the modern work world cuts both ways - if employers can't have loyalty to employees [in any business], well employees aren't stupid - they are going to capitalize on their "free agency" in the way that works out best for them.


"Keeping track of hours is hard to do and it also runs the risk of busting the budget if the hours get out of hand on a fixed fee deal"
Don't you run the risk of "busting the budget" even with employees working in-house full time?


"Do I give him business cards with my firm on them?"
Looking at it from the outsider perspective, it would seem odd to me as a client or contractor to have someone show up on a project representing your firm, but not have a clear association with the firm.


"...asking him to come up with a fixed price to do the whole project and then marking it up as required to cover my overhead and make a little profit."
You would have to think that someone selling their services to you in this way would want to make a profit on their efforts, and also be rewarded for the potential risk of "busting their budget" with you.  So all things being equal, you are paying more for the same services than you would for an employee [although without the "risk" of hiring them full-time, whatever that is].  But you gain the upside in flexibility without commitment.


"...salaried employment contract for a six month period or so to be extended as possible."
What do you see as the difference between this and just hiring them as an employee?  You have to think that everyone in the working world knows that jobs these days are "at will" and can evaporate at any time.  It doesn't hurt to be upfront and tell the potential employee, when you offer the job, that things look okay for X months, but beyond that it's not certain.  They may decide your offer isn't all that tempting, and prefer to work contract and look for a better one.


If you think you need the help, and can support the employee for the foreseeable short-term, [this is where it gets Dr. Phil-ish] what is it about the commitment that you are afraid of?

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Matthew Bartner, AIA, LEED AP BD+C
Kitchen & Associates
Architecture - Engineering - Planning - Interior Design
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You have laid out your options fairly well.
Given the current economic climate i would keep him as a consultant fro a fixed number for each project.
it will give you a chance to seeif he can stay on budget for fees & allow the time for things to settle down.
as to the cards, if you want him out represnting te firm rather than himself I would give them to him. the othwer costs you refer to such as cell phone, etc should br part of yourbusiness deal with him.
Just my opinion.
Good Luck,
Burt

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Burton L. Roslyn, FAIA
President
Roslyn Consultants, LLC
Roslyn Heights, New York
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I can appreciate the dilemma, but providing PM services with contract labor carries a lot of risks you may not have anticipated. My comments here are only intended as general background. I encourage you to consult with an attorney licensed in your jurisdiction to get more detailed advice:

1. If this contract PM is working mostly or exclusively for your firm, and does not have his or her own independent business, the IRS could re-classify the PM as an employee and assess your firm for payroll taxes. This is a high value audit issue for the IRS.
2. Likewise, if your PM is considered a statutory employee, your firm could be liable for overtime pay despite your efforts to negotiate a fixed hourly rate or max fee for the service. This is real gray area, as there are exemptions for "white collar" employees, but your facts may not fit that exemption.
3. Your professional liability insurer won't like the arrangement either. While you probably will have coverage for your vicarious liability, you won't have recourse against the contract labor PM for his/her mistakes unless that person also carries insurance (and they usually don't).
4. You may have a risk under your state professional practice act for delegating professional services to someone who is not your bona fide employee (i.e., W-2 employee). Some jurisdictions might also require a written subcontract with that contract PM before you could legally seal and sign any professional documents prepared by that person. That written subcontract may help with problems 1 and 2, but won't absolutely protect you if it is evident that the person is working under your direct supervision and control, works mostly or entirely for your firm, and you are providing all the "tools of the trade" such as cell phones, computers, software, and so on.
5. Unless this person is someone you know and trust well, it can be very difficult to manage a contract PM, and their loyalties may not lie with your firm over the long term. We have seen many situations in our law practice in which that contract or temp employee caused major damage to the project or client relationship. The employer (or its insurer) ends up writing the check in every case. If you give this person a business card with your firm name on it, you may well be held responsible for anything that person does in your name even if that exceeds the scope of the authority you intended to grant.

If your work has picked up to the point that you need the help, it is better to increase your fee quote to support the added burden of payroll taxes, benefits, and compensation, so that you may bring your PM on board as soon as you can do so. Until then, treat the PM as a subconsultant, which means a formal contract, insurance requirements, and all the other things you require of other subs.



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P. Folk
Attorney
Folk & Associates, PC
Phoenix AZ
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