Choosing & Using Consultants & Advisers: A Best Practice Guide to Making the Right Decisions and Getting Good Value

240 Pages·2006·0.75 MB·English

by  Harold Lewis

CHOOSING
& USING
CONSULTANTS
& ADVISERS
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CHOOSING
& USING
CONSULTANTS
& ADVISERS
A best practice
guide tomaking
the right decision
andgetting good
value
Harold Lewis
London and Philadelphia
This book has been endorsed by the Institute of Directors.
The endorsement is given to selected Kogan Page books which the IoD recognizes as being
of specific interest to its members and providing them with up-to-date, informative and
practical resources for creating business success. Kogan Page books endorsed by the IoD
represent the most authoritative guidance available on a wide range of subjects including
management, finance, marketing, training and HR.
The views expressed in this book are those of the author and are not necessarily the same as
those of the Institute of Directors.
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the publishers and author cannot accept
responsibility for any errors or omissions, however caused. No responsibility for loss or
damage occasioned to any person acting, or refraining from action, as a result of the material
in this publication can be accepted by the editor, the publisher or the author.
First published in Great Britain and the United States in 2004 by Kogan Page Limited entitled
Consultants and Advisers.
Paperback edition 2006 entitled Choosing and Using Consultants and Advisers.
Apart from any fair dealing for the purposes of research or private study, or criticism or
review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may
only be reproduced, stored or transmitted, in any form or by any means, with the prior
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outside these terms should be sent to the publishers at the undermentioned addresses:
120 Pentonville Road 525 South 4th Street, #241
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www.kogan-page.co.uk
© Harold Lewis, 2004
The right of Harold Lewis to be identified as the author of this work has been asserted by
him in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 0 7494 4639 0
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Lewis, Harold, 1933-
Consultants and advisers / Harold Lewis.
p. cm.
Includes bibliographical references and index.
ISBN 0-7494-4136-4
1. Business consultants--Selection and appointment. I. Title.
HD69.C6L443 2004
658.4’6--dc22
2004006664
Typeset by JS Typesetting Ltd, Porthcawl, Mid Glamorgan
Printed and bound in Great Britain by Creative Print and Design (Wales), Ebbw Vale
Contents
List of figures vii
Preface ix
Acknowledgements xii
1 Why would I want to use consultants? 1
This is what clients say 1; Consultants and employees 5;
What are the alternatives to an external consultant? 7;
Starting the relationship 10; When not to use consultants 11;
Bringing people onside 12; Making a business case 13
2 How do consultants operate? 15
Profile of the consultancy sector 15; Professional credentials:
what’s in a name? 20; Quality accreditation: what’s it
worth? 21; Professional indemnity insurance 23; Consultants
and relationship management: what you need to know 24
v
Contents
3 What do consultants charge? 27
Basis of charges: a range of options 27; Fee levels 31; How
fees are calculated 33; How time is charged 36; How expenses
are dealt with 37; Will I have to pay money up front? 38; The
hidden costs of consultancy 39; Counting the benefits 40
4 How should I specify the job to be done? 43
Preparing a work specification 44; Defining your
objectives 46; Drawing up the scope and content 46; Gauging
the practical demands of the work 49; Setting a timetable
50; Identifying the right form of engagement 51; Confirming
your budget 51; Determining your inputs 53; Deciding
what is really important 54; Assessing and controlling
risks 55; Putting the work specification on paper 60; Moving
ahead to selection 66
5 How do I select the right people? 69
Taking up references 72; Follow-up meeting 74; Seeking
more information 77; Going out to tender 82; Inviting
proposals 84; Reaching a decision 102
6 What should I know about engaging consultants? 125
Agreements and contracts 125; Types of contract 130;
Drawing up a contract 138; Guidelines to steer you clear of
problems 144
7 How do I keep track of the work? 161
Before the work starts 161; Once the work is under
way 162; Monitoring performance and progress 165; Why do
things go wrong? 171; What can you do to put matters
right? 174; Handling contract variations 178; When the
assignment is completed 183
8 How does the public sector go about procurement? 187
Procurement rules and regulations 188; The procurement
process 190; Best value and partnering 201
9 How can I get the best value from consultants? 203
Securing added value 204; Creating a collaborative
business relationship 206
Index 217
vi
List of figures
1.1 Some reasons for using consultants 3
1.2 How to tell a consultant or contractor from an employee 6
2.1 Categories of consultancy and advisory services 17
2.2 A consultant’s day 19
3.1 Example of time charge basis 29
4.1 Relationship of the work specification to other elements in
the consultancy process 44
4.2 Example of a basic work structure 47
4.3 Basic structure of a work specification 62
5.1 Example of a consultant register format 70
5.2 Example of a client’s letter of inquiry 73
5.3 Example of a client’s letter of intent 77
5.4 Example of a consultant’s letter of agreement 78
5.5 Outline of the competitive tendering process 82
5.6 Typical procurement structure 84
5.7 Example of a simple form of quotation 85
5.8 Guidance on pre-qualification 86
5.9 Example of a template for CV information 90
vii
List of figures
5.10 Example of a template for work record information 91
5.11 Typical proposal structure 93
5.12 Detail of a response matrix 94
5.13 Example of a Form of Tender 98
5.14 Summary of evaluation criteria 107
5.15 Example of a proposal marking scheme 108
5.16 Example of a letter of agreement from a firm of
accountants 117
6.1 Example of a fixed price contract 131
6.2 Example of a call-off contract 136
6.3 Example of a call-off contract 150
6.4 Example of a call-off contract (US) 156
7.1 Example of a side letter modifying a contract 179
7.2 Example of a close-out form 184
7.3 Example of a close-out report structure 185
8.1 Public sector procurement: contract value thresholds 191
8.2 Steps in a typical local authority procurement process
for consultancy 192
8.3 Structure of a typical output-based specification 197
9.1 Main stages in a partnering process 207
9.2 Guidance on partnering 211
viii
Preface
Everyone in business will at some time or other need professional help.
If your background includes accountancy – and you have kept up to
date with changes in tax affairs and so forth – you may feel confident
you have the accounting skills needed to run your company. If you
have legal qualifications and know your way around company law,
you may think you have little cause to consult a lawyer. But even so,
there will be occasions when it makes good sense to seek help in deal-
ing with matters outside your competence or in sorting out a difficult
problem. If your company is like most businesses, you will have come
to regard using accountants and other advisers as a fact of life.
This book guides you through the process of choosing and using
consultants so as to secure the help you need and the results you
intend. It is directed not just at businesses in general, but also at non-
commercial groups and organizations, as well as individuals who have
reason to engage professional advisers. If you are a small business or a
householder needing to use a consultant, perhaps for the first time, this
book is meant for you! Its intention is to help you avoid mistakes and
ix
Preface
pitfalls, save time, money and effort, and make the process of working
with consultants really worthwhile.
There may be lessons in its pages even for big companies and
corporate organizations. It is surprising how frequently clients whom
one would expect to be shrewd about these matters get their fingers
burnt. Where levels of risk are high, poor advice can cause financial
loss and at worst put firms out of business.
Chapter 1 identifies the kinds of situation in which professional help
may be necessary or useful, discusses various ways to obtain this help
and indicates circumstances in which bringing in outside advisers may
not be the best course of action. Chapter 2 offers a profile of the
consultancy and professional services sector, describing the basis on
which consultants work and offering an insight into the way they view
relationships with their clients. Consultants’ fees and expenses are
analysed in Chapter 3. The points to take into account in deciding your
requirements, planning the work and developing a work specification
are examined in Chapter 4.
Chapter 5 explains step by step the process of selecting the consultant
who is right for you, from initial contacts and interviews to determin-
ing the ‘best buy’ proposal. Chapter 6 provides advice on drawing up
contracts and negotiating with consultants. How to keep track of the
work and get it back on course if things go wrong is the subject of
Chapter 7.
Though the book does not address directly the use of consultancy
services by public sector clients, since they have access to a fund of
guidance from government, the factors that differentiate public sector
procurement in the UK from general business practice are significant,
and they are outlined in Chapter 8. The book concludes by considering
ways to obtain best value from consultants and the factors conducive
to successful client–consultant relationships (Chapter 9).
Several case studies illustrate aspects of the client–consultant
relationship, as well as offering pictures of good and bad practice in
action. There are also personal viewpoints in which people from
various professional and business sectors comment first-hand about
their experience of consultants and offer pointers that it is hoped will
be particularly helpful to new and less experienced clients.
The book includes numerous figures, many of which are intended
to exemplify ways of treating their subjects rather than necessarily
serving as models. To avoid breaking the flow of the text unduly,
lengthier figures such as examples of contracts have been placed at the
end of chapters.
x