Contract management and added value

Contracting out work or services to outside companies and individuals has become usual both in business and government in the Western world since the 1980s. Originally, it was due to downsizing and lean-and-mean budgets. Organisations could not maintain enough staff on the payroll to carry out their business, so they hired contractors to pick up the slack. It may have been a matter of making a virtue of necessity, but the diversification of the people doing the work has sometimes resulted in interesting and creative contractual arrangements.

Contract management is an opportunity for an organisation to get a new perspective on particular issues and problems. Yet all too often managers still think of outside contractors as no more than “temp staff” or “extra help”, and the main thing they worry about is control – being able to control what the contractors are doing and getting the specified result. This is understandable, as there is anxiety involved in depending on outsiders to get part of your business done, which is what contracting means. But this kind of defensive thinking excludes the all-important factor of “value added”.

When a product or a service on the way to the customer or the consumer passes through the hands of different people, they should be adding value every time. This value will come from their particular perspective and their particular expertise, which others in the chain do not have. The more diverse the people in the chain are, the more value is likely to be added. Contractors are no exception here. Whenever you contract a job or part of it out to anybody, they should be adding value.

Yet the counter-phobic desire for control more often than not prevents this from happening. When a contractor offers new perspectives on the task that the organisation simply hasn’t thought of, the response is likely to be: “our committee has already decided how this is to be done. It’s too late to make changes. You just have to implement what was decided.” Again, the contractor finds themselves working in isolation, not part of the team, not invited to meetings, not kept informed of what other people on the project are doing. The counter-phobic desire for control is matched by a contradictory but also counter-phobic desire to keep the contractor at arm’s length.

This is definitely not the way to go. Looking back on situations where I as a contractor was able to strike up a good working relationship with a manager on the inside of an organisation who was open and communicative, I can say that really the only point in contracting out is to have value added. The organisation doing the contracting out should expect value to be added, and should allow and indeed encourage the contractor to do so.