- Contract hire is an arrangement in which the supplier agrees to supply the customer with the services of a certain number of staffs at agreed daily or hourly charge rates. The customer takes responsibility for managing the staff concerned. Either party can terminate the arrangement at fairly short notice, typically one week, either in respect of a particular person or as a whole. The supplier’s responsibility is limited to providing suitably competent people and replacing them if they become unavailable or are adjudged unsuitable by the client.
Consultancy Contract in Computer Science
- Consultancy IT projects can be done for a daily/hourly rate or at a fixed price If done at fixed price, contract is much simpler:
Sums of money involved are usually much smaller
The end product is very often a report, not an actual system
- Nevertheless, there are some important issues that need to be covered
- Confidentiality: a consultant may not disclose information about client learned during assignment
- Terms of reference: specify which matters to investigate (and which not) Can become source of disagreement: consultants discover they need to look at issues outside of original terms
- Liability: consultants usually want to limit their liability (“follow advice at your own risk”)
Client may insist on adequate liability insurance Ownership of final report: client is often given a fixed period to review a draft before handing over the final report.
Time and Materials Contract In IT/Computer Science
- Type of a contract in which the buyer agrees to pay the contractor based upon the work performed by the contractor’s employees and subcontractors, and for materials used in the construction (plus the contractor’s mark-up), no matter how much work is required to complete construction
- Contract hire shifts most of the risk to the client
- A time and materials contract try to balance the risks between client and supplier
- Supplier agrees to the development of a system similar to a fixed priced contract (i.e. requirements, delivery, acceptance, etc.)
- The payment, however, is handled differently
Made on the basis of costs incurred
Labour charged in a similar way as for contract hire
- Supplier does not have to deliver for a fixed price (often maximum payment may be fixed)
- Risks can be managed by agreeing on milestones and termination clauses.