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587a9ebb
Community Member

What's the point of mediation for hourly contract?

I hired a freelancer to create an app and he promised to deliver in 100 hours. We started an hourly contract and throughout development he used various tactics to stall the development and get more hours (I'm not an app developer so his work logs didn't mean much to me). When he sent a broken app with multiple issues and broken functionality after 350 hours I filed a dispute only to learn that mediation can only help us "reach agreement" and that arbitration for hourly contracts is not available. 

 

Obviously we couldn't reach an agreement, that's why I filed a dispute in the first place. So the question is - what is the point of mediation for hourly contracts if it doesn't provide any remedy for broken agreements, stalling, and poor work overall? It only wasted time, as the mediation guy didn't respond for days and couldn't properly explain the process at any moment in private correspondence. But maybe that was because he didn't know much about it himself, as he initially said that arbitration is possible in our case before the freelancer corrected him (see attachment). 

 

I assumed that there would be more client protection for hourly contracts, considering it must bring more revenue to Upwork, while making the client more vulnerable with automatic payments. Now I see absolutely no sense in ever starting an hourly contract here. 

 

**Edited for Community Guidelines**

ACCEPTED SOLUTION

"Well... I can see in the screenshot you provided that there is a reference to this in a Help section article." - it's not an article, it's an exchange between the freelancer and our mediation "expert" in our mediation chat. 

 

"In practice, there is no such thing as mediation for an hourly contract." - first of all, this is ridiculous for the reasons I'll describe below. Second, the Upwork support or mediation "expert" should have informed me before the process even began. 

 

"A wise client decides that she will never dispute time logged on an hourly contract. Instead of planning to ask for money back after she has already been billed... she INSTEAD hires and manages thoughtfully and proactively." - no one planned to "ask money back later", this is a simple case of violated agreement. That's why we have courts and legal teams all over the world to sort these issues out (apart from Upwork hourly contracts). By your logic, there is no point in having any arbitration anywhere at all, we should all simply "manage thoughtfully and proactively" and if something goes wrong we should simply swallow it and not think about it much.

 

With software projects, there is no way to have a clear understanding of incremental progress. For example, an app feature might not work because it's missing 2 lines of code or 1000 lines of code. If you are not yourself a developer in that specific area, there is no way for you to know the issue. You can only detect a problem after the fact when the freelancer shares poor results, which happens after many hours of wasted money. That's why it's absolutely necessary to have mechanisms by which a freelancer can be punished for such behavior if there is sufficient proof that he stalled the work. Otherwise, there will always be incentives to screw over clients in projects like mine. 

 

I hired one freelancer because it's a job for one person. If I need an independent PM and a team of developers just to make sure that I get what I pay for because Upwork lacks basic mechanisms for solving disputes, then I really don't see a reason for using this platform at all. There are two core components to any marketplace: 1) it connects providers and consumers 2) it makes sure their agreements are honored through various mechanisms. The second component is the most important as it saves the client from going through hurdles and costs of legal disputes, should the provider violate their obligations. Since Upwork fails at the second component in regards to hourly contracts, I really don't see why a "wise client" should ever use hourly, instead of breaking the project into fixed-price contracts that compensate results, instead of worthless proof of work. 

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8 REPLIES 8
prestonhunter
Community Member

Mediation for an hourly contract?

 

Well... I can see in the screenshot you provided that there is a reference to this in a Help section article.

 

But I advise you to ignore that.

 

In practice, there is no such thing as mediation for an hourly contract.

 

In practice (despite what you may read elsewhere) Upwork employees follow a very simple set of rules for removing hours that do not meet Hourly Payment Protection.

 

I DO BELIEVE that there are times when Upwork actually has employees work on mediation for hourly contracts. I do NOT believe that it is worth my time as a client to THINK about that.

 

A client is only going to undermine her project and waste money if she thinks that there is such a thing as hourly contract mediation. Because in the end, that sort of thinking is going to lead her astray.

 

A wise client decides that she will never dispute time logged on an hourly contract. Instead of planning to ask for money back after she has already been billed... she INSTEAD hires and manages thoughtfully and proactively.

 

Is Betty doing terrible work that I am not going to use in my project? Should I:

a) end the contract and assign her tasks to other members of my team?

[or]

b) continue paying Betty a lot of money with the hopes that maybe I can get some of that money back later?

 

I understand that there is a place for disputes SOMETIMES. Disputes may be necessary for FREELANCERS to file in situations where a fixed-price contract client refuses to release payment after a freelancer has completed the agreed-upon task. I don't see the "dispute" process as something that has ANYTHING to offer me as a client.

 

re: "Now I see absolutely no sense in ever starting an hourly contract here."

 

Houry contracts are used successfully by clients because they allow for much more flexibility and higher quality results. But if a client does not understand how to use an hourly contract properly, things can indeed go wrong.

 

For a project of this size and scope, it was simply a mistake to hire a freelancer or freelancers to work on this project without also hiring an independent project manager. If the client is not able to serve as the project manager, and if the lead developer doesn't serve effectively as a project manager, then it means the project will fail. Only about 20% of lead developers are able to serve effectively as project manager. The original poster hired a lead developer who is in the 80% who can NOT serve as project manager. (OR the freelancer didn't even try to do so.)

 

Aside from not hiring a project manager, the other thing I wonder about is: Why did you hire only one freelancer to work on this? If you hired only one person, how can you compare his work?

 

If you had hired multiple freelancer, then you would have been able to compare their work and you would have been able identify which are doing excellent work for very little cost, which are doing excellent work for very high cost, and which of them are doing terrible/unsable work (either at little cost or high cost).

"Well... I can see in the screenshot you provided that there is a reference to this in a Help section article." - it's not an article, it's an exchange between the freelancer and our mediation "expert" in our mediation chat. 

 

"In practice, there is no such thing as mediation for an hourly contract." - first of all, this is ridiculous for the reasons I'll describe below. Second, the Upwork support or mediation "expert" should have informed me before the process even began. 

 

"A wise client decides that she will never dispute time logged on an hourly contract. Instead of planning to ask for money back after she has already been billed... she INSTEAD hires and manages thoughtfully and proactively." - no one planned to "ask money back later", this is a simple case of violated agreement. That's why we have courts and legal teams all over the world to sort these issues out (apart from Upwork hourly contracts). By your logic, there is no point in having any arbitration anywhere at all, we should all simply "manage thoughtfully and proactively" and if something goes wrong we should simply swallow it and not think about it much.

 

With software projects, there is no way to have a clear understanding of incremental progress. For example, an app feature might not work because it's missing 2 lines of code or 1000 lines of code. If you are not yourself a developer in that specific area, there is no way for you to know the issue. You can only detect a problem after the fact when the freelancer shares poor results, which happens after many hours of wasted money. That's why it's absolutely necessary to have mechanisms by which a freelancer can be punished for such behavior if there is sufficient proof that he stalled the work. Otherwise, there will always be incentives to screw over clients in projects like mine. 

 

I hired one freelancer because it's a job for one person. If I need an independent PM and a team of developers just to make sure that I get what I pay for because Upwork lacks basic mechanisms for solving disputes, then I really don't see a reason for using this platform at all. There are two core components to any marketplace: 1) it connects providers and consumers 2) it makes sure their agreements are honored through various mechanisms. The second component is the most important as it saves the client from going through hurdles and costs of legal disputes, should the provider violate their obligations. Since Upwork fails at the second component in regards to hourly contracts, I really don't see why a "wise client" should ever use hourly, instead of breaking the project into fixed-price contracts that compensate results, instead of worthless proof of work. 

re: "With software projects, there is no way to have a clear understanding of incremental progress."

 

Well, that's a big part of the problem right there.

 

For future reference:
Yes, you do want to keep an eye on the progress of the software project every step of the way.

And you want to compare the work done by the various people on your team.

And you want to either limit the work done by underperforming developers, or fire them completely.

 

Sergei:
I am really sorry that you were disappointed by your experience.


But I sincerely believe that you are confusing or conflating the following things:

- How Upwork actually works

- How you think Upwork SHOULD work

 

In the end, it just doesn't matter if Upwork SHOULD DO something... if it really doesn't do that thing. What matters is how YOU can actually use Upwork to achieve YOUR goals.

 

You are not a project manager.

If you want to succeed in commissioning a complex software project, you will need to do one of the following:

- Hire an independent project manager

 

- Hire a lead developer who can reliably server as his own project manager (20% can; but even with those, it is better to have them report to a separate project manager)

 

- Learn how to be a project manager. And if you plan to use Upwork for hiring, you will need to learn the "best practices" for hiring on Upwork, even if those practices don't reflect an idealizes version of how you think Upwork "should" work.

 

re: "Second, the Upwork support or mediation expert should have informed me before the process even began."

 

You and your projects will benefit if you plan to never again deal with Upwork mediation experts. Dealing with an upwork mediation expert implies that you are involved in the mediation / dispute process. Just stay away from that entirely. That is not how projects are completed successfully

 

re: "That's why it's absolutely necessary to have mechanisms by which a freelancer can be punished for such behavior if there is sufficient proof that he stalled the work. Otherwise, there will always be incentives to screw over clients in projects like mine."

 

You can't succeed in commissioning a complex software project if you plan to "punish" freelancers on your team. Instead, simply stop working with underperforming freelancers. If a freelancer deserves to be punished, then she deserves to be dropped from the team. If you value her work enough to keep her on the team, then you will NOT drop her from the team nor will you punish her.

 

re: "No one planned to "ask money back later", this is a simple case of violated agreement. That's why we have courts and legal teams all over the world to sort these issues out (apart from Upwork hourly contracts)."

 

That is not how this works.

Legal teams and courts have absolutely nothing to do with the successful creation of software projects. If you look at successful software projects of all sizes, I can assure you that lawyers, judges, courts, etc., had no part in the creation of their software. Moreover, the project owners focused on pushing their projects forward. They did not expend time or energy on penalizing or punishing freelancers or taking them to court.

 

You say that no one planned to ask for money back later. But that is exactly what you did. Successful, effective project owners and project managers don't do that. "Dispute thinking" only hurts clients.

 

re: "I hired a freelancer to create an app and he promised to deliver in 100 hours... When he sent a broken app with multiple issues and broken functionality after 350 hours... I hired one freelancer because it's a job for one person."

 

A project that is planned to take 100 hours, and ends up taking more than 350 hours, and still doesn't work... How is that a job for one person?

 

And even if it conceivably COULD be done by one person, how do you know you hired the right person? The entire basis for you filing a dispute is essentially you saying that you did NOT hire the right person. So, by definition, you made a mistake by hiring this one person. This is a potentially costly mistake.

 

But ANOTHER CLIENT who wanted to create an EQUIVALENT PROJECT did NOT look on this as a "job for one person." That client hired six different freelancers. That client quickly found that three of them were not to be trusted or were too expensive or turned in unusuable work. That client assigned the work to the remaining three freelancers. And those three freelancers finished the project in a total of 98 hours. By hiring multiple people, that client saved time, saved money, and never felt like he had to file a dispute.

 

re: "this is a simple case of violated agreement."

 

There was no violated agreement as far as Upwork is concerned.

You hired a freelancer to work for you on an hourly basis. He did so.

The agreement was: "He will work for you and track his hours, and you will pay him for the hours that he worked."

 

If you thought there was anything more to the agreement than that, you were mistaken.

 

re: "By your logic, there is no point in having any arbitration anywhere at all"

 

Actually, arbitration is NOT part of Upwork's hourly contract model at all. Upwork DOES NOT ALLOW arbitration for hourly contracts. Arbitration is only a part of fixed-price contracts.


Moreover, arbitration should ONLY be sought by freelancers. Never by clients. Arbitration nearly always results in decisions favoring freelancers and money awarded to freelancers. Arbitration is a costly and time-consuming process, a hinderence to project development. A wise client decides before hiring ANYBODY that he will never push for a dispute or arbitration. Instead, an effective, successful client hires proactively and thoughtfully, and monitors work submitted by freelancers, especially early on. An effective, frugal client does not set up large/expensive fixed-price tasks/contracts, especially not with unfamiliar freelancers. Instead, a wise client doesn't set up fixed-price tasks that are bigger than he can afford to lose. If a freelancer turns out to be a bad fit for the team, or provide work that the client doesn't love, the effective client can simply release pending esrow funds and close the contract and stop working with the freelancer. And there is NOTHING that a freelancer can do about it.

 

This does NOT mean that there should "be no arbitration anywhere for anything." There are MANY areas of life where arbitration has its place. Arbitration may be a sensible way to handle a divorce. Or a split between business partners. Arbitration simplly has no place in an Upwork's client's plans. Because it is far less expensive and time-consuming to simply fire underperforming freelancers, rather than go to arbitration.

 

If you hire using hourly contracts, then there is never any money tied up in escrow at all. You can simply end a contract whenever you want. If you monitor the progress of the different freelancers on your team, even if only by viewing the manifest front-end progress of their work, then you can make effective decisions about who to continue working with and who to fire. Many successful Upwork cients hire using hourly contracts extensively.

Hi Sergei, 

 

I'm sorry to hear about your experience. If you feel like you've been billed for more time that the freelancer worked on your project, you can file a dispute during the five days after the billing period closes. That said, you can dispute the validity of the hours billed but not the quality of the work through Upwork’s dispute process. I can see your dispute is in process and being handled by our mediation team. Please continue to communicate with our team via your dispute so they can assist you further.

 

Thanks!

~Andrea
Upwork
jaggu_94
Community Member

Hello,
We were having hourly work. Client filed dispute and i won the dispute. Does client still do anything after that to get refund?

Hi Jagdishkumar,

 

I suggest that you refer to the Hourly, Bonus, and Expense Payment Agreement with Escrow Instructions and this Community thread for more information.

 

Thank you.

~ Aleksandar
Upwork
tta192
Community Member


Sergei B wrote:

[...]

I hired one freelancer because it's a job for one person. If I need an independent PM and a team of developers just to make sure that I get what I pay for because Upwork lacks basic mechanisms for solving disputes, then I really don't see a reason for using this platform at all. There are two core components to any marketplace: 1) it connects providers and consumers 2) it makes sure their agreements are honored through various mechanisms. The second component is the most important as it saves the client from going through hurdles and costs of legal disputes, should the provider violate their obligations. Since Upwork fails at the second component in regards to hourly contracts, I really don't see why a "wise client" should ever use hourly, instead of breaking the project into fixed-price contracts that compensate results, instead of worthless proof of work. 


"making sure..." is the PM's job and Upwork's mechanisms don't provide that out of the box.

 

Whether you need a PM or not has nothing to do with how you assembled your team. Upwork puts you in contact with various freelancers you can choose from. Once you made your choice you're  the only one responsible for supervising the project. Especially for hourly contracts, it's better to think of Upwork as a simple payment processor. So, instead of relying on refunds try focusing on ways to identify the best freelancers, build trust and provide them with high quality instructions.

To find the best freelancers for your project(s) you'll need to test a few, so you may incur some losses; your job is to minimize those losses and recognize a good match.

 

re: "I really don't see why a 'wise client' should ever use hourly, instead of breaking the project into fixed-price contracts that compensate results"

 

Because she has tried both and gets better results with hourly.

 

There is nothing inherently wrong with fixed-price.

 

Clients who find fixed-price effective for their needs shouldn't be afraid of using fixed-price. But clients shouldn't base their decision about this on philosophical concerns or hypotheticals. Rather, use what actually works best for you and your project.

 

If you aren't sure about which to use, or if you have not experimented with both, then use hourly.

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