Engaging a web developer

If you are a tech start-up, choosing a web developer will be one of the most important decisions and biggest investments you will make. For other non-implement tech reliant businesses, a website is now something that you will nonetheless be required to develop and maintain as part of business branding and marketing. In both cases, there are certain fundamental components to any engagement with a web developer that you should consider before engaging them.

The contract

The only way to confirm what you could expect to receive from a web developer is to document the relationship in a contract that specifies:

• the price of the services (and whether you’ll be charged on an hourly basis, or a fixed price on a per project basis);
• what is included in the price and what is not (it’s important to be painstakingly specific in this regard);
• what are your targets and deadlines;
• what are the implications of the developer’s failure to deliver the service on time;
• what if there are defects also known as ‘bugs’ in the system they create;
• if the developer is obliged to remedy the bugs, how long after handover will they be obliged to do so and at who’s cost; and
• who will own the site and platform upon completion – you or the developer.

Many web developers have standard contracts which more often than not don’t cater for the unique engagement of each job. Irrespective of the web developer’s standard terms it is open to you as the purchaser of the service to negotiate those terms and make any amendments to their contract as necessary for your business.

Ownership of the platform and hosting

In the absence of a written agreement confirming ownership of the website, it may be argued by the web developer that the website and any intellectual property (IP) created in connection with the website belongs to them. This would be a particularly unsavoury outcome if the IP in your new business rests in the mechanics of the website itself. For this reason, it is important that you secure ownership of (and any IP in) the service being provided by the web developer before engaging them.

Timing and delivery

The most common complaint by consumers following completion of a job by a web developer is that it took much longer than they originally anticipated and (in some cases) it also cost more than estimated. This generally results from failings on both sides of the engagement.

Firstly, there is often a failing by the business owner to properly specify what they wanted (which results in multiple changes to the specification of services) and secondly, a failure by the business owner to provide the web developer with contractual incentives to deliver on time. Such incentives may include penalties for failing to deliver on time or incentives for delivering ahead of time.

Final payment

One way of keeping your web developer honest is to reserve final payment until 2-4 weeks after delivery of the final product. This gives you the opportunity to test the platform and confirm there are no defects in the system and (to the extent that there are) request that the web developer remedy such defects prior to final payment. A staged payment system is highly recommended in any web developer agreement and can also be utilised as an incentive for getting the developer to get the job done on time. It is also a good idea to get an independent third-party developer to perform an audit of the website once it is completed to ensure that there are no bugs (which are not visible to the untrained eye).

Ongoing warranty period of maintenance

The contract between you and your web developer is governed by the Australian Consumer Law. Notwithstanding general warranties that you may have at law, your contract with the web developer should specify:

• the period of time following final delivery in which the developer must rectify any defects; and
• any obligation for the developer to provide ongoing maintenance to the platform following completion of the job.

It is also important to ensure that the source code developed for your platform is properly documented so that if you decide not to use the same web developer for ongoing maintenance and upgrades following completion that it is easy for an incoming developer to navigate the source code and perform the upgrades.

Transition out (userability)

As mentioned above, if you do decide to use a different developer following completion you should make sure that you have obtained all supporting documentation for the source code. The most practical way of doing this would be to ask your third-party auditor to check whether the source code is adequately documented. Finally, the website should be fully transferable in case you sell your business in the future.

Tax incentive

The Research & Development (R&D) Tax incentive program is designed to facilitate the growth of early stage tech start-ups by providing rebates for research and development expenditure upon lodging a tax return. In order to be eligible for the R&Dincentive, the business needs to be in the early stage of its development and involve an innovation process (i.e. developing a new service or product). The Australian Tax Office will evaluate the eligibility of the start-up company to receive deductions back from the government. When engaging a web developer, it is important that the agreement scoping their engagement is drafted in a way that maximises your R&D return.