Welcome back to another episode of Smart Consulting Sourcing, the only podcast about consulting procurement. I’m your host, Helene, as we continue our journey on “How to buy consulting services like a pro”. Today we’re venturing into new territory: selecting your consultants like a pro.
Get ready for an informative and engaging exploration of the process as we dive deep into deciphering commercials in your consulting proposals and uncover the key elements that will guide you toward making the perfect choice for your project.
But before we embark on this enlightening journey, let’s take a moment to rewind and refresh our memories with a quick recap of last week’s episode. Here’s what we covered:
Challenging the core proposal is a necessary art. This involves carefully analyzing the proposals and asking the right questions to shed light on any uncertainties or weaknesses that may be lurking beneath the surface.
Next, you will need to evaluate the qualifications and experience of the consultants who will be working on your project, ensuring they have a solid understanding of your context, objectives, and the necessary industry knowledge.
You also need to assess fit and behavior. Why? Because compatibility is key, and factors such as personality, communication style, and the consultants’ ability to align with your team’s values can help build credibility and trust with stakeholders.
Also don’t forget to give consulting firms a few days to incorporate your clarifications and modifications into their proposals. It will help them fine-tune their offerings and allow for adjustments to be made, including the price if necessary.
Lastly, check references. When in doubt, reaching out to the consultants’ references can provide invaluable insights and firsthand experiences that will help address any lingering concerns you may have.
If you happened to miss our previous episode, fear not! You can catch up with us on all the major streaming platforms: iTunes, Spotify, Samsung Podcast, or even on our YouTube channel. We’ve got you covered, no matter your preferred way of consuming our insightful content. And for those who have a penchant for the written word, head over to our website consultingquest.com and visit the Thought Leadership section. There you’ll find the full transcript of our episodes, allowing you to indulge in the wisdom shared at your own pace.
Are the Proposal Expenses in Line with Your Budget? Let’s Find Out
It’s time to shift our focus to everyone’s favorite topic: the price! Before we dive into analyzing whether the consulting proposals align with your budget, it’s important to take a closer look at how the price is structured. Brace yourselves, because the most affordable proposal might not always be the one that initially catches your eye with the lowest face value. Price is a complex creature, and we’re about to unravel its secrets.
Decoding the Fee Structure: Delve Deep into the Consulting Proposal’s Price Breakdown
Let’s start with a dive into the intriguing world of fee structures used by consultants. They have a few tricks up their sleeves when it comes to determining how they charge for their services. Here are some common fee structures you might encounter:
Hourly Rate: Brace yourself, because this fee structure can be a bit of a double-edged sword. You pay for the consultant’s time on an hourly basis. While it may seem straightforward, we don’t necessarily recommend it. Why? Well, it can be quite challenging to control the spending, and it might indicate that the consultant struggles with accurately sizing the project or lacks sufficient experience. Plus, it puts all the risks on your shoulders. However, there are some cases where this fee structure could be interesting, such as when the scope is vague or the project is very small. Just make sure to incorporate a soft or hard cap on the number of hours to avoid any surprises.
Flat Fee: Ah, the classic. This is the most common fee structure employed by consulting firms. With a flat fee, the consulting firm commits to delivering the work within a fixed budget. It provides a level of predictability and allows you to plan your expenses accordingly. However, be wary of any adjustments to the fee if the consulting firm needs to change the staffing of the project due to a lack of performance or internal turnover. You don’t want any unexpected surprises popping up later.
Baffling Clauses: Ah, the joys of unexpected surprises in proposals! It’s always interesting to come across peculiar clauses that make you scratch your head. Let me tell you about one I recently stumbled upon.
Imagine this: a proposal for a 6-month project with consultants indicating that their daily fees would increase by a mere 2% midway through the project. Why, you ask? Ah, it’s due to the normal increase in wages in their company, based on some mysterious index that I can’t quite remember.
Now, let’s take a moment to appreciate their effort at transparency. It’s commendable, really. But here’s the thing—it’s a bit, well, silly. Now, let’s do some quick math. If we take a hypothetical 3 million-dollar project, that 2% increase would amount to 60,000 dollars. In French, we have a saying, “dans l’épaisseur du trait,” which roughly translates to “within the thickness of the line.” In other words, it’s peanuts compared to the total amount. While most companies strive to control costs, it’s perplexing to add such a minuscule increase that could easily have been incorporated into the initial pricing.
So my dear consultant friends and consulting buyers, let’s make a pact to avoid such ridiculous clauses in proposals.
Risk-Sharing or Value-Sharing Approach: Now we’re talking! With this fee structure, the consulting firm’s payment is tied to their performance and the value they bring to your organization. It’s often calculated as a percentage of the savings or income increase they generate. It’s a win-win situation, as they have a vested interest in delivering exceptional results. Just make sure to review the payment schedule and ensure you can withhold a significant portion of the fees until the work is fully completed. You want to protect your interests too, after all.
A Look into the Other Expenses
Once you’ve grasped the fee structure, it’s time to shift your attention to other expenses, such as travel costs. Some consulting firms may include automatic percentages for phone and copy expenses, while others may allocate a fixed percentage for travel expenses. It’s important to carefully consider these expenses and incorporate them into the overall project price. Aligning travel expenses with your company’s travel policies and including them in your terms and conditions can help ensure clarity and fairness.
Let’s Dive Into Some Cool Calculations
Now, let’s dive into some number crunching! Start by envisioning the potential scenarios of how the project will impact your company. Consider the different fee categories and calculate the fees for each scenario and proposal. To facilitate analysis, ensure that all amounts are indicated in the same currency.
What is the most probable scenario? What is your favorite price structure? If you have questions about the pricing of the proposal, it is the right moment to ask. Try to understand how they structured their price and what are their constraints.
Making the Final Call: What to Consider Before Sealing the Deal
Now comes the exciting part—making your final decision! The goal of this exercise is to ensure an objective comparison among the proposals. While some consultants may have impressed you with their pitch, it’s important to evaluate their proposals methodically to get a more accurate picture of their value. The true value of a proposal often lies somewhere between the initial impression and the thorough evaluation.
To facilitate the decision-making process, we recommend creating a weighted score based on predetermined criteria. Assign each criterion a weight that reflects its importance to your project and company. Here’s an example of a potential weighting:
- Quality of Approach – 30%
- Cultural Fit – 15%
- Inspirational and Original Thinking – 15%
- Team Expertise – 10%
- Proposal Clarity and Deliverables – 10%
- Price – 20%
Once your evaluation matrix is ready, you can start screening and grading the proposals. Assess each bid closely, either criterion by criterion or proposal by proposal. Start with the proposal analysis and adjust the scores based on the pitch sessions. Remember to review the elements that may not have been captured in the initial analysis.
It is highly recommended to gather your team and work towards building a consensus score. The procurement process is crucial for your company’s success, so it’s important to involve multiple perspectives. Embrace diversity and explore different scores to understand the evaluators’ reasoning. Outliers should not be dismissed too quickly, as they may offer valuable insights or highlight personal biases.
By discussing and adjusting the scores and weights, you can build a solid consensus. This approach ensures fairness and encourages active participation from all team members. A consensus score is not only more reliable but also perceived as fair by potential suppliers, stakeholders, and employees.
While this process may require more effort than a simple matrix, the outcome will be worth it. You’ll have a workable solution that aligns with your company’s goals and maintains its competitive edge.
Lastly, if none of the proposals meet your requirements or budget, don’t hesitate to engage in a second round of discussions with the shortlisted companies. Clear communication about your needs will allow consultants to tailor their solutions, accommodating your specific requirements in terms of scope, timing, and team size.
Get Everyone on the Same Page: Aligning Stakeholders’ Expectations from the Get-Go
Let me pause for a minute. The decision-making process is a crucial step, especially when you’re dealing with transformational or sensitive projects. In such cases, it’s vital to have all stakeholders aligned on the project’s expectations before it even begins. By involving your team in the selection of consultants, you’re making a smart move that increases your chances of success.
Nobody wants to work with a consultant who was imposed upon them. It’s essential to consider the preferences and opinions of your team members. They might have valid concerns or reservations about certain consultants, or they might feel more comfortable working with someone they trust or have had positive experiences with in the past. By choosing the consultants together, you foster a sense of ownership and collaboration within the team, setting the stage for a more harmonious and productive working relationship.
Involving stakeholders in the decision-making process also helps to build trust and buy-in from the start. When team members feel that their voices are heard and their opinions matter, they are more likely to be committed to the project’s success and actively contribute to achieving the desired outcomes. This alignment and shared sense of purpose among stakeholders lay a strong foundation for a successful project.
Remember, the success of your project not only depends on the expertise of the consultants but also on the seamless integration and cooperation between the consultants and your internal team. Choose wisely, involve your team, and set the stage for a successful partnership that will drive your project forward.
Rounding Up
Now that you’ve selected your favorite consultant, what’s next? Negotiations! We’ll delve into the art of negotiations in our next episode, but here’s a tiny tip to keep in mind: always have two rabbits in your hat. Why, you might ask? Well, negotiations don’t always go according to plan.
Negotiating with consultants can be a complex dance, and unexpected twists and turns may arise during the process. It’s essential to be prepared for various scenarios and have alternative options up your sleeve. Just like a magician with two rabbits in their hat, having backup strategies or alternatives gives you flexibility and leverage in the negotiation process.
As we wrap up today’s episode, let’s reflect on our key takeaways for selecting the best proposals:
Assess proposals thoroughly: Take the time to analyze and grade proposals based on criteria that align with your project’s objectives. Look beyond surface-level impressions and dig deep into the quality of the approach, team expertise, deliverables, fit with your teams, and price.
Challenge the core proposal: Ask questions to clarify any uncertainties or weaknesses in the proposals. Ensure that the proposed approach aligns with your project’s needs and has the potential to make a positive impact.
Evaluate expertise and fit: Consider the consultants’ qualifications, understanding of your business and market, and their ability to work effectively with your teams. Look for compatibility in terms of personality, values, and credibility with stakeholders.
Analyze the fee structure and expenses: Understand how the price is structured, including the fee structure, expenses, and potential variations. Factor in potential scenarios and calculate fees for each proposal to gain a comprehensive view of the cost implications.
Weight, score, and rank proposals: Create a weighted scorecard to objectively compare proposals based on predetermined criteria and their relative importance. Seek consensus among evaluators to ensure a fair and comprehensive evaluation process.
Involve stakeholders in the decision-making process: Engage your team in the evaluation and decision-making process to align expectations and increase the likelihood of project success. Their input and perspectives can bring valuable insights and promote buy-in.
Remember, selecting the right consultants is a critical step that can greatly impact the success of your project. Take the time to thoroughly evaluate proposals, engage in meaningful discussions, and make a well-informed choice that aligns with your objectives and company values.
In the upcoming episodes, we will dive into the fascinating world of negotiating consulting services. We’ll kick things off by discussing an important prerequisite: understanding what aspects you want to negotiate, identifying the key individuals who will be involved in the negotiation process, and determining the margin for maneuver you have.
Negotiations play a vital role in securing favorable terms, ensuring value for money, and establishing a mutually beneficial partnership with your chosen consultants. By carefully preparing and strategizing for the negotiation process, you can position yourself for success and achieve the best possible outcomes.
So, make sure to tune in next week for an informative session that will provide you with practical insights and guidance on how to navigate the negotiation process when procuring consulting services.
Till then, stay safe and happy sourcing and if you have any questions regarding today’s topic or any consulting proposals and procurement-related matters, remember you can always contact me directly on LinkedIn or by email because I’m always game for a chat.
Bye and see you next week, au revoir.
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