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How do I find a reputable reliable capable company?
You are started on the right track by being here at WebmasterWorld. Community and networking bring about acquaintances, friendships and trust. You are building a network of resources. I'm not saying that a company that happened to work out well for one entity is going to work for another but at least you have a resource pool from which to draw insight and direction.
Then contact those portfolio companies and ask what their experience was with the firms, both in terms of whether they performed as promised and what exactly that contractor did. (Be aware: lots of developers / designers "exaggerate" what they did on a site.)
In my opinion if you're looking to go cheap (5 digits, for a complex site) you'll be working with small operators and you have to be extremely careful. You may still get a good job done, but it'll be harder -- believe me, I've done this, and burned a ton of my own time project-managing people who were smart and skilled but couldn't project manage their way out of a paper bag.
If you go to 6 digits, you can start working with a larger, more established firm. You still have to be careful, but it'll be better because then you'll be working with professionals.
Above all, make sure that your developer is an incorporated company within a location where you can take legal action should you need to do so. Then define what you want very clearly in a signed paper contract. That is good protection against someone running off with your deposit.
It sometimes pays to get a professional opinion of a company from another programmer. If in doubt, a brief review by someone experienced could make you aware of systematic deficiencies in the work of the company such as poor code, security or design practices.
Also, be aware that your $ is very weak internationally, so you probably won't get the same kind of service for the money you would have seen in the past if you go abroad.
Also I am nervous about paying a portion of the total fee upfront and would prefer to pay after I see some preliminary work on the site.
A contractor/firm may be similarly nervous about a new client (you), and so want some money before they've put in a huge amount of work. The way around this is to set up a contract with specific milestone payments that are early, frequent and specific.
One thing I've heard of but not yet tried is making the first milestone development of a "technical spec". It's sort of a workplan-plus-feasibility-study on steroids. Basically, they take your spec (which should be very detailed -- ideally wireframes and use cases for each page), and lay out how they will do each part and on what schedule.
(A simple version of this could be part of a contractor's proposal, but less expensive firms in particular may not be willing to devote time into real work (which this is) until you've signed a contract.)
This shouldn't take too long (depends on the site, and the people), but presumably within a week you will (a) see how they work / think, and (b) give you a clear roadmap for how they will finish the site overall (though you should expect at least some changes along the way).
If they agree to the milestone but then don't deliver, you walk away without burning too much time or money.
1. a detailed project specification (with use cases as mentioned by another poster). you need to specify every little thing
2. a detailed RFP (request for proposal) that outlines whats expected and when.
3. an understanding of (in your case) PHP and/or technical representation on your side to verify deliverables are 100%
4. a solid handle on project management. i use ms project.
5. someone that speaks your language at the other end. (too many times I've had to decipher 1/2 english 1/2 punjabi). skype is a great way to stay in close contact with your offshore development team.
Things to consider...
1. look at the top money makers on elance and contact them (invite to bid)
2. read about the providers feedback (don't be fooled by bogus feedback posts)
3. contact firms that the provider has done work for (similar to hiring someone for a job)
4. YOU DICTATE THE PAYMENT TERMS - don't let me try to do that (and they will). Offshore development firms are a dime a dozen.. you have a sea of companies to choose from... if you give [them] control of the project your sunk.
blunt but hey... i haven't been burnt once yet and all my clients are satisfied.
hope this helps...