After surveying the use of management consultants by agencies and ministries of the British Columbia government, the auditor general in that province concluded “that the ministries are receiving value for money from the majority (about 74 per cent) of the management consulting contracts we could conclude on. In the other 26 per cent, value for money was not received.”
The auditor general also stated that “in these situations, inadequate planning, inappropriate contractor selection, poor contract management or a combination of these factors usually accounted for the results. We also concluded that in most cases the ministries lack action plans with which to ensure that consultants’ recommendations are acted upon and not lost or forgotten.”
This pattern of mostly successful but with significant exceptions appears to reflect the general municipal experience with respect to consultants as well. A particular area of concern is the cost of the services acquired.
Consultancy costs are notoriously difficult to predict and even more difficult to supervise adequately and control.
For these reasons, any prospective consultancy arrangement should be scrutinized, as should the performance of work once the retainer is made.
However, despite the evident need for care, at many municipalities the purchasing department is almost completely shut out from the purchase of the consultancy services with the result that the opportunity for a co-ordinated, city-wide approach to the process of consultant-hiring is compromised.
In addition, there is the attendant risk of reduced oversight of this important aspect of purchasing. For this reason, there has been considerable interest in developing some method that would secure a higher level of purchasing department involvement in the purchase of such services.
Other difficulties associated with purchasing professional consulting services on an as-needed basis may be quickly summarized.
Obviously, consultant services present all the risks entailed in purchasing any other service. These include considerations such as whether one needs particular services, whether the best combination of services is being provided, comparing the cost of what are often radically different forms of service offerings and monitoring the work done.
However, special difficulties arise even in such basic areas as trying to define the kind of services that a municipality wishes to buy.
In any transaction, it is necessary for the customer to know what it is trying to achieve. In the consultancy context, this means it is necessary to be able to gauge accurately when a consultant’s advice is needed.
Lack of subject matter expertise may compromise the ability of the prospective municipal client to engage a consultant at the optimal time. This problem can be well illustrated using a private sector example.
Often the need for professional tax advice does not become evident until after the transaction concerned is closed. By that time, the benefit of the tax advice is too late. More generally, the fact that a perceived transaction may give rise to legal problems is often not appreciated by non-lawyers until a point at which it is impossible to avoid those problems.
The counterbalance to retaining a consultant later than necessary is the risk of bringing in a consultant when there is no need to do so at all.
In engaging a consulting firm, a municipality may expect to obtain a wide range of different benefits. For the most part, some benefit of the kind expected is always obtained, but there are very often complicating factors that make it difficult for any municipality (or other lay client for that matter) to be sure the consultancy arrangement results in an optional solution.
Across North America and beyond, one finds a steady increase in the use of consultants at almost all levels and in almost all branches of government — irrespective of the political party conducting the administration.
Growth in the use of consultants frequently follows the downsizing of a municipal administration.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
Recent Comments
comments for this post are closed