Hello and welcome back to Smart Consulting Sourcing, the only podcast about consulting procurement.
I am Hélène, and today we will be talking about Why the scope of a project is essential in consulting?
However, before that, let me give a recap of last week’s podcast.
According to a recent study from the French Senate, Emmanuel Macron’s administration and other public organizations have signed contracts worth at least €2.4 billion with consulting companies since 2018, for work on subjects ranging from the introduction of the coronavirus vaccination to digital transformation.
What we saw last week is that the controversy was amplified by the political context, since we were still in the middle of a presidential election.
Actually, France doesn’t spend more money than its European neighbors, and most of the consulting expenses were used for the digital transformation of the public sector and the management of the pandemic.
However, we were still able to find areas of progress for the French Government to better use, buy and manage consulting.
Indeed, implementing consulting procurement best practices such as demand management, make or buy, panel management, project management, and performance measurement could really make a difference.
Listen to the complete podcast about why is The French Government pouring so much into consulting?
However, this week, let me talk about one of my favorite topics:
Why is the scope of a project essential in consulting?
It is not unusual to realize when you start explaining your needs that you are embracing a scope too large, or that the project could be broken down into smaller pieces.
The main objective here is to provide a high-level overview of the problem. And adjust the scope that is best suited to the purpose of the entire project.
The scope of a project is a description of the work to be done, as well as what will not be done throughout the project — the items that are out of scope. There are seven reasons why you need an RFP to clarify the scope of your project.
It is the only way to know what you need, I know, and you know, that when you buy consulting services, there isn’t necessarily a formal RFP process. Let’s be clear: using an RFP does not always imply competition.
Clarifying criteria and translating them into an RFP is what defining the scope means to me. The first reason is that it will be complicated to determine what type of consulting firm you could work with unless you know what your requirements are.
Also, the truth is that one consulting firm that you worked with previously on one project is not necessarily the right one for the next, and you won’t know that unless you know what you’re looking for.
The second reason is that if you don’t define the scope of your project, you won’t know what internal stakeholders will be impacted by the project’s outcome. This is where we’re talking about change management and the fact that if you can involve stakeholders early in the process and define the scope and align on the expectations,, you’ll be able to maximize your project’s chances of success.
Another important reason is that the timeframe of a project is a balance between the scope, the staffing, and your internal milestones, and you need to understand that in order to make probable trade-offs to get you the best outcome in the correct time with the proper staffing.
Now, let’s talk about results.
Most consultants, including management consultants, strategy consultants, and others, commit to results rather than resources, and unless you define what results you expect in terms of objectives and in terms of deliverables, how could they commit to that? If you don’t give deliverables, you’re just opening the door to some sort of time & material project. And it can become quite expensive if you are working with very high-level consultants. And you might find yourself disappointed with the value of money.
You want to organize a fair competition when it’s possible and relevant, which isn’t always the case, but when it is, you want to do so.
They know your business, they know your context, and they know what you’ve done before on a given topic. If you don’t write that down and share it with the newcomers you want to invite to an RFP, they will be at a disadvantage in that process.
The truth is that when you run an RFP process with competition, your goal is to be able to choose from several outstanding proposals. So you need to put all the consulting firms in the best possible conditions to deliver those solid proposals., and now we’re going to talk about results and potential problems in contracts.
A consulting project is similar to a marriage in that everything is fine until it isn’t. If you haven’t planned on how to terminate the project, whether it’s at the end and you’re not satisfied or in the middle because it doesn’t deliver, you’re in a difficult situation.
Moreover, if you’ve clarified your expectations, if you’ve described what success looks like and what deliverables you’re looking for, you will be able to identify the deviations and either put the consultants back on track or just terminate the project early.
Ultimately, the final two components The cost is perhaps the most crucial. The cost of a consulting project is directly related to the scope of the work or the workload, so it has a different impact. You already know that how big or small you want your project to be will have a direct impact on how long it will take to deliver and how much it will cost. And the same is true for the impact: if your results aren’t feasible, the impact won’t be there.
How do you negotiate price if suppliers submit different solutions?
It’s an excellent question. The thing is, in consulting, when you negotiate, you are not only negotiating the price. You negotiate a little bit of everything because the price is linked to the scope and to the team composition. So we’re going back to how important the RFP is?
The RFP is essential because it can help you define what you’re looking for, what outcomes you want, and the deliverables you need.
Let’s imagine that you have three proposals, and they are 20 or 25% over your budget. But you want to go into your budget so you can start saying okay, I think it’s too expensive.
So we play the game, and we ask for a discount. Actually, we often get one if they haven’t given it yet. But that’s not going to get us to 20 or 25 %.
That’s going to be we’re going to be under that. But then, when you want to go further, there are some other elements in the proposal that you can touch on, such as out-of-pocket expenses, ramp up/ramp down, the experts on the proposal, etc. But that won’t get you much further than 5%.
So you’re still over 10% over your target, and the only way to get there is to refine the scope and the timing because that’s where you have the most potential for decreasing the price.
Now, if you’re able to just modify the breadth of the work or the depth of it, you know the granularity in which you want the work to be done, then you can decrease the scope. And that’s how you can reduce the price.
You cannot compare proposals solutions one next to the one. Because it’s kind of apples to oranges. So before we get there, you need to choose what approach sounds better for you, what teams sound fitting better with your teams, and what expertise you need most.
And the only way to fo that is to have a clear understanding of your needs. Or in other words, the well-defined scope of work.
One of the first and most critical steps in project management is determining the scope of the project. It is even more critical when you are buying consulting services since the scope will be your basis for identifying the potential suppliers, negotiating the proposals, and steering your project.
And that marks the end of our podcast, folks. Next week, I want to talk about the different types of consultancies. So, stay tuned.
Till then, stay safe and happy sourcing!
If you have other questions about the scope of a consulting project, remember you can contact me directly on LinkedIn or by email because I am always game for a chat!
Bye and see you next week! Au revoir!