Decision Framework for Contractor vs. Full-Time Hire

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DECISION FRAMEWORK — CONTRACTOR vs FULL-TIME HIRE Six-month infrastructure project ==================================================== 1. WEIGHTED SCORING TABLE ==================================================== Scores 1-5 (5 = best). Adjust weights to your situation. Criteria Weight Contractor FTE ---------------------------------------------------- Cost efficiency (6-mo) 25% 4 3 Time-to-value / ramp-up 20% 5 2 Specialized expertise 20% 5 3 Commitment/availability 10% 3 5 Flexibility / exit cost 10% 5 2 Knowledge retention 10% 2 5 Team/culture integration 5% 3 4 ---------------------------------------------------- Weighted total 4.15 3.15 Contractor wins on this weighting — typical for a fixed-duration project where speed and expertise outweigh retention. ==================================================== 2. BREAK-EVEN COST MATH ==================================================== Assumptions: 26 weeks, 40 hrs/wk, $130k base salary. FULL-TIME HIRE (6 months, fully loaded) Salary (6 mo) $65,000 Benefits+taxes+overhead $22,750 (35% of salary) Recruiting/agency $26,000 (~20% of salary) Ramp loss (1 mo at 50%) $ 7,300 Severance/exit risk $ 5,000 TOTAL $126,050 CONTRACTOR (6 months) Rate x 40h x 26w $114,400 (@ $110/hr) Procurement/onboarding $ 2,000 TOTAL $116,400 BREAK-EVEN RATE: $126,050 / (40 x 26) = $121.20/hr Rule: below ~$121/hr the contractor is cheaper on pure cost; above it, the FTE wins. But cost is only one criterion — and the contractor's zero-ramp, zero-severance advantages are already baked in. ==================================================== 3. THREE QUESTIONS THAT FLIP THE DECISION ==================================================== Q1. Is there follow-on work past month six? If the roadmap shows this infrastructure being extended, maintained, or rebuilt again within 12-18 months, the FTE flips the decision — you'd otherwise pay contractor premium twice and lose continuity between phases. Q2. Do you need the knowledge to stay in-house? If this project defines your core platform and your team must operate, debug, and extend it afterward, the FTE flips the decision. A contractor walks out the door with the architecture in their head; you pay again for every future question. Q3. Is the contractor's availability guaranteed? If the contractor has competing engagements, can't commit to your critical windows, or is remote when you need hands-on debugging, the FTE flips the decision — schedule risk on a 6-month window usually costs more than the rate differential. ==================================================== VERDICT RULE ==================================================== 1. If break-even math favors contractor AND score is contractor AND all three questions answer "no" to FTE-flip -> hire contractor. 2. If ANY flip question answers "yes" -> FTE (or contractor-to-hire conversion clause). 3. If score and cost disagree -> let the flip questions be the tiebreaker; they capture the non-quantifiable risk. Recommended hedge: if you lean contractor, include a conversion option (fixed rate to hire after 6 months) in the contract — it preserves the flip decision for free.