Procuring Consulting Services: A Strategic Guide

Management consultants have a real and valuable role to play in disseminating ‘best practice’ and creating effective business cultures. Properly commissioned and directed, consultants provide a valuable resource for organizations of all types and sizes. However, it is still a profession that has no statutory regulation about who can practice and the qualifications they must have. The below guidelines will help purchasing professionals improve the value for money they obtain through consultancy. Management consultancy is a large diverse profession, both in terms of revenues and of employment.  Indeed, it forms one of the fastest growing industries. However, consultancy firms continue to face pricing pressures. Greater competition from new and returning players, centralized procurement, and the lack of clarity about the value consultants contribute, are all impacting the industry. Therefore, cost control and survival are still high on the agenda alongside improving the reputation of consultancy and attracting high caliber people into it.     Ensuring consultants work to professional standards and are competent:   There is no statutory regulation of the profession. Therefore, anyone can call themselves a management consultant, unlike other major professions where the requirement for qualifications and the competence to practice are very carefully controlled. This is a difficulty for those trying to choose consultants since the outcome of the project will undoubtedly depend upon the way the consultant carries out the work and businesses can suffer if the project is not executed effectively. One way of having confidence in their ability to carry out the work is having relevant professional consultant qualifications or are members of the professional body for the profession. Many consultants will be members of organizations which represent their prime specialty e.g. Chartered Management Institute, Chartered Institute of Purchasing & Supply.   Reasons for using a consultant should be clear:  
  • to provide a strategic overview of the position of the organization in its marketplace or environment, and to recommend mid to long term strategic directions.
  • to provide an independent review of a proposed course of action, or of the choice between two or more, typically tactical, decisions.
  • to catalyze change by recommending alterations to management processes and organization.
  • to strengthen a team. Client and consultant may create a joint team to develop in-house capabilities.
  • to achieve the implementation of a new system or process.
  • to be involved in the long-term operation of the organization. This of course is outsourcing rather than consultancy and should be contracted for like any other outsourced service.
The nature of the consultant’s engagement with the client will change over time as priorities are refined and projects develop. This normal process should be managed well to prevent an open-ended arrangement.     The benefits of using consultants should be quantified and can include:  
  • unique solutions and knowledge of ‘best practice’ and effective solutions, reflecting the circumstances and aspirations of the client.
  • speed of action
  • exposure to expertise derived from other industries and sectors, or indeed other countries.
  • provision of specific technical skills that are either non-existent or in short supply in-house
This should all lead to ‘value for money’ from the consultancy assignment, demonstrated through improved performance by the client. The client can increase the likelihood of a good outcome by including the final report to be submitted with clear understanding of time.   The procurement professional shall follow the below guidelines:  
  • have taken the project through the organization’s procedures for approval
  • work with their internal sourcing/procurement procedures and policies
  • define clear rules of engagement to govern the procurement process and communicate these to all parties
  • have a mechanism for allowing key influencers to engage with consultants during the procurement process
  • identify and make available internal resource required
  • be clear and explicit about the need for the work and that the desired outcomes have clear benefits and smart objectives
  • keep an open mind on which suppliers to consider
  • consider a variety of resourcing and remuneration options to obtain best value
  • be clear with the consultant about the true state of knowledge and understanding of the problem
  • be open to alternative ways of looking at the problem and be prepared to change views
  • give honest feedback
  The procurement process for management consultancy:  
  • Preparation and project definition:
  Purpose and scope It is essential to start with a clear and honest statement of why the consultancy is being commissioned. The scope of the project must be defined. This will need to look both forwards and backwards, reviewing the circumstances that have lead to the decision to hire consultants. E.g. to implement an ERP system and if successful extend it to the supply base or to the distribution network.   The project brief Essentially, the specification against which the consultants will tender, or the negotiations conducted, should be prepared. This should contain as much information, but care should be taken not letting the consultant tell the client firm what it wants to hear. The brief should include a background and objectives of the project, deliverables, timeline, resource requirement, reports, compliance and so on.    Internal communication A successful consultancy assignment will need the co-operation of the workforce. It is therefore important that employees are told in good time about the project, and why the organization is bringing consultants in.  
  • Identification of suitable consultancy practices, prequalification, and tendering procedures
  Commercial Considerations   It is vital to select the right resource to suit your requirements. Keep up to date with market information including salary packages for consultants. Incorporate commercial tension into the selection process by tendering between several suitable / capable suppliers. Segment the project into phases, e.g. design, implementation etc.  This allows you to stop the project if it fails to deliver its business case, change supplier if appropriate and /or change the agreed scope of the project in a more methodical way.  Control the expenses and agree an expenses policy up front and track spend. Managing the tail spend is also important since it will impact the savings gained.   Pre-Qualification and Tender   Few qualities you should look for: Previous experiences and contacts, recommendations from other organizations, articles and case studies in reputable journals, some professional institutions maintain lists of consultancies and/or of individual consultants. Evidence that they work to professional standards and ethical guidelines, breadth, and depth of resources adequate for the task including not only consultants, but back-office and support systems, and of course some evidence of financial stability and backing, relevance of the proposed methodology, apparent commitment and enthusiasm, ability to meet proposed deadlines etc.   Consultancy selection through negotiation   In most cases, the winning consultancy will be selected through a series of negotiations based on the project brief. It is important to be mindful of the length of the negotiation phase, when the consultancy practices are not being paid for the work, they are doing.   3) Project award and contract terms & conditions   It should be possible to award the contract based on these final presentations. Subsequently there will be project review at regular intervals of the project management process and a post-project review. Unsuccessful bidders should also be notified promptly. They may well have been withholding key staff from other assignments to be prepared for an early start on your project in mind.  
  • Project management
  The client organization should appoint a project manager and possibly a small management team. The manager is responsible for maintaining a complete record of the project, and all its variations, The progress of the consultancy should be formally reviewed at appropriate intervals. The purpose of a review meeting is to review progress against the project brief. A review meeting also provides an opportunity to consider and if appropriate approve variations in the project specification. In many consultancy assignments a key part of the deliverable in the form of reports at various stages. The client must have an internal mechanism for receiving, discussing and if necessary, acting upon these. Successful consultancy depends very much on personal relationships, and these can sometimes break down. Hence having a healthy relationship is important. There is a well-known phrase – “People manage contracts and not the companies”.   In conclusion:   The process of buying consultancy services demands a strategic and meticulous approach. By aligning organizational needs, researching, and engaging in thorough evaluations and negotiations, businesses can forge successful partnerships with consultants, ultimately enhancing their capabilities and achieving their objectives.

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