In a recent roundtable think-tank between UK members from Chartered Institute of Purchasing & Supply (CIPS) and the Management Consultancies Association (MCA), it was suggested that procurement should become more involved in the delivery, and not only the purchase, of management consultancy deals. Hugo Were, a partner at Accenture, and president of the MCA, said that he would “like to see procurement departments adding more value by seeing the deal through to the delivery. Once it has started, help see it to the end.”
Managing the Results
While most of the MCA participants agreed that procurement personnel should be more focused on the outcome of consultancy engagements than they currently are, they conceded that there are time constraints involved. Members generally agreed that there had been improvements in the way that procurement has approached buying the wide variety of consultancy services over the past few years, but that problems remained when deciding on the best way to manage delivery of results and track value across a deal’s life.
So, what are the steps that procurement need to follow to address this issue?
Step One: Define the Brief / TOR
“Accurately describe what it is that you aim to achieve, usually called the Terms of Reference (TOR). If you get this wrong, everything else you do will be focused on the wrong issues and provide unsatisfactory results. Hence, it is advised that you spend quality time on this step by doing some ‘front-end loading'”, Elaine Porteous, Managing Director of CA Procurement told SmartProcurement.
“When defining the TOR, tap into the considerable expertise of potential suppliers. Ask two or three industry leaders to meet with you to help you define the need or issue. Their advice at this stage is free and usually willingly offered. This will help you focus on all the relevant areas that need to be addressed”, Porteous continues.
Do this thoroughly as you may find that there is a simpler and cheaper solution by maybe using an already available resource. Always be on guard against introducing new complexity to suit the consultants. Remember, their fees are usually ‘time based’ and thus you need to manage that efficiently throughout the engagement
Step Two: Obtain a Proposal / Quotation
The Request for Proposal (RFP) is usually the best route here. You will draft the wording based on the brief that has already been agreed on in Step One.
What do you need to know so that you can select the appropriate consultancy? Their proposal must include:
- The objective of the engagement: What result they will achieve for you?
- Their approach: How will results be achieved, i.e. their expertise, inputs, etc.
- Roles and responsibilities: Theirs and yours.
- Their outputs: Reports, implementation plan, manuals, training, etc.
- Their price proposal: Fee basis, rates, expenses.
- Timing: Start, milestones, finish, handover date.
- DON’T make ASSUMPTIONS! Be clear on every aspect of what they are required to do and how much they bill you for doing it.
“The final contract document will then clearly state and define all these elements to ensure you achieve a successful outcome. Once again be wary of pitfalls and discuss the contract details with colleagues if you are unsure about anything”, Porteous advises.
Step Three: Manage the Results
The focus here should be on ensuring that the results being delivered are strictly in accordance with undertakings in the proposal. This might sound obvious, but be sure that your brief was clear. The objectives may shift or expand; internal and external circumstances may change, therefore the client needs to be sure that the right issues are being addressed and must continually review progress against the agreed milestones.
Be especially aware of scope creep! This is where the scope of the project changes significantly after it has started (i.e. where the brief and contract were insufficient in defining the scope of work). Some consultancies may set out to find other relevant / associated issues that you need to address urgently so they can boost their income. Resist changes as best you can, especially if it costs more and / or will delay the project. Keep in mind, you are paying and are thus the ultimate driver of the process – not the other way around!!
Reviewing the End Result
As the project draws to an end you will review each aspect of the brief and contract: Did the supplier achieve what they said they would in the way they said they would, on time and within budget? And if not, why not?
This review process is vital to establish if the objective was accomplished to the satisfaction of the client and what still needs to be completed – there is always a “snag” list of incomplete outcomes at the end!
A post-mortem involving both parties to establish “lessons learned” can also be very a very useful tool. At the CIPS roundtable discussion, Stephen Hayers, Vice-President, Services Procurement, at British Telecom, outlined their approach of holding regular meetings with suppliers and stakeholders to discuss progress and satisfaction both during and at the end of projects.
SmartProcurement is hosting a workshop series during February 2009, presenter by Elaine Porteous, in Gauteng, Western Cape and Kwa-Zulu Natal on the ‘Sourcing and Contracting of Professional Services’, during which you will have an opportunity to discuss this very subject, viz, the sourcing and managing of consultants.
It will provide extremely useful guidelines and tips on Service Level Agreements, and, more specifically, on dealing with Legal, Human Resources and Insurance Services. Should you have interest in attending this hands-on one day session please email: admin@smartprocurement.co.za or phone Erieka Santos on 086 133 4326 (choose option 2).
Article by Elaine Porteous, an independent procurement consultant and commentator on topical issues in the profession.
Acknowledgements:
“SRM needed for consultants“, the CIPS online journal, 17 July 2008.
“A guide to buying consultancy and other professional services“. By Qualitar Consulting for the London Centre of Excellence (2008).
