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  • Writer's pictureJoel White

Cautionary Tale

The most profitable contract research company I've ever seen:

- did not require employee timesheets

- used contractors extensively for delivery

- built every payment schedule on fixed fee milestones

What it taught and reinforced to me:

- timesheets don't add intrinsic value- they track time

- contractors provide tremendous flexibility for resource and cost management

- fixed fees incentivize efficient, timely delivery of services

Unfortunately, I had to use the past tense up above. After that company was acquired, employees were required to use timesheets, most contractors were let go and replaced with FTEs from the mothership, the company was unprofitable within 2 years, and now, to my knowledge, no longer exists. I had a role in it back then, with several regrets, but I learned from it and use it in my current work to help companies avoid making the same mistakes.

Think of this next time you see yet another new project set up with dozens or hundreds of timesheet codes, or you look at the Contractors line on your P&L as an annoying expense instead of a pool of flexible, experienced resources, or bid a project as T&M because it's easier to pass through your inefficiencies at poor margins than deliver with discipline at high margin fixed fees.


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