CONTRACTORS VERSES CONSULTANTS

INTRODUCTION -

The burning question and frustration to all procurement professionals is knowing the difference between a contractor and a consultant. Why does it matter whether someone calls themselves a contractor or a consultant?

Any business-person knows that one of the keys to success is good marketing. If you're a self-employed IT professional, do you call yourself a contractor or a consultant? It may sound like a pointless argument, but what someone calls themselves can make a big difference.

It's important not to confuse contractors with consultants. The difference between the two will affect outcomes, expectations and fees.


CONTRACTORS -

A contractor essentially acts as a temporary employee. The contractor works under the manager's supervision, probably with other employees, to help complete part of a larger project. He or she is told what to do, how to do it, and when it needs to be done.

A Contractor will spend a significant amount of time at your company performing tasks such as conducting audits and writing procedures. The contractor provides an additional set of hands to do certain tasks for you. Contractors may spend 50 percent or more of their time working with you over several months. The contractor is a worker, not an advisor, and generally doesn't take part in the strategic project planning necessary to achieve registration.

Contractors are useful for companies whose employees lack the ability, time or inclination to do their own auditing and procedure development work or who need a significant amount of hand-holding to work through these tasks. Contractors are also useful in lean organizations that lack readily available personnel resources or that contract out many functions as a strategic choice.


CONSULTANTS -

A consultant is brought in when the company has a need and either isn't able, doesn't wish to, or doesn't know how to take care of it - and doesn't have time or desire to figure it out. The consultant analyzes the problem and decides how to solve it, often using methods or tools that the client hasn't even thought of. The consultant is self-directed and does whatever it takes to deliver the solution that meets the client's needs.

Consultants on the other hand are advisers who help lay out a strategic plan and organize the necessary resources. A consultant acts as a coach on the sidelines, encouraging and motivating your employees to perform the tasks necessary to reach registration. The consultant helps everyone stay on track, brainstorm solutions and knock down barriers. Knowledgeable and capable consultants have worked with several companies and have learned first-hand some of the typical pitfalls companies face when pursuing registration. Because they have identified many of the same kinds of problems before and understand that it's possible to overcome these problems, consultants are less likely to be discouraged or frustrated by bumps in the road. Moreover, because consultants don't own the process and have less emotional commitment to the organization than do full-time organizational members, they may be able to bring an unbiased and unemotional perspective to problems and evaluate a variety of potential solutions.


DISTINCTIONS BETWEEN A CONTRACTOR AND A CONSULTANT -

Generally, a consultant is paid higher fees than a contractor. Of course, this depends on a lot of factors, such as the market demand, the skills, and the client's need.

A contractor generally bills based on time spent performing services. Invoices detail the number of hours worked multiplied by the set fee per hour. Contractors generally work onsite under direct supervision. They often work through agencies and don't find their own work.

A consultant most often bills by project, charging for designing and implementing the solutions offered. Consultants rarely work through agencies, and they're often responsible for drumming up their own work, either by networking or marketing. A consultant sets pricing based on the quality of the solution and the demand for it, not just on time. Many consultants bill by the project, thereby increasing their hourly rate breakdown by working faster and more efficiently. In addition, many clients like this approach because they know what they'll end up paying for the project, and they know there's no incentive for you to drag out the work.

Other distinctions between Contractor and Consultant:


INDEPENDENT CONTRACTOR

1. Entity may be either an individual or an organization.

2. The services are of a specialized nature which cannot be performed by a regular employee.

3. Entity may be given responsibility for the conduct of part of a sponsored project.

4. Entity may be given credit in any published report or other documents.

5. The department retains the right to control the results of services performed, but not the manner of performance. The department has the right to reject the services/products provided.


INDEPENDENT CONSULTANT

1. Entity is usually an individual, but may be an organization.

2. The services are primarily advisory in nature requiring professional expertise to solve a clearly delineated problem. The advice cannot be obtained from campus resources.

3. Entity may provide advice, recommendations, analysis and resources based upon their background, education, experience, knowledge and expertise. Entity may not be given responsibility for any part of conduct of a sponsored project.

4. Entity may not be given credit in any published report or other document as other than "consultant" to the project.


CONCLUSION -

The definition of the terms becomes critically important when a trying to decide whether an individual is an employee, contractor or consultant. Generally, contractors and consultants are not employees. They are individuals from outside of the organization that perform services for the organization

In a nutshell, Consultants provide advice, while Contractors "do" things.

The Consultants role is evaluate a client's needs and provide expert advice and opinion on what needs to be done while the Contractors role is generally to evaluate the client's needs and actually perform the work.

However, these terms, Contractor and Consultant, have become blurred over the years and at times have been used interchangeably. Especially when the Consultant, after having given his or her professional opinion or advice on what has to be done, then enters into an agreement (contract) to provide the services required. At that point the Consultant may be said to become a Contractor. The terms have also become blurred as industry has incorporated them into employee job titles.

Generally, a Consultant is a self-employed independent businessperson who has a special field of expertise or skill. The consultant provides professional or expert opinion, advice or services regarding information or materials in his or her field of knowledge or training to assist others in making decisions or in performing tasks.

On the other hand, a Contractor is a self-employed independent businessperson who agrees (contracts) to do work for another usually for a fixed price. It is usually an 'arms length' transaction. The individual hiring the contractor defines the desired results and the schedule. The contractor may supply labor only or labor and supplies. The Contractor generally retains control over the work to be done including the means and methods used to do the job, the scheduling of the underlying work, who performs the work and determines how the work will get done within the standards and time requirements set. A contractor will generally use his own tools and work equipment and may employ others to do the work for them.