Project Agreements - Why Are They Integral To Outsourcing Projects?

Outsourcing projects can be a very good business move for many businesses. Businesses often outsource particular projects or certain non-core processes for a variety of reasons, such as faster completion, expertise services, cost savings etc.Project outsourcing involves hiring external service providers, whether consultants, freelancers or companies, and delegating work to them. Often times, the potential external service providers are located in offshore countries, which might be more economical for your project, but can increase anxiety and skepticism about the offshore service provider’s quality and commitment to the project. This is why it is important to put in place a written project agreement at the commencement of the project.A project agreement is a binding contract between client and the service provider that details all aspects of the project. Think of a project agreement as an insurance policy that helps ensure the project will be delivered on time, within budget and in accordance with your specifications and expectatations. A project agreement also protects the interests of the service provider, assuring payments will be made once the project is delivered.Here are some key things that you need to include in a project agreement while outsourcing projects:Parties – Make sure your project agreement clearly specifies the correct names of the freelancer and the client.Roles & Responsibilities – The project agreement should clearly outline the roles and responsibilities of both the client as well as the freelancer. Clients may need to supply the service provider with raw materials in a timely schedule so that the provider can use those materials to perform the project. . Clients also have payment obligations. Similarly, the agreement needs to define the roles and duties of the service provider, including exactly what the service provider is required to do and deliver. Are there milestone deliverables and milestone payments to set out in the agreement?Ownership Rights – Many times, clients hire freelancers to create product solutions as per their requirements. For example, the freelancer might be creating a website, software applications and so on. A very common issue that arises in such cases is that of ownership of the deliverables (i.e. who does the completed product belong to?). The client who invested the money or the designer/developer who designed it. Make sure you have the ownership sorted out in the project agreement.Escrow Details – Escrow arrangements may be a good way of doing business which reduces the risk of non-payment. An escrow involves the client handing over the payment sum to an independent escrow agenct, which the escrow agent then transfers to the service provider's account once the project is completed to the full satisfaction of the client. This negates any chance of the client refusing to make payments and also ensures a money-back guarantee if they don't receive quality services. Clients can refuse to release funds to the service provider if they find their work unsatisfactory. Such arrangements can be included in your project agreement.Timeline of the Project – The timeline of the project should be included in the project agreement. The timeline might set out the total duration of the project (i.e. how much time will the service provider take to complete and deliver the project), or different timeframes for specific parts of the project. A project might extend to weeks, months or even years. In the case of long-term projects, you might consider breaking down the project cycle into manageable parts (such as quarterly or monthly periods) and decide what needs to be completed and when. Such milestone timeframes are a great way to help you manage the overall project.Communication - Communication is one of the most important but often forgotten parts of an outsourcing project. When delegating your project to an external service provider, you need to make sure that you keep an eye on the project and communicate regularly with your freelancer. Therefore, make sure your project agreement details how the communication lines will work. Will there be weekly meetings or telephone conferences. Do you want all deliverables to be emailed to you? It is a good idea to fix a monthly or weekly meeting or call so that both parties can update themselves on what is happening with the project.Disclaimer :  Sabra Easterday is the owner and founder of MatchB2B.  Sabra is also a lawyer with a special interest in business issues and e-marketplaces.  Notwithstanding that Sabra Easterday is a lawyer, nothing in this article and no services of MatchB2B or its website are legal services and no attorney-client relationship exists between any reader of this article or user, customer or potential customer of MatchB2B, and MatchB2B, its website or Sabra Easterday.

Sabra Easterday is the founder and managing member of Match B2B, an online trading platform for businesses to seek compatible business partners. Clients can hire consultants or online services. for their project requirements of any kinds.

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