As a programme or project lead, you will likely have assessed whether or not you have the existing skills, capacity and capability to deliver your projects. Often, programme managers will look to bolster their delivery teams through consultant or contractor engagements – one of your critical decisions is choosing the engagement method for this approach. Traditionally, the two primary methods for consultant engagements are Time and Materials (T&M) and Work Package Delivery (WPD). Both delivery methods come with their set of advantages and disadvantages, making it hard to choose. However, the decision you make affects your project’s outcomes, including cost, quality, and efficiency. In this blog, we’ll explore the pros and cons of each method to help you determine which suits your project best.
Time and Materials (T&M) Delivery Method
T&M is a common delivery method where a client pays for the actual time spent and the materials used in a consultant engagement. It is best suited for projects with changing requirements, little clarity, and high uncertainty.
Pros of Time & Materials Delivery:
– T&M allows the project team to adapt quickly to the changing needs of the project.
– It is a flexible approach that accommodates unforeseen challenges, leading to faster project completion times.
– The client only pays for what they receive, which promotes transparency and helps manage project costs effectively.
Cons of Time & Materials Delivery:
– The client takes on the risk of cost overruns as the final cost is determined by the actual time and materials used.
– It can be tough to measure project progress or determine when the project is complete.
– There can be questions about whether the project team is optimising their efforts and thus whether costs are fair.
Work Package Delivery (WPD)
WPD is a delivery method that divides a project into manageable work packages or statements of work. Once each package is complete, the consultants and contractors within the project team deliver fixed pre-agreed outputs or outcomes to the client, who then approves it before beginning the next work package.
Pros of Work Package Delivery:
– WPD promotes accountability as the project team focuses on delivering work packages within a set deadline and budget.
– WPD transfers the risk of delivery to the outsourced supplier, as each output is contracted for delivery and the organisation providing the consultant is therefore responsible for ensuring that appropriate resource, skills and capability is in place to achieve the delivery.
– It provides transparency and allows the client to measure project success against the set timelines and deliverables.
– WPD allows the project team to optimise their efforts, driving down costs for the client
Cons of Work Package Delivery:
– WPD requires a lot of planning and management for the project to run smoothly.
– Changes in project requirements can require the redefinition of the entire work package, which can lead to budget overruns and delay project completion.
– Deviations from the agreed upon project plan can lead to disputes between the project team and the client.
Choosing Between T&M and WPD delivery methods
Choosing between T&M and WPD requires careful consideration of your project’s needs, goals, and deadlines.
– Consider the project’s scope and requirements. Projects with many unknown variables are best suited for T&M delivery. Projects with a clear definition and set milestones are better suited to WPD.
– Consider your risk tolerance. If you doesn’t want to take on significant project risks and prefers a predictable cost framework, WPD is the better choice. T&M is best when you are willing to take on more of the risk in exchange for greater flexibility.
– Consider the client’s involvement in project management. Hands-on clients prefer WPD as they can actively monitor progress. T&M works best for hands-off clients who prefer that the project team determines project direction and progress.
Off-payroll working determinations
The Off-Payroll working rules were first introduced in April 2000, to ensure that individuals working through a Personal Service Company (PSC) paid the same taxes as employees. In April 2017, the responsibility for determining whether the working arrangement was inside or outside IR35 moved from the PSC to the end client, for public sector bodies. From April 2021, this applies to the private sector. This means that if a contractor is deemed to be inside IR35, the hiring organisation will be responsible for deducting income tax and national insurance contributions from the fees paid to the PSC. It is vital to understand the implications of the new rules to ensure that your programmes are compliant. To make sure your programme or project is compliant with the new off-payroll working rules (IR35), you will need to take the following steps:
– Conduct a review of all contracts and working arrangements for contractors and freelancers to assess whether they fall inside or outside the scope of the new rules whether this is through time and materials or WPD.
– Provide feedback to any consultants, contractors and freelancers on the results of your determinations, and ensure they are aware of any changes that may affect their working arrangements.
– As with any new legislation, it is always advisable to seek professional advice if you have any questions or concerns. Here at Reed Professional Services, we have a dedicated talent engagement and compliance service that helps our clients determine whether an engagement is best suited to T&M or WPD and how to remain compliant,
Project Delivery with Reed PS
Choosing between time and materials or work package delivery affects project outcomes significantly. It’s critical to weigh the pros and cons of each method before selecting the one best suited to your project. Ultimately, the right choice depends on the nature and scope of the project, the client’s objectives, and their willingness to take on risks. As a lead, take time to analyse your project’s needs and goals, consult with your team, and choose a delivery method that drives your project’s success.
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