A colleague recently forwarded me a Dilbert comic in which Dilbert is complaining to a consultant about the size of said consultant’s bill. I had to laugh. I think anyone who has ever worked with a consulting firm of any ilk can relate. There is no denying it, consulting can be expensive. The reason it tickled my funny bone, though, is that so many clients don’t know they have more control over cost than they realize. They just need to know what works and what doesn’t.
Low Hourly Rates May Not Be a Such Good Deal
One popular strategy I’ve seen clients employ in an effort to control consulting costs is to hire the consultant with the lowest hourly rate. Unfortunately, this is often a strategy that backfires.
About a year ago, a prospective client called in a state of panic. It was just weeks away from the go live date of a new system, and the end-user training she had been charged with creating was in a pitiful state. It was rife with errors and some courses hadn’t even been started.
When I inquired how things could have gone so terribly wrong, she complained about the consulting team. She had selected them for their low hourly rate because she figured that would translate into more time to get the work done. The problem is that hours do not equal results. The solution is to look beyond the rate to what the consultant has actually achieved. Remember, past results are the best indicator of future results.
Fixed Bids Benefit Consultants, Not You
Another strategy I’ve seen companies employ is that of the fixed bid. The idea that a fixed bid is beneficial to clients is smoke and mirrors. It does not protect you from out of scope work, which is often the biggest culprit in high consulting costs. In fact, the second your project goes out of scope, the consultant writes a change order for the additional work, fixed bid or not.
The fixed bid doesn’t even protect you from the consultant’s poor estimating skills. It protects the consultant! They simply add a sizeable fudge factor on top of their normal bid. This provides a cushion in case their estimates are off. And, if their estimates are accurate, they make a premium on your project.
What Works
So, what can you do? If you are working with a consultant on a time and materials basis, take these measures:
- Hire a consultant not a vendor
- Get your best practices straight
- Don’t treat consultants like employees
- Keep an eye on project scope
- Avoid schedule delays
- Watch the budget closely
Hire a Consultant Not a Vendor
What’s the difference? A vendor is focused on developing a deliverable. A consultant is focused on partnering with you to achieve results. This results orientation means the consultant can work with you to devise creative solutions to cross the finish line when time and money start to run out. And, we all know that time and money always run out. If you work with a vendor, they will be single mindedly focused on developing the deliverable for which you hired them. So, when time and money start to dwindle, it will be quality that suffers as they cut corners to turn out said deliverable.
Get Your Best Practices Straight
Nothing takes more time than infighting among subject matter experts on what constitutes a best practice or, worse yet, inventing a best practice from scratch. The goal of training is to document and teach existing best practices. If you lack an agreed upon, existing best practice for the instructional design consultant to document, send them home while you work it out.
That said, a seasoned consultant can add tremendous value to business process design. They will ask questions that reveal holes in your logic that you’d never spot. This is because they bring both objectivity and experience from working with multiple clients. That is hard to get when you work in-house. However, make sure you have the money to leverage their expertise before you embark, or you may end up with a project half done when funds run dry.
Don’t Treat Consultants Like Employees
Unlike exempt employees, consultants are on the clock. This means they are charging you for the time they spend with you. If you are late or unprepared for a meeting, they are on the clock. If you interrupt your meeting with them to answer numerous calls, check email or answer colleagues’ questions, they are on the clock. All these bits of time add up. So, make sure the time you spend with consultants is sacrosanct.
Also, do not invite consultants to attend meetings unless you believe they will add significant value. Better to inform them what decisions were made that affect their work (which can take about 15 minutes) than to have them sit through a 2-hour meeting. And, if they are in a meeting that disintegrates into unproductive political squabbling, send the consultant home.
Keep an Eye on Project Scope
Out of scope work is the number one culprit in high consulting costs, in my experience. It most often occurs when extra rounds of revision are added to the project. Sometimes this can’t be helped, but sometimes it is a matter of subject matter experts not catching issues before they give final approval. This adds another round of revisions, covered by a change order, of course. Worse yet, it can add significant cost to the project if the issue is caught late.
For example, if an issue is caught at the storyboard phase of an e-learning project, it may take the instructional designer and editor to address it. But, if it is not caught until the alpha has been programmed, it may take the instructional designer, editor, programmer, graphic designer, and QA team to address it. You can see why the latter is a much more expensive proposition.
Avoid Schedule Delays
Schedule delays cost you in two ways. First, they result in additional project management to revise the schedule and to get the team organized again. Second, if the delay is significant, it means that team members need to spend time getting up to speed on the project again. Worst-case scenario, a critical team member may no longer be available, and a new team member may have to fill her shoes.
Watch the Budget Closely
You should know where you are financially at all times. It’s easy to request that the consultant provide you with budget numbers every week. This way if you see the budget evaporating faster than the work, you and the consultant can strategize about how to achieve the goal with the remaining funds. This is where hiring a consultant with a focus on results rather than a vendor with a focus on deliverables can really benefit you.
An Alternative
If you don’t like the feeling of being nickeled and dimed to death, there is an alternative to time and materials billing. It is called value pricing. The way it works is that you and the consultant determine the value of the project to the organization in terms of potential results. The consultant then charges some small percentage of that value. While it is not suitable for every project, I like this model for several reasons:
- It ensures the project actually has a value, which is not always the case.
- You don’t have to worry about expensive scope creep.
- It strengthens the partnership between client and consultant because you are working toward the same goal. This increases your chances of actually getting the desired results.
In the meantime, however, you now have the inside scoop on how to control consulting costs.
Hope this helps you avoid feeling like Dilbert.
