Is your consultant giving you value for money?

If you’re a local authority, ensuring that your consultant gives you value for money does not mean always accepting the lowest bid, or the consultant with the best track record. You need to focus on what added value they can bring to the assignment, how they can deliver to your specification, and whether their overall proposal is the most appropriate approach in terms of staffing, timetable, internal resource support and communication style.

In my experience of consulting over the past 10 years, the single largest area where time and money are wasted in the appointment and use of consultants is in not being given a clear brief from the outset of what support is required. Consultants can only cost based on what information they are given, so an initial description of the support required will ensure that only suitably qualified consultants submit a quote and that these quotes are appropriate to the tasks identified.

Something that has become more common of late is the use of a ‘support consultant’ to develop the brief for a specific and larger scale piece of consultancy support to ensure it is appropriate and will attract the right type of submission. This may seem crazy, but has proved time and again to be cost effective for the local authorities and the consultants alike.

The right support is critical

As consultants, the second major headache we often face is a lack of adequate internal support for the project in question. Too often local authorities expect they can hire a consult to take ownership for a project from start to finish with little thought about the level of internal staff time required to support the project. Consultants are able to provide a quote for any type of assignment, but usually we don’t want to take ownership away from the council. At the end of the day, it is your service and decision, and we would recommend that consultants act as advisors to you. If you want us to take the risk though we will price for this too.

Given sufficient internal project support, you can concentrate the consultant’s input to tasks that really require an external or specialist perspective. Hyder Consulting is working with a number of local authorities on procuring new waste collection, treatment and disposal services. The clients are taking responsibility for the programming of the activities, the writing of minutes, and the development of the service specifications while we are focusing on service innovation issues, evaluation matrices and detailed service modelling – all things that external support are ideally placed to offer.

The third key area that will ensure best possible value is good communication. Clear instructions and objectives from the client at the outset will always ensure we give them something they want rather than something they don’t want. On our longer assignments we have meetings every month or at the end of each stage – this will allow any issues to be raised and sorted quickly. We have found these meetings to be particularly beneficial with our procurement assignments where we are working alongside other consultants (legal and financial) and the sharing of ideas across the project team can identify the best way to proceed early on, saving the client both time and money.

Budget as you go

Another issue for consultants is budget. Most of our public sector clients prefer a lump sum price for the assignment. However, this is only possible if the brief is exact and clearly written. Lack of clarity in the brief can lead to heated discussions about work that is out of scope and the inevitable ‘project variation form’ with its demands for extra budget. Traditionally, a commission has been all about risk transfer and capping. This is already an adversarial arrangement whereby both parties circle warily around each other like two prize fighters.

I understand why clients want a lump sum as it makes their budgeting easier, but it also transfers risk and does not enable a partnership approach to be developed. I would like to see more clients use ‘time and expense’ contracts where we agree the scope and inputs required and charge at an agreed daily rate. If the client wants anything extra then the budget is a simple calculation – open book accounting. If a client wants to fully understand what any particular ‘task’ will cost then time and expense is an ideal approach to adopt.

The final major concern from a consultant’s perspective is the unreasonable demands on professional indemnity (PI) insurance cover. We are regularly asked for £10M PI cover for an advisory commission worth only £50,000. Although most major consultancies can offer this kind of cover, it will cost money to get the clearance required and this cost will be passed back to the client.

Local authorities should look at more appropriate levels of PI, linked to the tasks in hand and not settle for the standard council procurement rules which are being used for building waste management facilities. Consultancy is about advice and is often for significantly smaller sums of money.

Getting value for money is about appointing a consultant that understands the client’s needs, can deliver on time and within the agreed budget, and has the capacity and technical ability to perform the necessary tasks. But value for money should also be about client-consultant relations, value added in services provided, flexibility to respond to changing needs and circumstances and the ability to draw on additional expertise if the scope of the work changes. However these are not always easy to assess in terms of a bid, and may prove harder to identify prior to a project’s inception. So when you find a good consultant, hold on to them.

Don’t be afraid to select a company because their track record is short. New companies are forming all the time in the environment sector. Better to look at the staff available and their experience and expertise. The key issue is who will be working on the job, what expertise do they have and will they give you the support they need – ask to meet them at interview and establish who the support staff are.

Consultants on call

If you believe that you will be using consultancies over the next two or three years then perhaps consider using framework arrangements. This involves appointing a series of preferred consultants to call-off lists. Once the initial selection of consultants is complete, any new assignments can be awarded to one of the consultants from the list as appropriate. For example, you may appoint framework consultants to cover communication, consultation, strategy, modelling and procurement.

This has worked well with us and one of our clients, Northamptonshire County Council, who appointed us through the OGC environment framework and we now provide all of their technical advisory work under a three-year contract. If we are unable to satisfy the client in terms of our proposed team, budget or timetable then the council can always look elsewhere. I believe more and more local authorities will look to framework arrangements as it will save a lot of time and money in the long run and ensure that good working relationships are developed between client and consultant over a period of time.

So next time you think about a piece of work that needs completing, ask yourself how much it will cost to do in-house, and whether you can get better value for money from an external agency. If you decide to externalize the project then define clearly what you need, and when you need it by. Assess the most suitable organisations and enter into a contract with them to deliver the work on your behalf. If you have gone through all the stages mentioned above you should find yourself with a quality service provider, who delivers on time and within budget.

Professor Adam Read is head of waste management at Hyder Consulting