Paid staff vs Contractors

I have been wondering if there is anybody out there with direct experience dealing with paid staff vs contractors in the steam and or preservation world. There is some debate among some people that I know that say contractors are more cost effective than paid staff. I can't see it, contractors cost more and don't care about your specific project or equipment. BUT, they have a standard to maintain and have to produce good work to stay in business. For example, I know that a certain railroad contractor charges a minimum $2500 per day, but they get a lot done and do pretty good work.

So heres the question: Which is more cost effective, paid staff or contractors?