Hello and welcome to the episode 43 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be your host today.
Each week I’ll give you the keys to better use, manage and source consulting services. This week, I’ll explain How to Avoid Potential Problems in the Course of a Project
Last week, I explained what are the main features of the European Consulting Market and why its diversity is a strength
WE saw that Europe is a diverse market where Western Europe & Eastern have different growth and focus.
The covid-19 crisis has severely impacted the growth, but 2021 should gradually show an upturn that will benefit the consulting industry.
But this week, let’s talk about project management.
There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise during a consulting project. Just remember that all problems have a solution, and the better you plan ahead, the better the outcome will be.
So let me give you my Cheat Sheet for dealing with potentially problematic areas.
Here is what you need to pay extra attention to:
Good project management starts with a good contract
The first and most obvious one is to know the contracts inside/out and that means writing these yourself. Plus, it will be easier if you regularly work with consultants. You know, it is important to be clear on your expectations: the details of your project outcomes must be precisely described.
Other important parts must include Scope of Work, Timeline, Governance, and how the performance will be measured. And don’t forget to protect your business and interests in an unexpected or worst-case scenario. And set the ground rules for your Consulting provider to follow and abide by.
Once the project has kicked off, and everything seems to be going in the right direction, you still need to be vigilant. Because many things can change in a long-term project. You should limit the changes in scope as much as possible, and maintain the terms and conditions as they are.
However, if it happens, you should trace all changes to avoid disagreements later. We recommend including a clause stipulating that the contract can only be changed in writing.
Next element to look out for: Governing Law. Governing law, also known as “choice of law,” is a key component of a contract. Keep in mind that your contract is always the first point of reference if a conflict arises with your Consulting provider.
You need to discuss this with your legal team and ask yourself the question: “What Law would best protect our interests in a consulting agreement?” Your Consulting provider might also have some demands on that side as well. Don’t treat them lightly, and if necessary, include them in the negotiation.
Solicitation of personnel and liability
Alright, now let’s have a look at the solicitation of personnel. You know, the War for talents is ferocious in Consulting, just like it might be in your own industry. A healthy rule is to forbid yourself to poach the Consulting firm’s best talent, and in return, demand the same and include it in the agreement.
As a rule, you need to limit the risk for your company while entering a consulting agreement. Warranties and Liability are usually an important part of the negotiation since the Consulting firm will also try to reduce their financial exposure. Indemnification is another way to limit Liability by requiring your Consulting providers to have the appropriate level of insurance.
In a Consulting Agreement, you will often see a Limitation of Liability each party can incur and a Disclaimer of Warranty.
Termination of a project
Typically, a consulting contract is terminated at the end of a project. The Consulting firm has delivered the Service, and the Client has paid for it.
There are 3 main reasons why a contract can be terminated before the end of a project: That can be
- Breach of Contract,
- Lack of Performance,
- Force Majeure.
Your termination clause should cover these cases. You can also include a provision stating that each party can terminate the contract at any time, with advanced notice. That will give you some freedom to stop a project if you feel the consulting firm is not delivering at the level you expected or your needs have changed.
On certain projects, you might want to add a right to audit in your agreement. It will help verify if the Consulting firm is compliant with your client policies, for instance. When you include such a clause in your agreement, don’t forget to specify who will conduct the audit, where, and how. Besides, you have to be clear on who will be paying for it.
And now, let me give a Bonus Point –
How to Start a Project Before the Contract is Signed?
The normal process is to begin working on a project once the contract is signed. And Consultants, in theory, cannot and should not start working before having a formal written agreement. However, when you are in a hurry, and you are facing a complicated legal process to unfold to the end, you can use a Letter of Intent.
It serves as a piece of persuasive evidence that the project will happen and be paid for, and most Consultants will accept it. There is a risk involved though, and both parties should be aware of it. The Letter of Intent will specify all the terms negotiated, in particular: scope and deliverables, timeline, price, other specific demands that you agreed on, and if something else applies to your project.
The risk with a letter of intent is that it is often non-binding unless the language in the document specifies that the companies are legally bound to the terms.
I often say that a consulting project is like a marriage. Everything is blissful until it isn’t. Preparing for the worst is key to making sure you have peaceful and mutually beneficial relationships with your consulting providers.
That’s it for today. Next time, I’ll explain how to select the right consulting partner for your project
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at email@example.com
You can also have a look at our website smart consulting sourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!
See you at the next episode. Till then, stay safe and stay connected with us through our community LinkedIn
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