Wow, I totally cannot stress this enough: monitor your providers. If the job is really important, hire a project manager.
I was browsing through this thread on the oDesk community forums; posted a few months ago, but it recently surfaced again when someone posted a little ditty on "Providers that lie" further down the thread.
One problem both buyers encountered was the assumption that they didn't need to monitor their providers at all. It is vital to communicate constantly and ask for tangible updates from your provider when starting a new relationship. You don't know him, he doesn't know you. He might think he's doing "OK work" and in your eyes it's garbage. He might be trying to cheat you and sweet-talk his way out of it. You might not have explained your project clearly and now the provider is wandering astray.
oDesk has plenty of tools -- the work diary, the time analyzer, etc -- to keep you and your provider on the same page, but you have to use them to be an effective buyer. This is less of an issue once you and your provider have established a bond of trust, but before then you're just tenuous associates.
Another problem both buyers faced was not knowing the difference between the hourly model and the fixed-price model.
The hourly model is based on labor: they work, you pay them. This is similar to hiring a contractor to come paint your house. You pay him by the hour, he paints. If you're going over-budget, you can stop paying him, but that means he'll stop working -- even if he's only painted half the house.
The fixed-price model is based on the tangible end-result. You're not paying for the labor involved in creating the product
With both the hourly model and the fixed-price model, you have the same goal: completing the product. However, in the hourly model you pay for the labor to complete the product, where-as in the fixed-price model you're paying for the product itself.
By now, I'm sure you're wondering what this has to do with the thread I mentioned earlier. Here's the answer.
You can't refund labor.
You can't turn back the clock and give the provider his hours back. If he's been working on your project for 6 hours straight and suddenly you decide you don't like how it's turning out, you can't just straight gank his cash -- you can ask for a refund, and they may feel obligated to give you one out of a sense of professional courtesy (this happened to me with one provider), but not necessarily.
Ah, but what about fraud, right? What happens to cheaters?
First we have to distinguish the difference between fraud and disputed hours. Fraud means the provider was "cheating" -- they said they were working, but they weren't. No labor, no pay. However, disputed hours can stem from a few issues: maybe the provider was working on your project, but he wasn't working diligently because he was too busy chatting with his girlfriend by IM in the background. Maybe he was working, but doing it abnormally slow, trying to bill extra hours.
oDesk has policies in place for dealing with disputed hours and fraud. I've never dealt with disputed hours myself, but oDesk publishes their dispute policy online.
You're probably asking yourself right about now why you should bother with the hourly model at all. After all, isn't it safer to work with a fixed price project?
Maybe.
For complex projects, an hourly model is the way to go. When you use fixed-price, the more time a provider spends working on your project, the less they make an hour. So it's in the providers best interest to take short-cuts and be messy. For a smaller project, such as a personal website, fixed-price is much more suitable: the provider has plenty of time to finish the assignment. No need to rush or be sloppy.
An hourly model assures the provider that he has time to work on polishing your project and making sure everything is going as smoothly as possible. If a serious issue comes up without warning, he has the option of fixing it the correct way instead of the fast way.
To sum it up, let's say you're going to a restaurant:
The restaurant employs the hourly model to pay the chefs to cook food for the customers.
The restaurant is paying for the labor.
The customers employ the fixed-price model to pay the restaurant for their delicious meal.
The customer is paying for the product.
I hope that analogy made more sense to you than it did to me.
Anyway, use the tools. Keep an eye on your provider. Ask for tangible goods -- screenshots aren't good enough. If the provider says he isn't ready to set it up the project for you yet, ask the provider to use oDesk Share. oDesk Share allows you to view a provider's desktop in real time.
oDesk will connect you with qualified (and sometimes not) providers: it's up to you to manage them. If that sounds like hard, try to hire a project manager who will micromanage everything for you.
Man, I love me some bold text. Bold, yet smooth.
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