Welcome back to Smart Consulting Sourcing, your ultimate guide to mastering not just the art of procuring consulting services but also utilizing, buying, and managing these services as strategic investments. I’m Helene, your host, and I’m absolutely thrilled to have you join me for another enlightening episode.
We will delve into a crucial aspect that every business executive, whether you’re in procurement, Strategy, Finance, or sitting in the C-suite, needs to master: the art of scoping your consulting projects. Proper scoping isn’t just about controlling costs—it’s about maximizing the value each consulting engagement brings to your organization.
But today, we’re going to talk about scoping from another angle. While we often discuss the many levers in our consulting procurement toolkit, scoping stands out as a key lever for optimizing your consulting costs. Today, I’ll unveil some of the secret weapons we use at Consulting Quest to harness the full power of scoping.
But before we dive into that, let’s do a quick recap of our last episode. We discussed that optimizing costs in consulting isn’t just about focusing on the pricing. It requires a holistic approach that integrates both scoping and pricing to achieve truly optimized results. And by optimized, I mean results that are sweet on costs but also deliver the value you expect and deserve.
Focusing solely on costs might lead to subpar outcomes for your projects. Concentrating only on value might mean leaving money on the table. However, when you optimize the ROI of your projects, you open up possibilities to reinvest these savings into new initiatives or impact your bottom line, pleasing your shareholders. In other words, it gives you the option to do more with less.
If you missed this episode or any previous ones in this series that lay out our framework to optimize your consulting costs, I encourage you to catch up on them. You can find all our episodes on the major podcast platforms and watch them on YouTube. For those who prefer a read, check out our Thought Leadership section at consultingquest.com. And if you like what you hear, see, or read, please don’t forget to like and subscribe.
Thank you for tuning in today. Remember, at Consulting Quest, we help you leverage consulting to accelerate your transformation. Speaking of leveraging consulting, let’s now circle back to our topic of the day: scoping.
Last week, I defined what scoping entails and why it’s crucial for your consulting engagements. In a nutshell, scoping is about differentiating the ‘must-haves’ from the ‘nice-to-haves.’ And since consulting costs are primarily measured by the time consultants spend on your projects, defining the scope—both in terms of breadth and depth—becomes a critical lever. It’s not just about controlling costs; it’s also about managing expectations effectively.
Today, we’re diving deeper into the essential tools you have at your disposal to correctly scope your consulting projects. Let’s start with a principle that is particularly powerful: Scope to the Strict Necessary.
Scoping to the Strict Necessary
Today, we’re diving deep into how you can scope your projects right, ensuring they’re not just aligned with but actually accelerate your strategic objectives. Let’s start with a crucial principle in consulting: “less can be more.” This isn’t just a quaint saying; it’s a powerful tool for crafting lean, efficient projects that are strictly aligned with your core business goals.
First, let’s talk about avoiding Overlaps and Redundancies. In complex organizations with layers of ongoing initiatives, it’s easy for efforts to inadvertently double up, leading to wasted resources and increased costs. Effective scoping helps ensure that each task is uniquely assigned, preventing these costly overlaps. But it’s not just about avoiding unnecessary duplication; it’s about smarter integration. Recognizing and leveraging existing internal initiatives or intellectual property from previous consulting engagements can significantly accelerate your current projects while reducing costs. Deciding whether to build on existing work or start afresh is crucial—it should be a strategic choice, not an oversight.
Next, we move on to De-Scoping. This involves a detailed assessment of your project elements, distinguishing between what’s essential and what’s merely desirable. Often, projects bulk up with desirable elements that, while attractive, don’t necessarily add significant value. By conducting a rigorous cost-benefit analysis, you can focus on activities that offer the most bang for your buck. This isn’t merely about cutting corners; it’s about honing in on what truly matters to your project’s success, ensuring resources are concentrated where they’ll make the most impact.
And then there’s the Design to Cost approach. Traditionally, consulting projects are scoped by defining needs first, then pricing them out. But what if we flip this model, especially under tight budget constraints or when initial proposals exceed financial limits? Here, the budget isn’t just a number—it’s a framework within which the project needs to be tailored. Working collaboratively with consultants, this strategy involves shaping the project to fit the available budget without compromising on essential outcomes. It’s about ensuring each dollar spent is maximized for value, aligning project costs directly with your financial capabilities and strategic goals.
Refining Approach & Staffing
While we often focus on defining the scope of our consulting projects in terms of what needs to be done, it’s equally important to consider how the consultants will approach the problem and how they’ll staff their teams. Remember, consulting costs are largely driven by the time spent on a project, so every decision from adding workshops to the mix of consultants on the team makes a significant impact.
Let’s talk about how to ensure your project is structured and staffed for efficiency, using a few key tools:
The first point of attention is the Profiles of the consultants. When assembling a consulting team, matching the required expertise with the task at hand is crucial. It’s a balancing act. While an experienced partner might bring invaluable insights, not every aspect of a project demands top-tier expertise. By strategically mixing senior and junior consultants, you can optimize costs without compromising on the quality of the project.
Another critical point of attention is the Phasing of the Project. Timing is everything. By structuring a project into distinct phases, you can ensure that the right level of expertise is brought in at just the right time. For example, the ideation phase might require more experienced consultants, whereas the implementation phase could be handled effectively by a more junior team.
Now, let’s consider the Intensity of Consultant Involvement. This is all about how deep and how long consultants are involved in your project:
- Training — where the consultant educates your team who then carry forward the execution. This limits both the duration and depth of the consultant’s involvement, helping control costs.
- Advising and Guiding — in this setup, the consultant provides strategic direction while your own team handles the execution. This leverages the consultant’s expertise without incurring the full cost of execution.
- Co-creating with the Client — this is a collaborative approach where both the consultant and your team work together throughout the project. It’s a shared effort that can lead to integrated outcomes.
- Executing on Behalf of the Client — the most intensive form of engagement, where the consultant manages everything from start to finish. It ensures comprehensive expertise but at a higher cost.
Lastly, we have the Ramp-Up and Ramp-Down. The start of a consulting engagement often involves setting the stage with onboarding and initial data gathering. Not all consultants need to be involved during this preparatory phase. Similarly, as the project wraps up, you might not need the full team on deck, allowing for a gradual ramp-down. This approach makes sure you’re not bearing the cost for resources that aren’t adding value at every stage.
Optimizing the Delivery Setup in Consulting Projects
Let’s shift gears a bit and delve into another critical aspect of consulting projects — optimizing the delivery setup. By delivery setup, I mean the structure of the teams that will carry out the project, whether they are internal, external, or a mix of both. This aspect is often overlooked when planning projects, yet it has significant implications for both the outcome and the cost structure.
Many companies tend to swing to the extremes — going all internal or fully external — but there are numerous intermediary options that might better serve the project’s needs and budget.
The first concept to consider here is the Make or Buy decision. This is at the heart of many strategic decisions in consulting procurement. It’s about weighing the benefits of outsourcing parts of a project against handling them internally. While outsourcing can bring in external expertise, executing parts of a project in-house can significantly reduce costs and help retain critical knowledge within the organization. This is particularly crucial for projects of sensitive nature or strategic importance, where confidentiality and internal capability building are paramount.
For organizations with internal consulting groups or centres of excellence, this decision is vital. It’s not just about cutting costs — it’s about strategically deciding which components of a project will benefit most from external input and which can be efficiently handled internally without sacrificing quality or strategic alignment.
Next, let’s talk about leveraging Emerging Solutions in the consulting landscape. The rise of freelancers and consulting marketplaces has truly disrupted traditional consultancy models, offering unprecedented flexibility, competitive pricing, and access to niche expertise. These platforms aren’t suitable for every type of project, especially those that require a deep political understanding or a long-term commitment. However, for projects that can benefit from specialized skills on a flexible basis, these solutions can be incredibly effective.
Deciding to use these emerging platforms should align with your overarching company strategy. Once that’s established, you can assess each project individually to determine the best fit — whether that involves leveraging a freelancer for specific expertise or engaging a marketplace to fill a temporary need without the long-term commitment of hiring.
Leveraging Portfolio-Level Scoping Levers
As we wrap up today’s deep dive into optimizing consulting costs through strategic scoping, let’s explore some advanced levers that operate at the portfolio level. These strategies can significantly influence both the efficiency and economy of your projects.
First up is Volume Pooling. Think of this as the ‘wholesale’ approach to consulting procurement. By aggregating similar project needs from different parts of your organization, you create what is essentially a bulk order. This approach doesn’t just streamline your operations; it also enhances your bargaining power. When you negotiate as a substantial client, you can secure steeper discounts and possibly attract new consultancy players who are eager to handle a significant unified project. This not only ensures better pricing but also often guarantees top-tier service from the consulting firm’s A-team. For consulting firms, managing a batch of similar projects allows them to optimize their resource allocation and leadership, which can lead to more efficient service delivery and reduced costs for you.
The second lever we should discuss is Activities Unbundling. This involves dissecting a project to discern its core components and then identifying which parts are best handled by specialized players. Rather than relying on a one-size-fits-all, full-service consultancy, this strategy enables organizations to engage niche experts for specific segments of a project. This targeted approach not only typically results in higher quality outcomes due to the specialized expertise of the firms involved but also tends to be more cost-effective. Smaller, specialized firms often have lower overheads than their larger counterparts and can provide focused expertise at a lower cost. This means you’re not just getting expert input tailored to each project segment, but you’re also managing your budget more effectively.
These portfolio-level levers—Volume Pooling and Activities Unbundling—allow you to wield greater control over how consulting resources are utilized across your organization. They ensure that you’re not only optimizing the cost and efficiency of each individual project but also enhancing the strategic alignment and output of your entire project portfolio.
Conclusion
As we wrap up today’s discussion on the critical role of scoping in consulting procurement, let’s recap the key insights. Scoping is not just a preliminary step to be completed before issuing an RFP; it’s a dynamic tool that plays a crucial role throughout the entire buying process. And, perhaps surprisingly to some, scoping remains relevant even after a project has started. It is an essential element in managing change orders and ensuring project adaptability.
The crux of effective scoping lies in a deep understanding of how projects are structured, delivered, and priced. Having a seasoned expert by your side—ideally someone with significant experience in the consulting world, like a former partner—can be incredibly beneficial.
The overarching goal of this framework is not just about cutting costs or managing consultants. It’s about enhancing communication with your consulting suppliers, establishing an equal footing in negotiations, and being able to propose relevant and fair alternatives. By mastering scoping, you equip yourself with the knowledge and skills to not only manage but also to optimize every consulting engagement, ensuring that each project delivers maximum value to your organization.
And that wraps up today’s episode. But if you’re eager to delve further into the subject we’ve discussed, I highly recommend heading over to consource.io. There, you will find one of our insights titled “Nailing the Scope of a Project in Consulting: 7 Kickass Tips”. In this piece, we explore the crucial strategies for effectively defining and managing project scope in the world of consulting. So, if you’re looking to enhance your consulting skills, be sure to check it out!
And in case you are looking for more such topics, then you should check out consultingquest.com and consource.io. They’re packed with all sorts of helpful content like insights, podcasts, ebooks, and more. Whether you’re eager to boost your transformation or just want to make smarter buying decisions, you’ll find plenty of valuable information there.
Alright then! Next week, we’re diving into a very important topic and that is the Negotiation Lever and Its Significance in Optimizing Consulting Costs. Do join me in that episode next week because I promise you, its going to be very insightful.
Before you go, don’t forget to hit that subscribe button for all the latest episodes and updates. And thank you for tuning in to today’s episode! Your thoughts and feedback mean the world to me, so don’t hesitate to reach out on LinkedIn or via email at hcl@consultingquest.com. I’m always up for a chat! And if there are any topics you’d love to hear about in future episodes, send them my way too. Can’t wait to hear from you!
Until next time, stay safe and keep up the smart consulting sourcing game. Au revoir for now, and happy sourcing!
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