(Department wide)

• How and when does the department conduct an assessment of what skills it has and those needed for upcoming projects?
   
• How does the department expect its need for consultants to grow over the next 5 years?
   
• Are there tasks/roles regularly required for projects that are often filled by consultants?
   
• Does the department provide training tailored towards the requirements of upcoming/current programme needs?
   
• Does the department provide the recruitment team with detailed information of all work experience/skills desirable for upcoming projects?

(Project Specific)

• At what point during the project were plans to involve consultants made?
   
• Is the nature of work the consultants were required to do commonly needed by the department?
   
• Were current employees requested to gain training in specific skills to benefit the project?
   
• Were employees chosen for the project to help their development?
   
• Did you try to recruit full-time staff to fill roles done by consultants

Skills regularly purchased from consultancy firms must be under constant review to ensure value for money. If the same skills are being purchased over and over again it is very likely to be more cost-effective for the organisation to hire its own, full-time, suitably skilled staff to carry out the function, or provide the necessary training for its current employees including learning from consultants (see Project Delivery, Commitment and Skills Transfer for more information on transferring skills from consultants to internal staff) .

Department wide

• Does the department know its spend on consultants? How accurate are budgetary estimates?
   
• Does the department know who its main consulting suppliers are?
   
• Does the department know what the top services it buys are?
   
• Does the department know what procurement routes are used to purchase consultancy?
   
• How has the department’s spending on consultants changed over recent years?
   
• Who is responsible for the collection, analysis and use of management information on the department’s use of consultants? Do they have sufficient seniority to take action?

Project Specific

• Is there accurate data available to determine what was spent on consultants for the duration of the project?
   
• What is  the variance between budgeted consultancy costs and the actual values?
   
• If consultancy costs were not close to estimated values, why was this the case?

An individual with sufficient seniority, such as the finance director or head of procurement, should be given the responsibility to collect management information and be accountable for acting upon it.

Case study

AstraZeneca, a large multi-national pharmaceutical company, is a significant user of consultants. In some ways, the challenges in getting value for money from consultants are the same at AstraZeneca as those encountered by the public sector (such as getting internal business colleagues to liaise with the procurement function and measuring the value of consultants).

Two of the key areas the company has been recently looking at improving are better supplier management and use of management information.

Firstly, AstraZeneca has done some work to understand who its key global consultancy suppliers are. It is now putting in place regular, senior-level meetings to review spend, performance, and future demand with these suppliers. The collection of management information has been another area of increased focus. The global category management team for consultancy collects information (covering for example, spend, services purchased, supplier information, and market intelligence) and importantly is looking to collect post-project performance information. The post-project ‘scorecard’ seeks to capture information on: behaviour, skills, administration, and an opinion on overall value for money. This information is used to inform future buying decisions.

(Department wide)

• Does the department routinely require a business case to be written for consultancy engagements? Who reviews them?
   
• Where a business case has not been written, why was this the case?
   
• Are requirement specifications routinely written? Is there a process to deal with changes to the requirements during the course of the project?

(Project Specific)

• Was a business case produced? To what extent did this provide a cost benefit justification for the use of consultants?
   
• Was useful feedback given by the reviewer(s) of the business case?
   
• If no business case was produced, why not?
   
• Were requirement specifications written? Were they followed in the consultants’ work? How were changes to them handled?

Requirement specifications should be written and consultants’ work should be tracked against them to manage the scope (and cost) of their work. Requirements are likely to change to some extent during the project; a process should be in place to accommodate changes. A firm view of what is required makes it more likely that you will choose the ‘right’ consulting firm as well as make it more likely to achieve the project/programme’s outcomes.

The department should adhere to OGC guidance (re-issued in March 2006) on the recommended threshold levels requiring Ministerial or Permanent Secretary approval of consulting contracts and perform regular compliance checks. Doing so will ensure that senior management has full sight of the larger consulting contracts, promoting better accountability for their spending.

OGC’s best practice document includes information on business cases and requirements specifications: http://www.ogc.gov.uk/documents/DeliveringValueFromConsultancyCP0076.pdf.

OGC’s has produced guidance to provide a simple framework for identifying and expressing the value expectations at the start of an assignment, in order to provide a baseline against which delivery can be measured in the post-assignment review: http://www.ogc.gov.uk/documents/PSF_Value_criteria_template_BA_13sep.pdf
 

Department wide

• Does the department have procedures in place that require internal expertise to be considered in the first instance?
   
• Is there evidence of this procedure being followed?
   
• How does the department measure the pro’s and con’s (quality, timeliness, cost) of using internal resources versus external?
   
• How often are consultant requirements fulfilled by internal expertise and what functional expertise has been typically provided in these cases?

Project Specific

• Did the project carry out a gap analysis which identified the shortfall in internal resources?
   
• Were departmental procedures followed (if any exist) to determine if internal expertise could be found?

Efficient mechanisms need to be in place to find appropriately skilled internal staff from within the organisation or from other public bodies.

It is necessary to understand the costs of internal staff and make firm commitments to resource these posts on time.

Department wide

• Are roles and responsibilities of each member of the consulting team commonly made clear?
   
• Are consultants brought to conduct more generalist tasks, or are they done by department staff?

Project Specific

• Were the roles and responsibilities of each member of the consulting team commonly made clear?
   
• What particular skills or experience do the consultants have that the department does not have?
   
• Were there any members of the consultancy team doing work your own staff would have been capable of doing?

Review is necessary to ensure consulting staff are not being paid to do work that internal staff are already capable of, in particular more generalist posts, can be filled more cost-effectively with internal resources.

Consultants are not cost-effective if they are being used to add capacity, but do not offer new and different skills. Furthermore, more specialist skills may be available in smaller consulting firms and these firms should not be neglected when seeking suitable companies for the work.

Case studies

The e-Borders programme is looking to deliver timely data, information, intelligence and risk assessments to relevant government agencies on all passengers seeking to enter or leave the UK. The programme initially used two consultants to provide support on the implementation plan and engagement with the ports and carriers. The programme forecast that these skills would be required for at least the next two years and therefore looked to replace the consultants with full-time staff. The programme was able to do this and estimates that recruiting full-time staff instead of using consultants has saved just under £1million over the two years, whilst maintaining the level of expertise.

The Department for Communities and Local Government’s senior management team identified that a Programme Manager with experience of the fire service was required for the implementation phase of the New Dimension programme. New Dimension is seeking to enhance the capability of the fire and rescue service to respond to a range of incidents. Industry experience was vital to get the respect of regional staff that would be affected by the Programme. The Department was unable to identify an internal candidate with sufficient experience of the fire service so used a consultant. The Department believes that this person has proved to have the required skills to gain the trust and buy-in of departmental and fire service staff.

The Prime Minister’s Delivery Unit used consultants to help develop the framework for departmental Capability Reviews and get stakeholders engaged into the process. The Reviews assess capability in the Civil Service in three key areas – leadership, strategy and delivery and aim to identify where departments need to improve. Two of the key skills required by the Delivery Unit were facilitation and managing workshops, in particular for a two-day workshop to be attended by a cadre of very senior civil servants. The existing civil servant project team had strong experience in facilitation and managing workshops, however they identified the need for even more sophisticated skills and experience. The team had previously worked with consultants to achieve similar objectives and engaged with them again for their specific need. The feedback from the two-day workshop was positive and it was an important factor in the development of the framework and the level of buy-in that has been achieved for Capability Reviews.

Source: National Audit Office examination of the Department for Communities and Local Government and the Cabinet Office’s Prime Minister’s Delivery Unit

Department wide

• Is it common for consultants to hold key roles?
   
• If the department does not always have enough qualified staff to fill all key programme roles, how do you actively work to solve/alleviate this situation for the future?
   
• Do you always feel department staff are in full control of projects?

Project Specific

• What proportion of key programme roles were filled by consultants?
   
• Was this planned before the work began, or did it become necessary during the project?
   
• Were there any points during the project where department staff felt the consultants had removed an element of control from the project?

Department wide

• Does the department consider whether or not the skills it requires exist in another department?
   
• Does the department consider whether similar consulting work has been done elsewhere within the department or another department?
   
• Does the department seek to collaborate with other departments for aggregated purchasing of services?

Project Specific

• Were enquiries made to see if any other parts of the department or even other departments had experience working on similar consultancy work? Was any useful advice gained?
   
• Did you collaborate with other departments for aggregated purchasing of services?

(Department wide)

• Is there a minimum contract spend level beyond which the procurement function must be involved?
   
• How does the procurement function ensure that it is involved in the buying decision?
   
• Does the procurement team add insight to buyers of consulting within the department?

(Project Specific)

• Were qualified procurement staff involved in the project?
   
• If not, why not?
   
• How was it ensured that the project team complied with procurement regulations?
   
• Did the procurement team add value to the consulting purchase?

Their purpose is to add value to the procurement process in various ways:

• Providing supplier and market information
• Providing independent challenge
• Having access to knowledge about previous departmental consultancy experience and management information
• Have knowledge of processes and procedures

Procurement teams must balance their ‘policing’ role with their ‘customer services’ role.

(Department wide)

• When using consultants, are a variety of payment mechanisms always considered?
   
• Is guidance available on the appropriate use of fixed price and incentivised contracts?
   
• How often are fixed price, incentivised or a combination of contracts used?

(Project Specific)

• Were a number of payment mechanisms considered for the project before deciding on the most appropriate?
   
• Was there guidance available to help determine if fixed price and incentivised contracts were appropriate?

Alternative payment mechanisms are likely to control costs effectively and help formalise the joint objectives that clients and consultancy firms share.

Case studies

The Home Office contracted with their consultants who are providing expertise in programme and project management and procurement using a time and materials payment structure as part of its Identity Programme. The Identity Programme seeks to provide UK residents with a secure method to prove who they are. The Department chose the time and materials payment structure for two main reasons: to allow for a degree of flexibility and because responsibility for work streams was planned to lie with civil servants. Both of these factors made it more difficult to set up fixed price contracts – the flexibility made it difficult to define detailed outputs and responsibility residing with civil servants reduced the amount of leverage the supplier would have over outputs. With the time and materials payment structure, the client (now the Identity and Passport Service) bears the costs for increases in project duration. Some of the programme’s key deadlines (for example the issuance of the invitation to tender) were rescheduled due to a variety of internal and external factors. This situation (where a project duration increases and payment is by time and materials) makes it more important to move consultants off the project, while being aware of the risks of losing momentum and knowledge.

The Home Office used consultants as part of its Process Improvement Programme. The aim of this programme was to trial changes in processes in different parts of the Department to produce efficiency savings. Consultants, for example, were used to improve policy development processes, in particular within the Specialist Crime and Policing Policy directorates. These consultants put 20 per cent of their fees at risk dependent on achieving a series of targets. The targets were agreed at the outset and their successful completion would be assessed by a team made up of Home Office staff and consultants.

A selection of the targets used in the Specialist Crime Directorate are below:

• develop and agree specific, individual learning plans for relevant Home Office team members;
• deliver team training sessions around core skills/techniques;
• develop the detailed implementation plan;
• ensure clear accountabilities and develop a framework for governance.

(Department wide)

(Project Specific)

• Was a framework agreement used for the project’s procurement?
   
• If so, is this common?
   
• If not, is it a common method but was considered inappropriate for this particular project?

(Department wide)

• How often are single tender actions used?
   
• Is this number accurate?
   
• Are single tendering actions limited broadly in line with OGC guidelines on spend amount?
   
• Is there guidance for the appropriate use of single tendering by the department, including spend limit and process?
   
• Is it followed and are compliance checks conducted?

(Project Specific )

• Were the consultants for the project gained through single tendering?
   
• Is there evidence of a robust justification for the use of single tendering?
   
• Was this done in compliance with OGC and department guidelines?

OGCbuying.solutions framework agreements are available at: http://online.ogcbuyingsolutions.gov.uk/information/ConsultancyServices/

OGC’s contract database is available at: http://www.ogc.gov.uk/contractsdatabase/

Case Study

A large UK-based media company has found that an increasingly large proportion of its spend on consultants is with small and medium-sized firms. The benefits the company sees from using smaller suppliers are:

• acquiring a consulting team that is more experienced and focused on the customer requirements, with fewer junior or generalist team members. This company interviews candidates focusing on their individual experience as relating to the requirement, as opposed to the firm’s experience in an area;
   
• ease of getting continuity of staff enabling deeper knowledge of the client’s business and reducing the initial learning curve for projects;
   
• potentially more competitive pricing as smaller firms may not have as significant ‘overhead’ or ‘corporate’ costs. The media company generally puts less weight on some of the benefits publicized by larger firms, namely brand, quality assurance processes, and access to a network of experts; and
   
• their flexibility and speed of decision-making and action.

Nonetheless, it is worth noting that this company, like the public sector organisations we interviewed, finds it difficult to measure quantitatively the value delivered by consultants, as separate from the value of a project or programme in its entirety.

Source: National Audit Office examination of a large UK-based media company

(Department wide)

• At what stage of the procurement cycle does the department first engage with the market?
   
• What stage does the department consider would be the most advantageous to start engaging with the market and why?
   
• Is this opinion reflected by what actually occurs?

(Project Specific)

• At what stage of the procurement cycle did the project team first engage with the market?
   
• If early engagement with suppliers was made, was this found beneficial to the procurement process?
   
• With hindsight, can you see any benefit in having engaged with them any earlier than you did?

OGC’s best practice guide includes advice on early engagement with the market (relationships and engagement sections):
http://www.ogc.gov.uk/documents/DeliveringValueFromConsultancyCP0076.pdf

Case Study

The Ministry of Defence held a supplier day to outline the business requirements for their procurement reform project. This project aimed to improve the way the Department purchases goods and services. The Department had almost 80 responses to their initial Official Journal of the European Union (OJEU) advertisement for this project. In order to improve the quality of the final bids, improve supplier understanding of the business requirements and to reduce the number of inappropriate bids, the Department decided to hold a supplier day that would allow an exchange of information between them and potential suppliers. The supplier day had the desired effect – the Department received high quality, competitive bids from suppliers committed to the project.

Source: National Audit Office examination of the Ministry of Defence

(Department wide)

• Is the duration of consultants’ work always tightly  defined?
   
• What procedures have to be followed when the renewal of a contract is deemed necessary?
   
• Is the decision to renew a contract deemed less significant than embarking on a new contract?

(Project Specific )

• How long did you intend consultants to be involved?
   
• Did this remain the case or was their time on the project extended?
   
• Did you have to renew/extend the consultants’ contract? How carefully was this decision considered?

Repeatedly renewing consultant contracts can severely compromise their value for money and hence the decision to extend the work of consultants should be as carefully scrutinised as their initial procurement was.

(Department wide)

• Does the department plan for skills transfer during consultancy projects?
   
• Does the department analyse and review how effectively skills are transferred (where the opportunity arises)?

(Project Specific)

• How well equipped were you and your colleagues to take over the work/roles previously done by the consultants?
   
• Were department staff willing to learn from the consultants and vice-versa?
   
• Were the consultants willing to train and teach department staff and vice-versa?
   
• What, if any, valuable new insights or capabilities have the consultants left you with to help, now and in the future?
   
• Will you need to hire consultants for similar work in the future, or have you now acquired the skills so internal staff can do it?

Skills transfer is a cost effective way to enhance internal resources to reduce the department’s future reliance on consultants and increase departmental core capabilities. It should be maximised by regularly assessing and identifying future capabilities required, and regularly reviewing the success of skills transfer to inform assessments of departmental capabilities.

The approach to achieve the transfer should be specified so both parties are aware of what to anticipate and what is expected of them (including the measure of success and nominating the team members who will gain the skills).
OGC’s best practice guidance includes advice on skills transfer (delivery and review section):
http://www.ogc.gov.uk/documents/DeliveringValueFromConsultancyCP0076.pdf

Case Study

One of the key decision criteria for the Home Office in selecting consultants for its Process Improvement Programme was the consultants’ ability to transfer skills to department staff. The aim of this programme is to trial changes in processes in different parts of the Department to produce efficiency savings. The four initial ‘trial’ projects within the Programme were designed to be the first steps with similar projects possibly to follow, depending on the findings of the four trials. As such, the Department recognised that certain skills would be required for the duration of the Programme (i.e. after the completion of the initial trial projects). The Department planned to use consultants for the trial projects working alongside a group of civil servants who would then lead any subsequent projects. Consultants’ ability to coach their civil servant counterparts and their approach to skills transfer were key criteria in selecting the consultancy companies. . One of the Department’s suppliers used the following main techniques to transfer skills to their civil servants counterparts:

• joint working to allow the civil servants to see the consultants’ methodology and practices at close quarters;
• set-up of skills transfer targets which were monitored at monthly intervals;
• providing a mentor from outside of the project who was available to provide advice;
• including time in the project plan to allow for skills transfer.

Through these techniques the civil servants are picking up important skills such as project and time management and methodology, IT systems use, communication, and strategic thinking.

A key output from the Ministry of Defence’s Procurement Reform Programme, which was written as a requirement into the contract, was the transfer of skills from consultants to permanent employees. The programme’s objective was to implement a department wide approach to category management for the procurement of certain commodities. This was a new concept within the Department and required the recruitment and training of over 250 full time civil servants to undertake the new roles. A key success factor for the project was the transfer of skills from the consultants to the new internal teams. A maturity model was used to assess the capability of the new teams. Department staff were assessed at various stages to see if they had attained the desired level of competence. The final assessment happened when the consultants were due to leave the team. The success of the skills transfer was improved by including it as a measure to trigger a part of the consultants’ payments.

(Department wide)

• Are all staff who will be affected by the project provided with an explanation of why consultants are being used?
   
• Is management approachable if staff have concerns over their role and the role of the consultants?
   
• Are teams well balanced with a mix of internal and external staff?
   
• Does the department have staff with adequate experience/training to effectively manage consulting projects?

(Project Specific)

• How clear were all project team members in understanding why the consultants were needed?
   
• Was there good communication and relations between internal and external staff throughout the project?
   
• Were the consultants as committed to the project as internal staff?
   
• Was there a good understanding of the nature of the consulting firm, in order to know what to expect, establish a good relationship and determine how to get best value for money from them (e.g. aware the consultants may be given incentives to sell further services so the department stand firm and ensure they do not agree to buying services they did not necessarily need)?
   
• Were internal staff managing consultants sufficiently experienced/trained to be successful in that role?

A good relationship between client staff and consultant staff is essential in gaining maximum benefit from the working relationship. Both parties need to be committed to the task at hand and be working towards the same goals.

This will reduce, if any exists, the preconceived bias against the use of consultants.

If department staff managing the consultants lack the relevant experience, training development and /or assistance (such as mentoring) should be provided or staff with the desired experience should be recruited.

(Department wide)

• Are project targets regularly achieved? If not, is it because they were unrealistic or because they were changed too often?
   
• Throughout the life of a project, is a full understanding of the aims and targets communicated to all involved?
   
• Is the importance of commitment from department staff to achieving the aims as highly regarded as the level of commitment expected from the consultants?

(Project Specific)

• Were all the aims of the project achieved. Are you on course to reach your aims? If not, why? For example unrealistic aims and targets, frequent changes of them, underperformance by people...?
   
• Were/are all individuals involved in the project (from all parties) well informed and updated on the project’s aims and targets, throughout the duration of the project?
   
• Was/is there a common understanding of aims and targets between internal staff and consultants?
   
• Was/is  there a high level of commitment shown by both internal staff and the consultants?

For the aims of the project to be achieved, it is imperative everyone involved in a project (both department and consultant staff) understands its overall objectives and aims; as much emphasis made throughout the project as there is at its onset.

It is important to the success of a project that the client makes good on its commitments; the consultants can not be expected to remain dedicated to a project if the clients themselves produce work of a poor standard, show a lack of diligence, or do not make good on commitments (e.g. providing inadequate resources, not making timely decisions).

OGC’s best practice guidance includes advice on skills transfer (engagement; delivery and review section):
http://www.ogc.gov.uk/documents/DeliveringValueFromConsultancyCP0076.pdf

(Department wide)

• What incentives are there for department staff to perform well in a project?
   
• How well do you understand your consultants’ motivations and incentives?
   
• For example, are consultants allowed to freely talk about the work they perform for the department (within reason) to help build their reputation?

(Project Specific)

• How did you decide who worked with the consultants on the project?
   
• What did department staff get out of working on the project?
   
• Were the consultants permitted to use the work they achieved in the project to boost their own reputation?
   
• What other non-financial incentives did they have for working on the project?

Incentives to do the job well may include the chance to learn or enhance certain skills while working on the project, allowing their involvement in the project to open doors to more interesting work, or promotion.

The department can also provide incentives for the consultants to perform to their highest standard; for example, by permitting consultants to talk about their work publicly, it will mean the consulting firm’s reputation will depend on the successful completion of the work involved. As a result the consultants will work hard in order to boost their reputation while the clients will gain from their successful completion of the work. Other incentives may include gaining experience or knowledge in an important field.

Also, understanding how consultants are organised, what their incentive mechanisms are, and their commercial practices, can help avoid confrontational relationships.

Case Study

The Prime Minister’s Delivery Unit identified the need for additional expertise, experience, and capacity for the development and communication of the framework for departmental Capability Reviews. The Reviews consider capability in the Civil Service in three key areas – leadership, strategy and delivery and aim to identify where departments need to improve. The project team understood that consultants were needed to provide deep experience and expertise in organisational capability diagnosis and, importantly, in engaging stakeholders. The team recognised that there was scope to obtain value for money in the consultancy contract because of the importance that prospective consultants would place on being involved in a key government initiative. Using this benefit, the project team was able to gather an exceptionally senior team from their consultancy supplier while remaining within their budget.

(Department wide)

Does the department check:

• If travel costs charged by consultants are reasonable?
• That the time billed for by consultants is the same as the time they have actually worked?
• Whether it is being overcharged for overheads?
• Whether expenses charged by the consultants are reasonable?
• That the fee paid corresponds to the level of consultants engaged?
• Whether travel rebates are being claimed by the supplier and then passed back (or not) to the department?
• Whether relocation costs charged by consultants are necessary?

(Project Specific)

Was it checked:

• If travel costs charged by consultants were reasonable?
• That the time billed for by consultants was the same as the time they actually worked?
• Whether they have been overcharged for overheads?
• Whether expenses charged by the consultants were reasonable?
• That the fee paid corresponds to the level of consultants engaged?
• Whether travel rebates claimed by the supplier were passed back?
• Whether relocation costs charged by consultants were necessary?

(Department wide)

• How satisfied is the department with the service provided by consultants?
   
• How does the department use the information from the post-project assessments and how does it ensure that lessons are shared and implemented?
   
• Do departments commonly communicate their experiences with consultants across the department and with others?

(Project Specific)

• What formal evaluation of the project was carried out against its original business case?
   
• To what extent were the people seconded into the project and those impacted by it, involved in its evaluation?
   
• What did you learn about how best to make use of consultants? How will these lessons be disseminated?
   
• Have the consultants brought a fresh perspective and new knowledge?
   
• What lasting impact have they left? How satisfied were you with the work on the project as a whole? And with the input of the consultants?
   
• How well do the consultants’ outputs match what was expected of them?
   
• Have experiences with using consultants during the project been shared to benefit other departments?

Compliance checks should regularly be performed to ensure reviews are completed properly.

Such review will provide valuable information to be analysed and shared to help inform other projects. Such information will help make informed decisions, such as which firms would be suitable to engage (and which would be unsuitable), and how to work well with them to gain value for money.

Informal knowledge can be equally beneficial. Employees can benefit from their colleagues' experiences from past projects to learn how to efficiently work with consultants in present and future projects. It may be as simple as having a ‘contact list’ of all individuals who have worked with which consultant firms.

Case Studies

AstraZeneca, a large multi-national pharmaceutical company, is a significant user of consultants. In some ways, the challenges in getting value for money from consultants are the same at AstraZeneca as those encountered by the public sector (such as getting internal business colleagues to liaise with the procurement function and measuring the value of consultants). Two of the key areas the company has been recently looking at improving are better supplier management and use of management information. Firstly, AstraZeneca has done some work to understand who its key global consultancy suppliers are. It is now putting in place regular, senior-level meetings to review spend, performance, and future demand with these suppliers. The collection of management information has been another area of increased focus. The global category management team for consultancy collects information (covering for example, spend, services purchased, supplier information, and market intelligence) and importantly is looking to collect post-project performance information. The post-project ‘scorecard’ seeks to capture information on: behaviour, skills, administration, and an opinion on overall value for money. This information is used to inform future buying decisions.

Source: National Audit Office examination of the Environment Agency