Purchasers must evaluate consultancy performance

15 August 2012

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15 August 2012 | Kamalpreet Badasha

Most procurement managers are not responsible for evaluating consultants during a project, despite the fact that 69 per cent of buyers have a strong influence on their purchase.

A study of 100 companies by Source Information Services (SIS) found 80 per cent of purchasers play no role in the measurement of performance while the engagement takes place. And this figure rises to 86 per cent when the project has finished. But 69 per cent of procurement managers strongly influence the purchasing of consulting projects worth €5 million (£3.9 million) or more.

Edward Haigh, director at SIS, told SM that buyers were not getting the opportunity to influence demand: “[Procurement managers] are influencing which firms are chosen, but they are not influencing what goes before that.

“If procurement doesn’t know what happened at the end of a project, then when it comes to trying to play a more strategic role and help to advise people on the use of consultants at the start of a project they are in the dark. The loops are never quite closed for them and that makes it difficult.”

Haigh advised a number of ways purchasers can ensure they get involved in evaluating consultancy performance.

•    Early involvement: Procurement managers should get involved at the earliest stage of a project, even before the decision to use a management consultancy has been made. They should be present when internal stakeholders are deciding on what work will be handed to the consultant and what is expected. The procurement manager is then considered a strategic partner in the project.

•    Internal relationships. It is imperative to build good internal relationships with the end users of consulting within the organisation. This ensures there is a mature dialogue when it comes to deciding what aspects worked and what didn’t work in the post-project evaluation. If there has been a consulting project that has gone wrong the end-user may feel threatened that it reflects badly on them unless there is a strong relationship with procurement.

•    Establish milestones. At the outset of a project milestones must be set. The more effort that goes into the scoping and definition of these upfront the better the outcome is likely to be. There should be meetings with the consultant, end-user and procurement to check the project’s progress at pre-agreed points.

•    Metrics: it is not always easy to measure the performance of a consultant. As it is a fluid discipline its outcomes are not always definable. In the case of some projects, if a consultant is cutting costs by 10 per cent that can be easily measured. But if the consultant is changing the strategy the results may not be visible immediately – it may take two years to see them.

The report also found those consultancies that win the most work in the market are the ones that win places on preferred supplier lists (PSL). PSLs are now used by 70 per cent of organisations that spent more than €10 million (£7.8 million) on consulting in the last six months.

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