1. Your people cannot solve the issue
If you are thinking of buying consultancy to redesign your processes, develop a new organisation structure or whatever, you must ensure that nobody in your organisation is capable of doing the job and establish exactly how much consultancy help you need. Would it be enough just to buy one or two experts’ time to help guide your own staff? If so, then you should not let the consultancy sell you an army of “warm bodies”. Firstly, because this will be a huge waste of money. And secondly, because employees are more likely to accept changes to which they themselves have contributed and are more inclined to reject changes forced upon them by young inexperienced consultants who will not be around to bear the consequences of the changes they are proposing.

2. Your management team has correctly identified that issue
The next question to ask is whether you and your management team could in any way be responsible for the situation with which you want your consultants to help you. It is unusual for an organisation to have a problem that is not in some degree related to the way management leads the place. If you are able to make a reasonably honest and objective assessment of your own role in creating a situation where you believe you need consultants’ help, you are much more likely to buy the correct consultancy.

3. Your consultancy is selling a solution and not a product
Before hiring a consultancy, you need to be aware of what they can and cannot offer. In particular you need to assess whether they are genuinely trying to provide a customised solution to your situation or whether they are trying to foist some pre-made service on you. And if your consultants are in any way connected with an IT systems house, all the warning bells should be sounding. It is probable that they will be under great pressure to flog you some IT – make really sure you need it before they convince you to buy it.

4. Your consultancy has the right skills
When a consultancy shows interest in working for you, there is nothing wrong with insisting on seeing the CVs of the consultants who will be running riot in your organisation. Many consultancies will resist this request – if they do, they are probably not the kind of consultancy you would want to work with anyway.

5. The consultants with the right skills will work for you
When your consultancy is trying to sell to you, they will probably give you loads of face time with their experts with the skills relevant to your situation. Too often, once you have signed the contract, the experts become scarce and you’re left mostly with inexperienced “billing fodder”. You should demand that the consultancy includes in your contract a firm written commitment as to how many days per week the experts will be on site working on your project. And you should not ever accept bland assurances that their experts will always be available on the phone to help your “billing fodder” out and give them guidance when necessary.

6. Your consultancy agrees to a fixed timeframe and fixed budget
Look closely at the contract your consultancy offers you. In particular, check whether the total fees they plan to charge you are fixed and whether they clearly commit to how long your project will take. Many consultancy contracts, especially those including some IT systems work, may at first look like they are offering a defined service for a fixed price within a fixed timeframe. But if you look in the small print, you will often find several “get out of jail free” clauses that allow the consultancy to charge an awful lot more and take considerably longer than they initially promise.

7. Your consultancy agrees to base part of their fees on results
There are few consultancies that will risk basing any significant part of their fees on the results they achieve. They will normally give all kinds of excuses – they cannot be responsible for external events in the market, the economic situation might suddenly change, one of your major customers might move to another supplier, a competitor might implement a new more aggressive strategy affecting your profits and so on. While there is some validity to all these excuses, you should still be able to find some performance measures that will indicate whether your consultancy delivered the dreams they promised. If they do refuse to base at least thirty percent of their fees on their results, you should consider giving the business to someone else.

8. Your consultancy charges ‘reasonable’ fees and expenses
Your consultancy will probably try not to tell you how much they pay their staff and they will attempt to give you an overall price for your project rather than revealing what each consultant will actually cost you. However, you can reckon that a junior consultant is getting paid somewhere between £30,000 and £50,000 a year, an experienced consultant £60,000 to £80,000 a year and a project manager £100,000 to £150,000 per year. So if your consultancy are paying a junior consultant less than £1,000 a week and yet appear to be charging you £8,000 a week for their time, then this 800% gross profit margin may be excessive. Likewise, if they are paying an experienced expert around £2,000 per week and you are forking out £15,000 a week for them. Then look out for extra administration charges, excessive travel expenses and only pay for consultants’ time spent working on your project.

9. Try adapting existing IT systems before deciding to build new ones
If you think you may need to improve your IT systems, most IT consultants will recommend you build a completely new system. Their argument will be that your needs are unique, so to give you the best solution, they need to design something exactly matching your needs. It may be true that overall the system they propose is different from other systems in existence. However, if you split your required system up into its individual elements, you will probably find that most of these already exist in other organisations. You will save many millions and huge organisational effort by thinking creatively about how existing systems can be adapted to serve your needs. And always ask yourself the question: with over 700 million people living in the developed world, is it really possible that your organisation is so unique that there is no other organisation in existence that has similar IT system needs to yours?

David Craig is the author of “Rip-Off! The scandalous inside story of the consulting money machine” which exposes how consultants fleece their business clients and “Plundering the Public Sector” which reveal

When an organization hires management or IT consultants, line managers must ensure that the consultants deliver the results promised. In this article, I summarise six techniques used by consultancies to maximize their own profitability. Some of these are just savvy business, some are dishonest, some are fraudulent – all are widespread throughout the consulting industry. By making organizations aware of these practices, I hope they will be better armed as they pay out their consultants’ usually generous fees and expenses.

1. Excessive profitability
A junior consultant will typically be paid around £30,000 ($45,000) a year. So with social and other costs, the consultancy may be paying around £1,000 per week. But they will usually be charged out at £7,000+ ($10,000+) per week to private sector clients – for larger public sector projects some consultancies will go down to £5,000+ ($7,500) per week. A more experienced consultant may cost the consultancy £2,000 ($3,000) per week, but can be billed at £12,000+ ($15,000+) per week. So while many manufacturing businesses make gross margins of around 80% and retailers are at about 100%, management consultancies generally target gross margins of 500% to 800% – a rather striking and enormous difference from the margins any of our clients would ever make. Surprisingly, very few clients do the simple mathematics and ask why they should be paying over £300,000 ($450,000) a year for an inexperienced junior consultant who is probably being paid just over a tenth of that.

2. Retaining travel expenses rebates
Last year three consultancies agreed to pay a former client around $100m compensation, when they were sued for “unjustly enriching themselves at the expense of their clients The lawsuit was that for a decade the three firms worked with outside suppliers such as airline firms and travel agencies to obtain rebates of up to 40% on airfare and other costs that were not passed along to clients.”

The way this works is simple. The consultancy sets up a deal with a travel agent, hotel chains and the main airlines for an end-of-year rebate. The consultancy invoices the client for the full travel and accommodation costs, sometimes even adding on an administration charge. At the end of the year, the consultancy receives a rebate from the travel providers. None of this rebate is ever passed back to the clients who have paid for all the travel and accommodation in the first place. The defendants claimed they had “discontinued this practice” however this is contradicted by a recent e-mail from a consultant from one of the companies, “Here’s how we do it every time. We state in our contract that we will bill for ‘actual’ expenses. Then we bill them for your air travel expense. Then we get a kickback on your air ticket. But we don’t give the client back the kick-back.” One British consultant estimated that his employer had stolen over £20m from just one client in this way.

3. Billing for non-client work
In most consultancies, partners or directors divide their time up amongst their various clients and allocate a certain number of days each month to each client – even when this time is actually not spent working for that client. Moreover, you often find ordinary consultants being told to charge clients for time spent on internal consultancy business. To quote a consultant from a 100,000 plus employee firm, “I was at an internal meeting with more than 100 other consultants. Partner told us to charge the day to the project so we could bill it to the client as it was almost quarter end and we needed to make our numbers.” Just this one apparently innocuous decision will probably have cost the client over £100,000 ($150,000).

4. Overcharging for overhead
In many consultancies, clients pay for fictitious overhead costs. At one major consultancy an extra 10% was automatically added to consultancy fees supposedly to cover overhead costs. So, with each consultant costing £300,000 ($450,000) a year, clients would also be billed for another £30,000 ($45,000) to pay for administrative overhead. Yet the London office, for example, had about three hundred consultants and around fifty administrative support staff – secretaries, receptionists, human resources, bean counters, marketing support, resource managers, trainers, information centre researchers and document production. Yet, with the 10% add-on, our clients were being charged for the equivalent of about three hundred administrative staff – hence the salaries of up to two hundred and fifty support staff were not being spent, as the staff simply did not exist.

5. Relocating staff
Many management consultancies are international and move their staff around the world at their clients’ expense. On £2.3 million ($4m) project I helped sell in Britain to a regional health authority, the consultancy did not have sufficient UK based staff. As our CEO wrote in an internal memo, “the project took place at a time when we were still heavily supported by U.S. expats. Naturally we accommodated them and their families and a proportion of these costs were charged to the client.”

So our NHS client had to pay thousands of pounds a week extra for these imported consultants in what a subsequent official investigation described as “a financial fiasco.”

6. Cheating on flat rate expenses
Frequently consultancies will agree with the client that expenses will be around, for example, 12% of fees. Each week the client will be billed for this 12%, then at the end of the project there will be a reconciliation between the 12% paid by the client and the actual expenses incurred.

On a project for a leading manufacturer of military aircraft, missile systems and satellites, we had agreed 12% but were actually only running at about 7%. The account vice president informed the rest of the consultancy that he had room to soak up expenses both from other projects and from our head office, rather than paying money back to the client.

Very occasionally, clients would audit our expenses. If they found some r

The vast amounts of taxpayers’ money being handed over to consultants could be seen as evidence of a dynamic, forward-looking government investing in modernising their country. At least, it would be positive were these massive investments successful. However, experience to date is less than promising. Judging by what has happened, New Labour’s investments in management and IT systems consulting appear to have just been a series of unmitigated and shameful disasters. So bad was the situation, that in an all-party committee of MPs criticised the British Government for both wasting taxpayers’ money and trying to cover up the truth about its financial mismanagement. The committee concluded that the British Government’s record on IT consulting projects was ‘an appalling waste of public money which Whitehall was trying to conceal behind a cloak of commercial confidentiality’. There have been so many disasters like the Child Support Agency – £1bn wasted on consultants, the National Offender Management Service – about £300m wasted and the Ministry of Defence – at least £500m spent on consulting that gave absolutely no results. The most shameful project of all must be the new NHS IT system which was planned to take 3 years to complete and cost just £2.3bn – it will actually take over 10 years, will cost over £12bn and won’t even work properly.

IT’S A MORAL, NOT JUST A MANAGERIAL, ISSUE

Management and IT systems consultancies are businesses. As businesses, their aim is profit maximisation. This means they must try and sell as much of their product as they can at the highest price possible. Just like any other business – manufacturers of soft drinks, breakfast cereals, photocopiers, paperclips, cars, burgers, cigarettes or whatever. When you sell management or IT systems consulting to another commercial company like a bank, insurance company or an oil company, you are playing a commercial game, where you both know the rules. You try and get as much of their money as possible by thinking up all kinds of ‘essential’ services and new IT systems you can sell them and you charge them as much as you think you can get away with. As everybody knows, that’s how business works. And anyway most banks, insurance companies and oil companies are hugely wasteful bureaucracies that have more money than they know what to do with.

However, having spent over twenty years selling consulting to many companies and government departments, I believe that this situation changes when a profit-maximising company like a consultancy sells its services to public sector organisations. Because here, every hundred million that is channelled into management and IT systems consultancies’ pockets means a hundred million less that can be spent on providing essential services in areas like health, defence, schools, social services and police. So if a management consultancy knowingly sells a project where it places twenty to thirty to forty inexperienced consultants in some government department or other, when two or three experienced consultants could have done the project more quickly and much more cheaply, you have to ask whether this is just nifty business or whether the consultancy could be accused of unethical practice. Similarly, if an IT systems consultancy manages to convince a government department that it should spend say £400m on building a completely new IT system, when it knows that an existing system could have easily been upgraded for less than £40m – is this just a case of the consultancy being canny businessmen or is it closer to theft of public funds? Moreover, if these consultancies also systematically overcharge the Government for their consultants’ time, bill for fictitious administration, charge the Government the full cost of travel expenses while retaining kickbacks from travel companies and make the Government pay for time consultants and their managers spend on internal consultancy activities – again the question, is this merely smart business or a fraudulent rip-off?

There is another dimension to the moral issues arising from how consultancies work in the public sector. If a consultancy or systems provider fails to achieve the promised results for a private sector company, nobody really gets hurt. But if inexperienced junior consultants set meaningless targets for the health service which lead to ward closures and less patients being treated. Or if consultancies produce IT systems fiascos for government departments that prevent people from travelling due to them not having passports, that leave over 176,000 immigrants stuck in limbo for months because their applications cannot be processed, that prevent courts prosecuting criminals, that cause families to lose their homes or that impoverish hundreds of thousands of low income households, then it seems reasonable to question the ethics of consultancies that are happy to take the cash and yet are seemingly impervious to all the suffering caused by their incompetence and greed.

THE PEOPLE AT THE TREASURY ARE NOT STUPID

At a dinner recently, I was sitting next to a gentleman who shall remain nameless. He had a knighthood and at various times had been a professor at a leading business school, a director of the Bank of England, a former member of the Cabinet Office Central Policy Review Staff (the ‘Think Tank’), a director of the Treasury and a director of a major bank. I started talking to him about my concerns over the amount of taxpayers’ money being handed over to consultants and the series of catastrophes that had ensued. I then suggested that the Government was being taken for a very expensive ride by its consultants. The gentleman looked disdainfully at me and said dismissively, ‘I find your arguments fallacious and lacking in intellectual rigour – the people at the Treasury and the Bank of England are not stupid’.

Having seen so much consultancy sold to so many government departments yielding so laughably little in the way of results, I’ve written a book to tell the story of what really happens when management and IT systems consultants are paid to bring their magic into public sector organizations. Now taxpayers can make up their own minds about the gumption or otherwise of the people at the Bank of England, the Treasury and the 2,500 other government departments who are contributing so generously to the welfare of already wealthy management and IT systems consultants by giving them almost unbelievable amounts of our money.

David Craig has spent 20 years working for some of the world’s best and worst management and IT systems consultancies. He is the author of two books about consultants – “Plundering the Public Sector” (Constable 2006) which exposes how the British government has wasted tens of billions on consultants and “Rip-Off! The scandalous inside story of the consulting money machine” (OBC 2005) revealing how consultants siphon money off from their business clients. He has also written “Squandered: How Gordon Brown is wasting over one trillion pounds of our money” (Constable 2008) and “Fleeced! How we’ve been betrayed by the poli

Companies hire consultants for different reasons. They may not have the specific expertise, time, experience, or objectivity to perform the QMS development work without outside assistance. A quality management system (QMS) consultant will:

Be able to close the knowledge and resource gap;
Add experience and insight to your QMS project,
Significantly accelerate your success for certification, by preventing any serious mistakes in QMS development and implementation.
Fast-track the development process by effectively planning, getting management and organizational support and ensuring adequate resources.
Organize and facilitate project deployment and avoid or resolve problems.
Save time and money by developing an effective QMS, that realizes benefits early and therefore get faster payback on your QMS project investment.
Remember that that it is better to have your personnel do the hands-on development work under the guidance and expertise of the Consultant. This ensures that QMS ownership stays within the organization.

2. What services would a QMS consultant provide?

A competent consultant should be able to plan, organize and facilitate the QMS project activities, interpret how the QMS standard applies to your organization, help identify and document your applicable processes, recommend process improvements, introduce benchmark practices, impart customized on-site training to the various functional levels within your organization, and conduct internal audits. He/she may also help you develop the entire documentation, depending upon the internal resources you have available to you.

3. What credentials should a QMS consultant have?

You must be very careful in checking out the consultant’s credentials. The following list of criteria may be useful in making this evaluation:

Education: As you are implementing a management system, you need a consultant with a management system background. A good quality management system consultant should at least have college level education and preferably a graduate degree. Majoring in management sciences would be a bonus.

Training and professional development: Does the consultant hold (or had) Lead Auditor certification through RAB/QSA, IRCA or similar recognized organization?

Does he/she have sector specific training and specialization in sectors such as automotive, environmental, aerospace, telecommunications, health and safety, etc.,

Has he/she written books, written courses, published articles, spoken at quality conventions and seminars, manage a QMS website or moderated a management system forum?

These trade related specialized credentials and activities demonstrate the investment that good consultants makes towards sharpening their skills and experience.

Experience: have at least 10 years of Consultancy experience in a variety of industries and more importantly, relevant experience in your specific industry sector.

Personal traits: you need a consultant with good interpersonal and communication skills; who is objective, pragmatic, perceptive, tactful and flexible in dealing with personnel at different levels of an organization.

Availability and access: the consultant should be able to provide the consulting time (days) that you need within the budget and time-frame you have and be reasonably easy to contact when needed.

Fees: what should a consultant cost? Rates vary and low daily rates does not necessarily get you the best results and cost in the long run. Look at costs from different angles – per day; per deliverable (e.g., training course); flat rate for the project; payback on the project, etc.

Remember, a good consultant will get things done more efficiently and help you develop an effective QMS that begins to produce results more quickly, saving you money. So look at consultancy cost from an overall result-oriented perspective.

4. Where do I find a good consultant?

There isn’t a single comprehensive source or listing of consultants, so try the following:

- Do a localized search on Google or Yahoo.

- Contact a couple of Certification Bodies. They will generally provide a short list of consultants available in your area, to avoid any conflict of interest.

- Through referral from customers, suppliers or other organizations or contacts who have used and were happy with the work done by their consultant.

- Professional and trade associations; such as the ASQ

- Leading management system publishers such as Quality Digest provides an annual directory of Consultants on their website.

- Quality management instructors; There are many good instructors that also provide consultancy services.

Use the credentials from point 3 above, to evaluate the selected consultants. Make sure you check references and perhaps arrange for the consultant to visit your organization and meet with you and key personnel. This would be a good way to size up the consultant against the criteria.

5. Can getting RFP’s (request for Proposals) from ISO Consulting firms help in the selection process?

Pick a short list of 2-3 consultants and request proposals from each of them. Their proposal should cover the service deliverables; number of consultancy days and over what time-frame; consultancy and training methods; fees and expenses; contact and reporting. This provides a consistent basis for evaluating them.

Your management team should evaluate the proposals using the defined credentials criteria from step 3. You want the management team to participate and support the selection decision, so the consultant can work effectively with your organization.

6. Do we need to have a signed agreement?

Clarify and confirm all proposal details. Negotiate any terms to your satisfaction, including fees and expenses. Consultants are always eager to win new business. Get the final agreement signed by both parties. This is now legally binding and provides clarity on the deliverables and contractual terms and should facilitate a smooth on-going relationship between the consultant and your organization.

7. How should we manage the Consultants activities?

All outsourced work, including an expert ISO 9001 consultant needs to be managed. Ensure that the primary contact and reporting requirements are clear and understood by both parties. Regular project and milestone/deliverable reviews must be done with the consultant and ensure any issues or misunderstandings are promptly resolved.

8. How should we evaluate the consultants performance?

When the project is completed, evaluate the consultants performance by asking the following questions:

- Were the project deliverables acceptable and on time?

- Were deliverable results in line with the objectives?

- Did the consultant do a good job of planning? And was the plan followed without significant changes or delays?

- Were communication and reporting requirements met?

- Did the consultant effectively transfer QMS ownership to the organzation’s personnel?

- Are benefits of QMS clearly beginning to be realized from

In reality, anyone can become a consultant. Small business consulting opportunities today are endless. If you have an area that you are extremely knowledgeable in and you have the drive and passion for excellence, you could become a consultant.

Many of the small business consulting opportunities do not require any special training. For example, if you are really good with computers, the software they use and network security, you could become an IT business consultant. Perhaps you are very creative and knowledgeable when it comes to marketing. You know how to take a product and make it sell. You could become a marketing consultant.

There are a few things you should keep in mind when browsing the small business consulting opportunities available. The first thing to consider is the qualifications that are needed. Is the area you are considering something you could call yourself an expert in? Are you familiar with the current information that is needed? For instance, when it comes to becoming an IT consultant, you would need to be knowledgeable with all of the current computer information. Technology is constantly changing and you have to know all of the up-to-date information. Another thing you need to check on is if there are any special certifications or licenses that are needed. While some companies may not require you to have a degree in a certain area, they may require you to be certified. Organization is another key factor when researching the small business consulting opportunities. You need to make sure that you are able to handle time management and be prepared when you enter into a situation.

Small business consulting opportunities are readily available to those people who are critical thinkers. A consultant is known as a problem solver and in order to solve issues effectively and efficiently, a person has to be able to demonstrate problem solving. A consultant works side by side with the business, therefore communication is important. A successful consultant must have excellent communication skills. They also need to have leadership skills. A consultant has to lead a company to success, and in order to do this, they have to lead. When a consultant comes into a company, the people there are relying on them to take their company to the top. The consultant has to take the lead and run with it, take control of the situation.

With so many small business consulting opportunities in many different areas, pricing is very important. A consultant needs to know how to set an hourly rate if their services are used by the hour. If a company uses them on a day to day basis, then the consultant needs to know how the prices for daily rates. Some companies will need a consultant to help with projects. If this is the case, a consultant needs to know how to bill their client by the project. When a company uses a consultant on a monthly basis, then the consultant would charge a monthly retainer. A small business consultant usually makes a substantial amount of money and pricing is the key element into turning those small business consulting opportunities into a success. Many consultants will require their client to pay a deposit beforehand. There will be occasions where the consultant will pay for expenses out of their own pocket. It is important for them to know how to get reimbursement from the company they are working with.

There are many areas of business, making the small business consulting opportunities endless. A great consultant has to have knowledge, passion, and understanding. There are thousands of people who have knowledge that they didn’t even know existed. Once they tap into that knowledge, educate themselves even further and put that knowledge to use by helping others, they are considered a consultant. A business consultant is the most sought after because there are companies developing all over the world.

One of the best small business consulting opportunities is being your own boss. You can set your own hours and pay, which makes you the boss. Of course you have to work certain hours, especially when helping a company with a project, but you basically are in control of that also. You just have to determine when the project needs to be done and how many hours it will take you to complete it. In reality, you have the most control over your work schedule when you become a consultant. You set the prices you are to be paid, and if you are an expert in a certain area, it is up to you to make sure your prices are set to what your time is worth. You are in complete control!

If you would like to know more about small business consulting opportunities, you can click the link below to find out more information.

Small Business Consulting Opportunities are everywhere these days. If you are inte