Ok, it might seem a little odd for me, a consultant, to be writing a blog on how to procure consultants, but let's not forget that my specialty is in procurement and consultant and contract labor spend is often a major category for most public and private sector companies, except most often, there are no controls, consistent processes, or benchmarks surrounding pricing/disbursements. Furthermore, everyone knows someone who is in the "body shop" or consulting business.
So it is very difficult for organizations to actually know the value of the spend, because there is so much leakage surrounding it. And furthermore, often, during the contracting phase, the issue of disbursements is often overlooked. If you read the headlines in the newspapers, this is often what gets press.
I am getting a little tired of consultants taking the bashing for poor procurement practices...such as the media reports at eHealth and now Cancer Care. Interestingly at no time has anyone said that the consultants haven't done their work. The issue mostly is how the contracts were awarded, the pay rates and the disbursements (or in other words expenses).
Now personally, when I do a contract for a client, unless I have to travel outside of a 60 KM radius, I don't charge mileage; I certainly don't charge for meals (I have to eat anyway); and lord knows, I'd never even think of billing the client for coffee. The only extraneous expense that I charge is parking -- because that is directly related to the client and in a major metropolis it can get quite expensive. And as an independent (highly skilled I might add), I don't charge what other independents do nor big firms...because I recognize I don't have overhead like the latter do. Why the former charge $3K plus rates, who knows.
So how do you procure consultants...Firstly, you don't need to tender everything, particularly if it is a smaller project and you need specific expertise. But what you do need to do is ask for a proposal that outlines approach and expected deliverables. You should know what the market pricing is, and you need to have a clear understanding of the costs of disbursements...don't pay for meals, mileage and the like...because this is a boondoggle. Make sure as well that any travel outside a specified area follows your corporate guidelines....not theirs.
I'll spec out full disclosure below, but this needs to be identified for any sole source arrangement. Also there should be some documentation that supports why this individual/company has the skill set required and why a tender was not required.
Make sure that there is a hold-back of 15 to 20% which will only be paid at finalization of contract. Oh and this brings me to another point. If you actually have a pretty clear project scope, have the consultant bill you on a fixed price vs. per diem base. Most consultants can pretty much figure out what a project will cost, and it will save you from having to pay for non-productive time.
If it is a larger project, of course you need to tender, but make sure there is no pre-conceived thought as to who to award it to...as my previous blog said, don't tender for the sake of tendering. Make sure that all conflicts of interest are clearly stated up front...that is has this person/company worked for you before, do you have a personal relationship with this person/company or anyone else (such as a wife/husband etc); have you ever accepted any service/good from this person/company greater than $100...well you get the idea.
I could rant on about this for a long time, but the reality is don't blame the consultants...there are always people who will try to take advantage of a situation -- but don't paint everyone with the same brush. If the appropriate procurement was done on this category...many issues could be avoided even more than those stated...because there is also risk, intellectual property, liability, not to mention what I have seen several times is that two different groups hire consultants for the same work, or a year later a consultant is brought in to do the same work someone had done before.
I'll stop now. But as you can see I could go on for a long time.
So it is very difficult for organizations to actually know the value of the spend, because there is so much leakage surrounding it. And furthermore, often, during the contracting phase, the issue of disbursements is often overlooked. If you read the headlines in the newspapers, this is often what gets press.
I am getting a little tired of consultants taking the bashing for poor procurement practices...such as the media reports at eHealth and now Cancer Care. Interestingly at no time has anyone said that the consultants haven't done their work. The issue mostly is how the contracts were awarded, the pay rates and the disbursements (or in other words expenses).
Now personally, when I do a contract for a client, unless I have to travel outside of a 60 KM radius, I don't charge mileage; I certainly don't charge for meals (I have to eat anyway); and lord knows, I'd never even think of billing the client for coffee. The only extraneous expense that I charge is parking -- because that is directly related to the client and in a major metropolis it can get quite expensive. And as an independent (highly skilled I might add), I don't charge what other independents do nor big firms...because I recognize I don't have overhead like the latter do. Why the former charge $3K plus rates, who knows.
So how do you procure consultants...Firstly, you don't need to tender everything, particularly if it is a smaller project and you need specific expertise. But what you do need to do is ask for a proposal that outlines approach and expected deliverables. You should know what the market pricing is, and you need to have a clear understanding of the costs of disbursements...don't pay for meals, mileage and the like...because this is a boondoggle. Make sure as well that any travel outside a specified area follows your corporate guidelines....not theirs.
I'll spec out full disclosure below, but this needs to be identified for any sole source arrangement. Also there should be some documentation that supports why this individual/company has the skill set required and why a tender was not required.
Make sure that there is a hold-back of 15 to 20% which will only be paid at finalization of contract. Oh and this brings me to another point. If you actually have a pretty clear project scope, have the consultant bill you on a fixed price vs. per diem base. Most consultants can pretty much figure out what a project will cost, and it will save you from having to pay for non-productive time.
If it is a larger project, of course you need to tender, but make sure there is no pre-conceived thought as to who to award it to...as my previous blog said, don't tender for the sake of tendering. Make sure that all conflicts of interest are clearly stated up front...that is has this person/company worked for you before, do you have a personal relationship with this person/company or anyone else (such as a wife/husband etc); have you ever accepted any service/good from this person/company greater than $100...well you get the idea.
I could rant on about this for a long time, but the reality is don't blame the consultants...there are always people who will try to take advantage of a situation -- but don't paint everyone with the same brush. If the appropriate procurement was done on this category...many issues could be avoided even more than those stated...because there is also risk, intellectual property, liability, not to mention what I have seen several times is that two different groups hire consultants for the same work, or a year later a consultant is brought in to do the same work someone had done before.
I'll stop now. But as you can see I could go on for a long time.
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