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Top 8 Steps to Follow When Negotiating and Preparing Your Consulting Agreement

Top 8 Steps to Follow When Negotiating and Preparing Your Consulting Agreement

“Every great building once begun as a building plan. That means, sitting in that building plan on the table is a mighty structure not yet seen. It is the same with dreams.” – Israelmore Ayivor

The importance of a good consulting agreement is huge, and a successful business relies on the foundation of a well-crafted contract. From idea conception to the final results, a project depends on the contract.
Consulting is a sensitive business with many variables that need to be included in the agreement, to assure as best you can the overall success of your Consulting project.
Here are the essential steps you can follow to secure and draft an effective, solid agreement.
Top 8 Steps to Follow When Negotiating Your Consulting Agreement:
Let’s start with how to negotiate better – once you have identified the most promising proposal, you can start negotiating. Similar to the selection process, you need to gather as much information as possible to have leverage during the negotiation
 

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Let’s discuss in more detail the Value creation – the pinnacle of opportunities for the Consulting industry to deliver more.

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1-Prepare for your negotiation – what you need to do​-

Before you dive into the key elements, take the time to prepare for your negotiation. The first step is to agree on what you want to negotiate. With intangible services, almost all the components of the proposals are negotiable. You can modify anything from the scope, the team composition, to, of course, the price.
You also need to keep in mind the overall value of the project vs. the price. Understanding the dynamics of the pay-off matrix will help you define the needed magnitude of the negotiation. Now, look also at how much latitude you will have in the negotiation. Do you have a negotiation edge? Or are your hands more or less tied?
Finally, get the right people at the table based on the size and the strategic importance of the project. No spending weeks negotiating cost when fixing the issue yields more each week than the cost of the project.
Try to anticipate as much as possible how the Consultants will act to get the best deal. In this situation, the best deal is when both parties have a positive outcome.

2. Negotiate the key elements – what not to miss –
When you enter a negotiation with multiple dimensions, the BATNA (Best Alternative To Negotiate Agreement) and ZOPA (Zone Of Possible Agreement) concepts can come in handy. They will allow you to draw a bundle of potential deals along the different dimensions. To build such a bundle, you will need to analyze how the changes in scope or team staffing will impact the price and conversely identify the trade-offs you are willing to accept. Do not lose sight of the ball, usually it is better to achieve your expected results than a half baked result at low cost.
If you still need to reduce the costs, you should explore other savings opportunities such as travel expenses, or expert staffing.
3. Why is better to give feedback to the unhappy consultants?
Don’t forget to debrief the consultants who lost the project. Take the time to explain why they didn’t get the project and what they could have done differently. It will help them improve their proposals for your next project or with their next client.
You can also ask the Consultants to give you some feedback on the project as well. It can bring you some valuable insights on how your teams manage a consulting project, and help you improve your practices.
4. Drawing the contract –

“A contract is only as good as the people signing it.” – Jeffrey Fry

Once you have negotiated the terms of the agreement, you can start drawing the contract. You can either work with a standard consulting agreement, or a couple Master Service Agreement (MSA) plus Statement of Work (SOW). The latter solution is particularly interesting when you work with the same consulting providers on a regular basis. We strongly recommend to work with your legal team to develop your own agreement templates.
5. Formalize your expectations –
Even if you work with a standard consulting agreement, the Statement of Work is the first element to include in the contract. It covers the scope of work & deliverables, the schedule & phasing, the Governance & Escalation procedure, and the expected outcomes & metrics.
The contract is always the reference in case of litigation. You want the Consultants to commit to the results of the project, not the means.
6. Define the terms & conditions – how and why –
When you have described what work will be done, how and when, it is time to define how the consultants will be paid. Even if you have opted for a flat fee, the schedule and the terms of payments should be clearly stated in the contract.
If you work with hourly fees or performance-based fees, you should include the conditions to get paid and the potential safeguards to avoid derailment.
7. Clarify the rules –
Depending on the project, and the company, some rules should be included in the agreement.

Confidentiality – This clause should always be involved in a consulting agreement. Many projects include confidential information about the company’s strategy or products.
Use of Third-Party – Many Consulting Firms work with subcontractors or partner with other firms on projects.
Intellectual Property – Monitor the information and the models developed during the project and clarify the ownership in the contract.
Client Policies (such as information management and safety) –The Consultants should comply with any rules that you might request.
Conflict of Interest and Non-Compete – On some projects, you might want to make sure that the consultants won’t have any conflict of interest, or won’t go and sell the methodology they developed for you to your competition.

8. Prepare for the worst – avoid the risks and the pitfalls –
As the old saying goes, hope for the best, but prepare for the worst. In your contract, you should integrate clauses that cover the most probable problems you might encounter if the project goes awry. The resolution of the issue if and when it occurs will be much easier to manage.
 
 

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How to measure the value created in Consulting?

How to measure the value created in Consulting?

“The best way to predict the future is to create it.” – Abraham Lincoln

The Consulting industry today is considered to be in good shape, but we can all agree on one thing – that there is plenty of room for improvement and growth. The more interesting question, however, is: what is the best direction to explore these possibilities?”
Let’s discuss in more detail the Value creation – the pinnacle of opportunities for the industry to deliver more.

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Main points for every business to develop an efficient Consulting Group to serve their needs.

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1-The Value Creation Equation – a Look at 5 Different Options–

There are many Schools of thought when looking at how value coming from consulting can be put into equations. Let’s try to explore from the simplest to the most elaborate one.
The simplest way to look at it is to consider the savings side of the equation. The value becomes what you were willing to pay for a given project minus the price you actually paid. So you were willing to pay 100 for a given project and ended up paying 80, you would consider a savings of 20.

Option 1: What you think you saved = Willingness to Pay – Price Paid

Unfortunately, your willingness to pay is all relative as it is at times difficult to assess, and might not be representative of the actual value of the service. You could, therefore, consider the value created using a more robust savings stick. Comparing what you paid to what you would have paid if you had selected one of the highest bidders. You could refine this notion and take the average of a representative sample of proposals (make sure you consider the full cost, including bonuses and expenses).

Option 2: What you saved and can be measured = Reference Cost – Actual Cost

If this notion covers partially the impact of a good sourcing and a good selection/negotiation, it, unfortunately, does not address the value brought by a quality scoping, with tapping into an infinite reservoir of cost avoidance if you buy more than you need. Why would you, for instance, purchase a market study covering the entire market when you only need one segment?

Option 3: What you actually saved = (Reference Cost – Actual Cost) + Cost Avoidance

However, you probably would not have launched the project if it was not creating an attractive value for your company. Depending on your company and your natural tendency to use consulting, the expected returns can be quite high. As a minimum the costs have to be paid back within a year. By experience the expected returns are usually minimum three times the cost. If you consider a cost corresponding, for instance, to one year of savings, the net present value with an average discount rate is around 7 times the costs involved.

Option 4: Theoretical Value = What you were expecting as return + What you actually saved

Value = Expected Return * Reference Cost + (Reference Cost – Actual Cost) + Cost Avoidance
Interestingly you can see that if your expected returns are greater than three times your costs, the first part of the equation will always trump the second one. The only caveat to this reasoning is that indeed, depending on the projects and the quality of the providers you select, the impact can be quite heterogeneous. Therefore there is a multiplier effect in the first part of the equation.

Option 5: Actual Value = Returns you will get based on the impact + What you saved

Actual Value = Impact * (Expected Return * Reference Cost) + (Reference Cost – Actual Cost) + Cost Avoidance
There are three major factors in this equation. Demand management will determine the expected returns. Quality of sourcing and negotiations will drive the savings. The efforts on the scoping will pay off through cost avoidance. While selecting the right consultants and managing them properly will drive the impact. Unless the expected returns from the project are quite low, the impact will be the determining factor.
2. Where to Focus the Efforts – Present & Future –

Where is the focus today?

Many organizations are leaving consulting procurement to the executives needing the services. In this case, the executives usually focus on scoping the project and managing it. The sourcing and negotiation parts are often overlooked as the organization does not manage enough projects. When organizations leverage the procurement teams, they tend to address Consulting Procurement as an indirect purchase among others. As such, the procurement organization is often looking at savings as a measure of performance. The focus is therefore on organizing a proper competition and negotiating lower prices at the back end of the process.

Where should it be?

In the same way that mature procurement organizations for direct purchases are looking at the total cost of ownership, mature consulting procurement organizations are now looking at the entire Value equation. It will drive a much higher focus on the impact and the value created. Those organizations are also implementing some form of demand management to make sure they invest where the most value will be created. As a consequence, the focus is placed on selecting the right projects, sourcing the right consultants, and managing them during the project to maximize the impact achieved. It does not prevent from taking care of the savings side of the equation but will ensure an optimum result.
3. Charting a New Route and Going Further-
As we discussed, maximizing the value creation of a project is where most efforts should be focused on. Should you remember only one rule when it comes to value created through sourcing of consulting projects, just remember that unless the expected impact is low, the value created by the project itself will most of the time outweigh the savings realized through the sourcing. It is particularly true when you look at one specific project.
If you are using consulting regularly and are managing a portfolio of providers, many other actions can yield substantial value. Those actions will range from implementing a performance management system or demand management to ensuring the full alignment between your strategy and your consulting investments.

Ready to get started on your next project?
Need a fresh point of view? We will be happy to help.
Please give us a call today, at no obligation. Let’s get the conversation started​
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Getting the Best of Both External and Internal Consulting-Is Like Getting a Special Night at the Louvre

Getting the Best of Both External and Internal Consulting-Is Like Getting a Special Night at the Louvre

Airbnb and the Louvre are teaming up for a special campaign that offers an unforgettable night with exclusive visits at the museum, to one lucky winner who likes to travel and is passionate about art. It definitely sounds like a fresh and exciting idea! The same idea of combining the best of two different worlds pretty much applies to Internal and External Consulting.
Every business leader should be able to select and work with the best consultants for each project, regardless of whether they come from an Internal Consulting group, or an External Consulting firm.
And every business situation at hand, in some cases will be better served by the Internal group, and in other cases, the External Consultants will provide the expertise the Organization lacks.
We can safely say that both types of Consulting have advantages and disadvantages, and it all comes down to making the best selection when evaluating which experts are the best fit for your project.

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Markets and conditions constantly change, but a progressive system of evaluation of Consulting projects, established within your organization, can produce desired results on a regular basis.

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6 Points to Consider When Working with Internal Consultants–

Identify your Consulting needs in the next 3 to 5 years and consider developing an efficient Internal Consulting Group to serve these needs.

Establish a clear value proposition for your Internal Consulting Group in order for them to deliver sustainable results. Even though you want the group to remain flexible, their core expertise and focus have to be very clear. The group should describe the topics where their knowledge will have the most significant impact but also the subjects they will not touch under any circumstances.

The group has to demonstrate its value to the rest of the organization. The group has to win projects thanks to a superior impact on the organization.

When projects have failed, many companies appear to have tried to force using the internal Consulting Groups. The exact opposite effect happens then, and the Internal Groups is singled out as the root cause for project failure.

Funding of the Internal Consulting Group – even though the team could be set up through an injection of corporate funds, they need to be able to fund itself by charging the internal clients. If the internal clients don’t see the value in it, the group will be short-lived.

Select the best fit based on your context and objectives -Like any other consulting firm, an internal consulting group has its own Consulting DNA, which takes its roots in the creation of the group and the profiles of the managers. Unless you have an extended internal consulting group, the skills and experience of your consultants will probably be focused on a few capabilities: this is where you want to use them. If you are dealing with a project that will span over a long period or requires to connect strongly with the teams, blend in to create buy-in, or potentially manage sensitive issues, the Internal Consulting team will be your preferred option

6 Points to Consider When Working with External Consultants –

External strategy consultants can bring in important advantages, many of them corresponding with the perceived weaknesses of internal strategists. Their specialist knowledge and experience can fill in the gaps the business has internally.

External consultants can deliver excellent results, and make a real impact on the business. However, Clients need to be crystal clear in project definitions and tasks. If they leave room for interpretation, there can be misunderstandings and unsatisfactory results.

They can ease the acceptance of stricter and harder decisions. When consultants are used to helping implement painful decisions such as cost-cutting or making sure that teams are delivering synergies at an accelerated pace, good relationships are challenging to sustain. For Internal consultants to manage a situation like that can be tricky. However, to External consultants, who are transiting once the project is complete, is easier to do that, and there are no long-lasting consequences. In that case, working with External consultants can be a better solution.

They are more objective. They won’t have to deal with internal politics and personal or sensitive issues. We can assume they will be more unbiased too.

Based on years of experience, they can contribute and apply successful insights and practices from other similar projects.

Your make-or-buy decision process can cover both options and you can integrate your Internal Consulting Group in the competition for projects where their skills and experience could be an advantage. Also using a Hybrid team of External and Internal Consultants, can be a viable option for getting the experts’ support you need, ensure knowledge transfer, and reduce your costs at the same time.

How to Decide Which is Best?
It’s important to always measure the performance of your projects.
When you are running projects through your internal Consulting Group, it is essential to measure the impact of the projects and the satisfaction of the internal clients. Having feedback on their work is a fantastic tool to build improvement and development plans. Your internal consulting group will be able to grow their skills on the right dimensions and serve better their internal clients. It is also a compelling way to convince internal clients to use their services while comparing with similar external service providers.
When deciding on your next project it is worth evaluating all the elements, and pick the team of Consultants that is best suited for the project, one who is prepared to deliver the best results.

If you are planning to launch a new Consulting project,
let us help you with finding the best Consultant.
Feel free to contact us today, to learn more about Consulting Quest and allow us to learn about your organization, needs and goals.
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Top 7 Questions about Internal and External Consultants You Wanted Answered But Were Hesitant to Ask

Top 7 Questions about Internal and External Consultants You Wanted Answered But Were Hesitant to Ask

Wondering what precisely are the differences between Internal and External consultants? We think there are seven distinctions, so let’s explore them a bit more closely now.
To make this exercise more fun, we chose a Q & A format.
1. How independent are External and Internal Consultants?
The level of Independence varies and affects to a degree the execution of a project. Logically, we can assume that External Consultants have a greater level of freedom and independence.
Internal Consultants are subject to organizational hierarchy, while External consultants operate at arm’s length and give in theory unbiased and independent advice.
However, if internal teams have to take into account key stakeholders that could influence their future career, external consultants have a vested interest in acquiring repeat business. They tend therefore to be very careful with their conclusions and the way they are presented if those present a significant risk for future revenue streams. Independence to stakeholders … yes, to power … maybe.
 

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Consulting agreements are often neglected, even though they are crucial for the success of a project. What are the key steps when negotiating and preparing a consulting agreement?

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2. How skills/experience level varies between Internal and External Consultants?

When it comes to skills and experience, there are lots of commonalities between both populations. Internal Consultants are usually experts in their field or have just joined after a consulting career. External Consultants maintain an edge on consultative selling skills and advanced capabilities. Internal Consultants will do the same with the cost performance trade-off on capabilities that have started to commoditize.
A key differentiator relates to intimacy with the company. Even though some external consultants tend to work with companies for years, nothing can replace being actually part of it to apprehend its culture and its core activities. Some projects require a strong intimacy with the company to be able to blend in or to provide an inside out expertise. Internal Consultants are probably the right partners. But sometimes you need to feed the project with rich experience from other companies in the same field or on the same capability. It will then be complicated to top the external experts.

Top consulting firms live and die by their ability to produce fresh thought leadership. They need to be at the edge of their discipline to remain relevant. Consultants need to write white papers and research materials to climb the ranks of their firm. It is not as material for the internal consulting roles as they are like other employees focused on projects and execution.
3. Are Costs for the Services different?
Usually, Internal Consulting Groups are seen as a cost center. They often chargeback for their time just like an engineering team would charge to a program or an industrial project. This practice allows a healthy check and balance with the internal customers. Note that small number of companies, like Deutsche Post or Thales, have started to position internal consulting groups as an internal business unit with a P&L. Their Consulting Groups are even offering their services outside the company as well.
External consulting costs are usually paid in full by the unit benefiting from the services. It might create at times a lack of visibility on the actual consolidated consulting fees paid by a given firm. Profitability from consulting firms comes from the level of utilization of their teams, whereas for internal consulting, it comes from the impact generated down the line.
4. How can Clients find the best talent?
It’s sometimes hard for internal Consulting Group to acquire and retain the best talent. The level of compensation in the Consulting Industry is exceptionally high. It is complicated, if not impossible, for Industrial Companies to keep up. Hiring a senior consultant or a partner, in particular, can very soon become unattainable for a Company. They have to use much imagination to attract the right talent and give them opportunities to grow. Besides, once a consultant has joined a company with a high compensation package, it can be difficult to find the next position within the company.
A route less traveled is to embed a few years in the internal consulting group as part of the career path for high potential executives. GE is incubating Crotonville graduates as black belt project leaders before advancing further in their career. This solution allows them to solve the compensation gap issue and increase the intimacy level with the company.
One of the most striking differences between top consulting firms and internal consulting groups is the homogeneity of talent. The pool of talent in external consulting firms is extremely robust, sometimes at the expense of diversity. We cannot deny the impact on the quality of talent that is available in a majority of the consulting firms. An internal group will show more heterogeneous profiles. Blame critical mass and internal HR policy reasons. Besides, Global consulting firms can provide instant access to a worldwide pool of talent when an internal consulting group is often centralized at the headquarter.
Last, but not least, the tenure of the consultants is usually not the same. Joining an internal consulting group is considered a step in the career of an employee. Companies cannot afford to have permanent internal consulting structures with unlimited size. The opportunities for consultants to develop from within are also limited. You will rarely find an internal consulting entity with the pyramidal structure typical of the established firms. A result, the managers are much more involved in the execution of projects. But they also have a limited bandwidth to address multiple projects. Succession too can become an issue as successors will be challenging to develop in this set-up
5. How Client-Consultants relationships differ for Internal and External Consultants?
It is lonely at the top. CEOs and Top Executives cannot always bounce sensitive ideas with their executive teams. They often appreciate having senior trusted advisors that are not tied to the company. On the political added value, external consultants definitely trump the internal ones.
However, when it comes to connecting with the teams and facilitating change, the internal route is often a smoother one. It is particularly true for implementing projects that do not require a strong connection to the top.
When the impact is somehow linked to the influence, a consultant has in the organization the connection to the top management or the board will be a must, and the external teams often have a stronger relationship with this group.
6. How Consultants’ individual interests and behaviors intersect with Clients’ Interests?
External consultants do their best and have the best interest of the Clients in mind. Some consultants even decide to buy some shares of the company they are supporting or to be paid in equity. Risk of conflict of interest aside, it is a good illustration of their commitment. However, consultants are making a living by selling projects and keeping the activities running. They keep their eyes on the ball during any project: delivering satisfactory results is a prerequisite. They also always have in mind to sell the next phase of the project or to identify an adjacency that could lead to another project.
Internal consultants are more detached from this objective to sell internally another project. They are also more focused on delivering an impact since they obviously have skin in the game. That being said, no situation is perfect. They will instead focus their attention on securing their next step in the company and above all not jeopardizing it. This objective in itself might partially limit the full execution of the projects.
7. How Implementation Projects, and Support Level Expected, differs with Internal and External Consultants?
One of the fundamental differences in the scope of activities of internal consultants is the proportion of implementation projects. External consultants are spending most of their time on the front end, analysis and the recommendations. But Internal consultants are usually supporting projects end-to-end.
The explanation for this difference is simple: costs. External consultants are generally quite expensive from a daily rate standpoint. Companies tend to focus the consulting activities on tasks they cannot deliver themselves. It creates an opportunity for internal consultants or low-cost implementation consultants. Mc Kinsey recently invested in a sub-brand in Europe to support implementation work that would not be affordable at the McKinsey premium.
Working with consultants able to follow through on the projects is highly appreciated. Everyone can learn during the implementation and avoid repeating the same mistakes. It is also very welcomed by the internal consultants themselves as they can see the results of their actions.
 
 

If you are trying to find the best fit for your next Consulting
project,we will be happy to assist you in any way possible.
Please give us a call today to learn more about Consulting Quest,
and give us the chance to learn more about you,
your goals and needs
Book your call

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Why Building a Performance Measure System That Lasts Delivers The Best Results?

Why Building a Performance Measure System That Lasts Delivers The Best Results?

“The system, to a large extend, causes its own behavior.” – Donella H. Meadows

Markets and conditions constantly change, but a progressive Performance Measure system for Consulting projects, established within your organization, can produce desired results on a regular basis. Or even better – it can optimize all resources and boost results.
Monitoring the relevant dimensions, that a Performance Measure system produces, will provide you with a wealth of inputs your firm can use to:

Measure the impact of your Consulting Spend
Understand who spends money on what and with whom
Create individual ScoreCard per project, or Consulting Firm
Compare the performance of the different Consulting Firms
Identify the Low- and the High-Performers

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Consistency as a Key Factor –
We should emphasize that if you start measuring the performance but stop after a few months, or measure it on a random basis, it will be difficult to convince your suppliers of the seriousness of the effort.
To avoid this unfortunate situation, we suggest the measure of the performance to become part of your Procure to Pay Processes (P2P).
The distribution of the performance measurement survey can be automated as part of the workflow when you open a new project and should be mandatory before the official closure of the project. It can be established as a mandatory step before proceeding with the last payment to the supplier.
But evaluating and measuring performance are, in fact, designed to bring improvements.

Few easy steps in implementing an Improvement Plan-
1-Set out a few dates on your calendar for discussions with your main providers about their performance over the last few projects. The focus and topics can cover the overall performance and will be the starting point of the improvement plan.
2-The goal of the exercise also is to yield value for the internal stakeholders, as they will have to spend time to fill in the surveys. Once a year at least, plan a debriefing with them about the performance of the key suppliers in the panel. Take advantage of this meeting to discuss what will be the future needs and to identify changes to be brought to the panel.
3-Depending on the situation, and the project, improvements may include:

Staffing (e.g., displacing low performing individuals or those with the lowest fit with your company’s culture),
Movements in and out of projects (staffing evolving too frequently, poaching of collaborators, …),
Perceived performance or impact issues (disconnect between costs and actual impact), lack of expertise on a given subject,
Compliance with company processes, policies, and commercial terms (daily rates, discounts, …).
Creating an internal network of experts to monitor and support improvement actions. They can be functional experts or ex-consultants. They can help you review the outcomes of the key projects, the feedback on the various firms and to design improvement plans more specific to the expertise of each consulting firms. They can also support you to identify, through their network, alternative consulting firms not initially in your radar screen.

Building an appropriate performance measurement system is your first step towards creating value through consulting and taking control of the consulting category while keeping decision-making and feedback in the hands of the project sponsors.
And to finish on a high note, the great news is that “What’s measured improves.” – as Peter Drucker said.
 

Ready to get started on your next project?
Need a fresh point of view? We will be happy to help.
Please give us a call today at no obligation. Let’s get the conversation started
Book your call

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The Savvy Structure and Approach to the Top 3 Dimensions in Managing a Consulting Project

The Savvy Structure and Approach to the Top 3 Dimensions in Managing a Consulting Project

“A good plan can help with risk analyses, but it will never guarantee the smooth running of the project.” – Bentley and Borman

Managing a Consulting project is like being a conductor. You direct the performance of all the orchestra players into producing their best. But what does that mean, really? Let’s have a more analytical look at the various parts and the roles of each player.
The first step is always to define how you will organize to manage the project.

Staff your Consultancy

A project usually starts with defining your Project Needs. The definition of the needs also called Requirements, is the first, and one of the most valuable steps in the process of procuring goods and services.
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1. Project Management Structure and Approach –
When you are ready to launch a major project internally, these are the main steps you will take.
You define the scope, appoint a project leader, secure the resources, and prepare the work plan. You also define the governance of the project, including the Steering Committee and the main milestones. In other words, you organize to do the work and to steer the project.

Consulting services are intangible – It’s important to keep that in mind, and managing a project is a crucial part of the process to obtain the results you expect. The intangibility of the service coupled with the volatility of the business environment, makes it highly improbable that a project will unfold just as expected. Plus, the longer it is, the more likely it is to change.
The importance of governance – The governance defined for the project should be part of the proposal and the contract signed by the winning consultant. Outsourcing a significant share of the work to external resources doesn’t change the fact the project is important if you decided to allocate funds to it.

Most Consulting projects consist of 3 main dimensions that must be well managed to secure its success:

Managing Stakeholders
Managing the Project
Managing Change

 

2. Managing Key Players & Effective Communication –
Once you project governance is organized, your next move is to make sure that you align the Key Stakeholders. You need to get the key players on board with the project. This initiative can take various forms. However, it always starts with why you launched the project and what benefits you expect for the business. Change practitioners would refer to it as the rationale for change. As there isn’t always an imminent change associated with a consulting project, we could refer to it as a rationale for the project.
Have they understood what you are trying to accomplish, and do they agree on the principles? Even if they may have doubts, are you sure that they will support the approach and provide what is needed from them? It may sound obvious, but a lot of projects are failing at this stage. A new executive decides to launch a project but does not embark the other members of the management team and ends up quite alone when execution time comes.
Communication with the Key players is quite important throughout the project.
Whether they are senior executives that should be aware and supportive of the approach or contributors that will have a role to play in the course of the project, this communication needs to articulate why the project is launched, what are the objectives and what is expected from the various stakeholders.
Your communication has to be aspirational and motivate people to act and contribute.
3. Project Management – Aim for the Best Practices –
Once the stakeholders are aligned and supportive, you need to put in place classic project management best practices, and address at least the work to be done, the role of the project members, and the governance for the project.
A work plan is usually a good place to start.
The foundation for any good project management is to break down the work to be able to deliver what the project is supposed to. The work plan also provides a backbone for structuring the activities and monitoring if everything is unfolding according to plan. Complex projects can require detailed project planning and interdependency management. For most projects a critical path analysis showing the various workstreams and associated milestones should suffice.
4. Planning the Different Phases –
You will very often start with a phase of information gathering, then phase of analysis, a series of meetings with the client, and the development of the report to be presented in the Steering Committee. When working on a consulting project, ask to review the detailed work plan in the early stages of the project and come back to it regularly.
The work plan should be associated with a breakdown of the resources required during each phase to complete the work successfully.
5. Roles and Responsibilities within the Teams –
Let’s see who is supposed to do what. You can usually identify two teams within the project. The client’s team and the consultant’s. Even though both teams have to work together efficiently, the roles of the various team members can differ significantly.

Roles within the consulting team –

Within a consulting team, you usually have a pyramidal set-up. At the top you will find the relationship partner. Then you will find a production partner, a project manager, and junior consultants. Depending on the size of the project the activities can be combined through fewer individuals, but the roles remain.
For small projects, this role and the principal’s role are often merged. Consultants are handling the heavy lifting during a consulting project. Performing interviews, handling quantitative analysis, formalizing the deliverables, etc.
Teams can be made of consultants or analysts, depending on the firm’s set-up. Experts are brought into projects to provide specific expertise on a given topic. They are usually spotted resources on the project and intervene only during interviews and workshops.
Note that Experts often serve as differentiators during the proposal stage and do not necessarily contribute afterward.
Now let’s make sure that your set-up as a client enables efficient management of the project.

Roles within the client team –

In the client’s team, you often have a budget owner that funds the project and a sponsor, a senior Executive that endorses the work. These two roles can be merged, especially on small or scope-limited projects.
The daily team is made of a project manager, responsible for the daily progress of the project in close connection with the consulting team and Project Stakeholders, individuals interested directly or indirectly in the results of the project. They can be contributors or those that just need to be informed.
6. The Effective Governance Model –
Most consulting projects have two governance bodies: one to drive the day-to-day activities of the project and one to steer the project and make major decisions.
The Steering Committee is the project’s ultimate decision-making body. It provides direction, support, and oversight as the project progresses. You should gather those main stakeholders that are real decision-makers. Don’t include too many people. It might be tempting to involve all the people impacted by the project to keep them informed, but the project would quickly become ungovernable.
The president of the Steering Committee is, most of the time the sponsor of the project, and the organizer is the internal project manager. In other words, don’t let the Consultants manage the Steering Committee. They have to support the internal project manager, not the other way around.
Five members for your average project seem to be reasonable. But the optimal number will depend on the size and the nature of the project.
Indeed the same applies to Steering Committees! They work better when there is a more cohesive environment.
The Project Management Committee is usually a recurring meeting between the client team and the consulting team. Frequency is often weekly but can vary depending on the nature of the projects.
7. Successful Change Management –
The third important dimension for effective project management is change management. This dimension is often overlooked or underestimated. Even today, a lot of people tend to believe that effective communication will do the trick. If we develop it, they will use it. If we teach them, they will buy-in. Well, things are a little more complicated.
The first step when looking at change management is to anticipate why change can be difficult. Depending on your project, people can refuse to accept the conclusion or passively resist the implementation of the new Customer Relationship Management system.
So place yourself in the shoes of the impacted stakeholders and try to anticipate why they would be resisting. They might be anxious about the security of their job, could have a feeling that their power within the organization will reduce or that the project will challenge their legacy.
For long projects with a significant change dimension, include change reinforcing elements in your communication. For instance, you can communicate on early successes and progress. It will help to keep the momentum.
Most consulting projects are going beyond pure transactional activities and will include a human dimension. Even though you want to keep your distance with your providers, you also need to maintain a close collaboration with the consulting team, to be able to discuss any topics and issues and take prompt action.

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Why Focus on the Roles Within Your Team Can Ensure the Project’s Success?

Why Focus on the Roles Within Your Team Can Ensure the Project’s Success?

“No matter what accomplishments you make, somebody helped you.” – Althea Gibson

A project usually starts with defining your Project Needs. The definition of the needs also called Requirements, is the first, and one of the most valuable steps in the process of procuring goods and services. However, the procurement requirements for goods are mainly focused on the specifications of the products. For Consulting, the background of the company, the context of the project, the scope, and the deliverables are equally important.

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ompanies that have implemented a Category Management System were able to make breakthrough savings (10-30%) …
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1. Defining the Project Needs –

The whole point is to make sure the consultants have all the elements to submit a relevant proposal. Writing well-defined requirements is the cornerstone of a successful consulting project.
Unfortunately, too many companies are leaving the definition of the work in the hands of their consultants. If you have troubles sleeping, will you go directly to the store to shop for a new bed? Of course not. You would end up with the largest bed in the store with all the gadgets, but your sleeping problem might still be there, unresolved. You need first to review all the other options.
It’s somehow the same when you start defining your needs with a consultant. They will tend to paint your problem with their capabilities and experiences or to make it fit the resources they have available.
2. Clearly identify your problem –

Working internally to define your problem, and identify what could be the best option is key to invite the right consultants to the discussion. It doesn’t mean that your requirements are final. You are just optimizing the chances that the project you are launching will fix the issues you are facing.
When procuring Consulting Services, the requirements are always dependent on the internal and external context of the company. Besides, the definition of what you expect and why is a key success factor for the project. It is always a good idea to formalize your requirements into an RFP, even though you don’t necessarily want or need to organize a tender.

3. Delegating the roles within the team –

Even before you start brainstorming ideas, and envision your ideal outcome, you need to make sure that the right people are in the room. And to build the right team.
Depending on the magnitude of the project, you can adapt the size of your team to it. However, here are a few roles that need to be included:

Number 1 – The Project Sponsor

The Project Sponsor is the person (often a manager or an executive) that will be accountable for the project. S/he will make sure that the project delivers the expected outcomes, and will champion the project to “sell” it within the project team and the organization. S/He will also be the chair of the Steering Committee.
The Project Sponsor has the right authority and decision-making power to lead the project effectively. S/he is also directly impacted by the project outcomes.
Usually, the project sponsor owns the budget. However, in some companies, consulting budgets are centralized under the CEO, Finance, or Strategy. In this case, you might want to invite the budget owner to the party as well

Number 2 – The Project Manager

The Project Manager is the person that has the daily accountability of the project. S/he will guide the consultants and make sure they work under the right conditions with the teams and deliver the expected results in time.
S/he is very often part of the Project Sponsor Team and is impacted directly by the project

Number 3 – The Procurement Leader

Unless you are working on a very small project and you have already a list of potential provides handy, you want to have someone from Procurement in the room. Sourcing the right candidates can take some time, and it is sometimes useful to start early in the process.
Besides, procurement managers are experts in defining needs and preparing bids, while it is rarely the case for the rest of the organization. They can facilitate your work and guide you through the process.
Many companies, however, don’t have the critical mass to have someone dedicated to consulting procurement. In that case, you can include in your team the person in charge of indirect procurement or the Head of Purchasing.

Number 4 – The Main Stakeholders

We mentioned that the project sponsor and the project manager are often part of the same team. However, their department might not be the only one impacted by the project. Ask yourself if you should expect a strong impact on or a profound change in interfaces with another part of the organization. If that’s the case, it can be a good idea to involve them at the requirements stage.
If your project is very large, like a Company-wide Transformation project, you might also want to involve Finance and Strategy, to make sure that it is aligned with the overall strategy.
When you have the right team at work, you can start brainstorming.
 
 
 

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4 Key Areas of Category Management

4 Key Areas of Category Management

“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” – Benjamin Franklin

Category Management should always have two main objectives.

Generating savings, but more importantly,
Maximizing value creation

Let’s discuss how Category Management is the perfect lever for bringing your consulting procurement to the next level.

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If you worry about team performance, the risks, and the issues associated with a Consulting project, you are totally right…
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Companies that have implemented a Category Management System were able to make breakthrough savings (10-30%) and noted improvements in supplier performance, internal client satisfaction, supplier relationships, and visibility on spending.
The problem however is, that Consulting is rarely managed as a category, but rather as part of the indirect procurement together with Travel and Insurance. In some case, Consulting is folded in the professional services category.
But there is a much better way to do it –
The first step to optimizing the Consulting Spend is to recognize Consulting as a strategic category.
Indeed the size of the spend (0.5% to 3% of revenues) added to the potentially significant impact on the business makes it a key enabler of the strategy.
But does Category Management fully apply to the Consulting Category?
Monitoring the Consulting Category – 4 Key Areas  
One of the principles of category management is to implement a continuous analysis of the spend, the market, and the performance of the suppliers to identify opportunities for improvement.

1. Spend Analysis –
Performing a Spend Analysis is often the first step in aligning the Consulting Procurement Strategy with the Company Strategy. To analyze all the projects outsourced and to forecast for the future, you need to aggregate the Consulting Expenses across all organizational divisions.
The objective of the spend analysis is to produce a fully documented understanding of the company’s prior and future spend for Consulting Services, broken down by users and suppliers.
2. Market Analysis –
Knowing the Consulting Market is crucial to procure Consulting Services. Leveraging your existing consulting spend, you can analyze the consulting market for the main capabilities of interest for your company. The second step, often more complex, given the lack of familiarity with the subject, will be to look at the market for the services you could use to accelerate your objectives and create more value.
The outcome from the Consulting Market Analysis should be a better working knowledge of the supplier market and your place in it. You have identified potential suppliers and know your value as a customer.
But unlike other categories, you cannot limit your supplier analysis to only the major players. The complexity of the market, the diversity of the offerings and the granularity of your potential needs make it necessary to take a deeper dive into the Consulting Industry.
3. Supplier Performance Analysis –
The Supplier Performance Analysis should give you a holistic view on the Performance of your Consulting Providers, broken down per capability, organizational division, and project. It is often based on metrics on tangible performance, such as on-time delivery, respect of the initial budget and quality of the deliverables.
4. Managing the Human Factor –
Consulting Services have an intrinsic human component, that has a direct impact on the performance. Attitude and relationships have a powerful effect on the project’s outcome.
The behavior of the Consultant with the different stakeholders, his ability to build trust or to transfer knowledge are parts of the delivery as well.
Especially for Large Companies, it is recommended to look at the performance of the consulting firms at the Partner or project manager level. Indeed, it is not unusual to see significant variability of performance when looking at a company level. However, the performance can be very well correlated with individuals. In other words, people trump brands, and not all Companies are good at everything. Learn to identify the sweet spot of each of your Potential Providers and the partner that you want to work with, depending on your needs.
Last but not least – a Consulting firm can deliver perfect action plans, but fail to support you in the implementation or in transmitting enough knowledge to take over when they leave. Make sure this is taken care of.
 
 

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  • Know the Consulting Category
  • Source Consultants
  • Optimize your Consulting Spend
  • Create Value Through Consulting
  • Leverage disruption to create more value through Consulting