Project Consultant or ‘W2’ Employee

~ A Commentary by Skip Stein ~

 

Experience Counts!

 

A Project has a very different purpose within an organization than does ‘ongoing business activities’ and the general administration necessary to all business organizations staffed by full-time or ‘W2’ employees. A Project has very focused objectives that are complete with resource requirements, time line and specific budgets. There is also (or should be) a definite return on investment (ROI) associated with each and every project initiated within an organization. The view that a 'W2' employee is more stable or lower cost than a Professional Consultant when utilized on a project for an organization just does not hold up under analysis. Consider the cost of overhead, fringe, benefits, and 401K plans. All this is added cost to the business in support of the ‘W2’ employee. It would be interesting to see a correct ROI projection based on fully loaded costs/performance of a 'W2' to a Professional Consultant over the same period of time!

 

Many corporate managers compare a 'W2’ individual’s salary to a Professional Consultant's hourly rate. Many of these managers fail to recognize the normal 'cost of doing business' that companies must bear for ‘W2’ employee expenses:

 

Paid leave--vacations, holidays, sick leave, and other leave.

 

Supplemental pay--premium pay for work in addition to the regular work schedule (such as overtime, weekends, and holidays), shift differentials, and   non-production bonuses (such as referral bonuses and lump-sum payments provided in lieu of wage increases).

 

Insurance benefits--life, health, short-term disability, and long-term disability.

 

Retirement and savings benefits--defined benefit and defined contribution plans.

 

Legally required benefits--Social Security, Federal and State unemployment insurance, and workers' compensation.

 

Other benefits--severance pay and supplemental unemployment plans.

 

These same benefits are either paid by the Professional Consultants out of their own earnings or forgone as unnecessary (except of course for the Federal, State and Local legal requirements). Employers' benefits costs in 1999 averaged 36.8% of payroll according to the U.S. Chamber of Commerce survey, The 2000 Employee Benefits Study (http://www.uschamber.org).

 

Consultants, who are properly managed under a written project document, will often outperform a 'W2’ employee due to their focus and commitment. Experience counts and directly correlates to cost-effective solutions. Consultants will bring not only their own professionalism and experience to the project, but also that of the company they represent (oftentimes themselves as an incorporated independent consultant). Consultants enter projects equipped with the methodologies, processes, tools and aides that have proven successful on other projects. The benefits of this experience can be many:

 

 

Fully experienced consultants frequently outpace less experienced people, and are more conscious of quality in the process. While you may pay more for an experienced consultant, you get your money's worth in deliverables design, usability, documentation, quality and effectiveness.

 

Fully experienced consultants design and develop material and deliver projects with an eye to the future, incorporating usability and maintainability that less experienced people are often unable to accomplish.

 

Fully experienced consultants often spot issues before they become problems. The expression ‘been there seen that’ may ring a bell. A key reason to utilize an experienced consultant is not only to produce on the existing project but also to foresee other issues that may help the organization bypass problems, bottlenecks or other roadblocks previously encountered on similar projects. Less experienced people may have limited awareness of potential issues and the appropriate measures that may be taken to address them.

 

Fully experienced consultants can grasp overall project goals to better ensure that their own deliverables complement and support the project scope and planned deliverables. Drawing from experience, they can generate creative solutions based upon the current business environment and need while anticipating future demands. Less experienced individuals are more likely to work on deliverables as isolated items rather than a creative piece of an integrated project solution.

 

Experience from other projects, methodologies and tools, makes the professional consultant adaptable and ready to adopt organizational standards of the current project. This project history enables the experienced professional to ‘hit the ground running’ and become productive at the very earliest stages of the project. 

 

A Project is usually undertaken by a Team of highly skilled individuals charged with completion of the defined scope and objectives within the designated time frame and budget. This is very different than the ‘doing business as usual’ found in most office and corporate environments. There may be a 'sense of urgency' lacking in someone who expects to ‘be there' year after year. While ‘W2’ employees often staff the most successful Project Teams, they become most effective when fully extracted from their ‘normal’ corporate environments and assigned to the Project. In this manner, they become Project Consultants from within the organization, freed of the ‘day to day’ responsibilities encumbering most ‘W2’ employees. This is one of the foundation concepts in the Extreme Programming - XP Methodology (http://www.extremeprogramming.org/).

 

When an organization has defined a Project and cannot identify appropriate resource availability within the existing organization, they often attempt to ‘hire’ a person to fulfill the defined project staffing objectives. This is where many companies make a resource allocation mistake. When individual commitment and technology transfer is an objective and timely completion of the project is desired, then recruiting a Professional Consultant to augment existing Project Consultants from within the organization can be most cost effective. When assembling the Project Team, a marriage of experienced Professional Consultants (individuals under contract to the organization) with internal Project Consultants can be the most cost effective resource combination. The organization accomplishes multiple objectives:

 

Timely Completion of the Project.

 

Project Completion within Budget.

 

Knowledge transfer from the Professional Consultant to the ‘W2’ Project Consultant.

 

Commitment and Focus.

 

Natural reduction in staffing cost upon project completion when the Professional Consultant proceeds to the next assignment.

 

Reduced overhead for taxes, liability and benefits by virtue of the Professional Consulting contract arrangement.

 

Utilizing experienced consultants on any Project Team impacting an organization can be an extremely cost effective means to complete the work while retaining all the benefits the Project Team delivers.

 

Remember, Experience Counts!