Managers can begin a project knowing what their budget is and feel reassured that a project can be completed within those parameters. The downside to this arrangement is that companies may be paying a premium for the flat fee. In the event that your project is called off, you may lose the investment you made on that initial payment. With hourly billing, you may pay invoices on a weekly, biweekly or monthly schedule. Hourly billing can be easier from a cash flow standpoint, since most contractors won't work on a flat fee basis without a good portion of payment up front.
Many contractors also prefer the regular income of hourly billing.
Contractors should be able to provide you with a detailed estimate of the number of hours a project should take. Another advantage of hourly billing is that it can provide project managers with detailed information on which phases of their projects were labor intensive and which need to be refined. Wrapping It Up Recruiting and hiring skilled contractors is in many ways just as challenging as your search for new employees. When bringing contractors into your organization, you'll have to determine the best source for those candidates. You'll also need to determine the best way to budget fees for contract hires.