Contracting 101: Accounting for People
by Kevin Majoros
It was pretty obvious from an early age that I would be working with numbers for a living as an adult.
By the time I was seven, I could memorize the bowling averages, games bowled, and pin count totals of all 60 members of my mother’s bowling league. Every week I would sit at a table in the bowling alley with the league stats in front of me while frightening women with bouffants walked by with questions like, “Hey kid, what do I need to bowl this week to raise my average to 170?” My mother bowled in three leagues weekly and I always had the answers for any questions about the numbers.
My father was the bartender at the same bowling alley and I was allowed to run around and pick up pop bottles for money, although I was not allowed to touch the beer bottles. I used to walk around and calculate how many people would be drinking pop versus beer (bouffant divided by polyester squared) and how many bottles they might drink during the course of the night. If I thought it was going to be a heavy night of beer drinking, I would pass on picking up the bottles and just concentrate on the bowling stats.
Even in college as I worked my way towards a degree in Finance, I spent more time forecasting my test scores and their affect on my GPA than I did studying.
When I started working at Carson Research Consulting, I was happy to find that most of my responsibilities involved using numbers to answer questions. Forecasting from trend analysis, time-tracking, building spreadsheets, and just plain number crunching are things I greatly enjoy doing.
When I realized that I would also be involved in contract management, which in effect meant that I would be dealing with people, the questions started immediately in my head:
Is there a template?
Can I create a formula?
Will there be a spreadsheet?
Are there people involved? Please, not the people…..
The first thing to consider when dealing with contract management is to remember to maintain a logical thought process. Even though people, unlike numbers, are not always logical, a planned course of action will generate the best results.
Here are a few tips for managing the hurdles in the contract management process:
Relationships are everything. Make sure you have as many contacts as possible and maintain good relationships with them. It is vital to the successful completion of any project. Once a contract gets into dispute or someone gets a chip on his or her shoulder, the project will most likely suffer as a result.
Contract approvals take twice as long as planned. In most cases, the consultant is expected to begin their work while the contract is going through the approval process. Plan for this and have a bank line of credit available to fund the wages of your employees during this period.
Look for guidance from your own staff. The staff members involved in the contract will have the best feel for how things are progressing during the contract. Interact with them regularly and get updates on how the work is progressing.
Track every dollar and labor hour related to the contract. Use your budget to create a declining balance spreadsheet and track your labor, direct and indirect expenses on a monthly basis. Sharing this with the staff will help keep the budget in check.
Monitor variations in the scope of work, deliverables and performance measures. These are established in the contract and generally will vary. If new work is added during the life of the contract, there needs to be a reduction of work somewhere else to stay within budget.
Know the payment terms of the contract. Knowing when to bill, whether it is monthly or upon completion of deliverables, is key. Get that invoice off your desk as soon as possible.
Know the timeline of the contract. When you are monitoring the time tracking stats, it is important to know where the peaks and valleys are in the timeline of the project. When there are reports due, surveys being compiled or focus groups being managed, labor hours are going to increase.
The above tips are just a few of the things that I have focused on because of their importance when mixing people with numbers (yes, the people….).
It would also be a good idea to consider the words of interpersonal skills guru, Dale Carnegie:
“If you want to gather honey, don’t kick over the beehive.”