Governments are using consultants on a regular basis for most major projects.
Municipal consultants are used in various aspects of the project review. Consultant services are required but can present some risks to the municipality.
These include considerations such as whether one actually 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.
For example, Audit Scotland, conducting a study on behalf of the auditor general for Scotland, noted the nature of consulting creates a number of difficulties for the public sector in dealing with consultants.
Specifically, it stated that: “It is often hard to understand what consultants do. The term itself covers a huge variety of work and consultancies often operate in a way that makes it difficult for clients to see what they do. It is also difficult to assess if consultants are providing value for money. Because it is difficult to understand what consultants do, it is hard to determine if this represents value for money. The range of activities undertaken and the difficulty of separating cause and effect complicate attempts to quantify the benefits from using consultants.”
A Management Consultancies Association study found almost half of organizations have not attempted to quantify the return on investment from using consultants. It can be difficult to separate the roles played by consultants and clients.
Successful projects are likely to require close working relationships between consultant and client. There are benefits arising from the development of these relationships but it can be difficult to maintain independence, objectivity, ownership and accountability.
Consulting firms have commercial drivers as well as meeting their clients’ needs. Clients need to be aware of potential conflicts of interest when they seek advice from consultants.
For example, consultants may be rewarded by their employers based on the amount of revenue they earn and this could influence the advice they provide.
I do agree with a lot of the Audit Scotland review. However, being a consultant myself, once you get involved in one of these major projects the scope sometimes changes and creates extra hours related to the assignment.
It is difficult with this type of work to assess the value for money aspect of the tasks the consultants are often asked to complete.
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 counter-balance 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 usually obtained, but there are very often complicating factors that make it difficult for any municipality to be sure the consultancy arrangement results in an optimal solution.
Stephen Bauld is a government procurement expert and can be reached at email@example.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.