Calculate the loaded cost before you compare vendors
Estimate a loaded contingent workforce cost using TCO drivers before choosing a supplier option.
Compare Vendor A at $94/hour for staff augmentation with Vendor B at $108/hour for managed milestone delivery. Loaded contingent cost = direct invoice cost + internal operating cost + expected quality/replacement/exit cost. The novice move is to compare only $94 versus $108. That ignores the work your organization must perform to turn a contractor hour into an accepted outcome. Direct invoice Vendor A: 480 hours x $94 = $45,120. Vendor B: 440 milestone hours x $108 = $47,520. This is the visible cost, but it is not the decision by itself. Internal management Vendor A needs 25 manager hours x…
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