Basics of Consultancy

Introduction

Hiring outside consultants to do short-term projects is common in business. More and more frequently, as in-house resources become scarcer and impartiality is required, organizations and municipalities are turning to consultants to get the job done.

Hiring a consultant for the first time can be a little intimidating. This section provides basic information that will help your organization or company make the best use of consultants.

What Are Consultants?

Consultants generally specialize in a particular area. They may be good at solving problems or doing research or exploring alternatives. Consultants usually work on contract, they sell their knowledge or services for a fee. Professional consultants can bring new ideas to community projects, and your organization or community can often learn from working with them.

How Do Consultants Work?

The two general approaches are the knowledge approach and the people approach. It’s important to choose a consultant who uses an approach that fits how you want the job done. If a consulting job doesn't work out for the client, the problem could be that the wrong consultant was chosen. One of the problems may be that their approach might not have been suited to the job.

The Knowledge Approach

Consultants who use this approach work for you – not with you. Hire an expert if you just want to get a job done as quickly as possible and there’s no need to involve the community. This approach is suitable for straightforward, technical jobs such as designing a computerized accounting system or membership database.

The People Approach

Consultants using the people approach tend to work with you, not just for you. Communities are leaning toward hiring consultants who use this style. The reason? When a consultant works with you and the community, you have a chance to learn something. If you hire a people-type consultant, they would probably work with the people in the organization or community to decide what research should be done and then train them to do the work.

Note: This approach may take more time and, consequently, cost more. But it usually means better research and involves the community. In effect, the research belongs to the community.

In summary, use the knowledge approach for one-time technical jobs that one or two consultants can do efficiently working alone. Use the people approach when the organization or community should become involved in a project that affects it in whole or in part.

What Is The Problem That Needs To Be Fixed?

Addressing this question sets the stage for determining the terms of reference and helps your organization or municipality clearly state what needs to be done. Only when this is accomplished can you proceed.

Do We Really Need A Consultant?

Before hiring a consultant, ask yourself if you can do it yourself, or if other help is available?

Can We Do It Ourselves?

Once you've answered the first question, you must decide if the people in your community can do the work locally. Here’s a short checklist to help assess whether it might be possible to use local talent.

• Have the community leaders, employees (if you have any) and other volunteers had a chance to look at the job to see if their organization has the skills required?
• Do local people and others think that the community would be able to do the job?
• Could you re-assign staff to work on the job?

If you answered yes to all these questions, your community could probably handle the job locally.

If you feel your community can't do the job on its own, the next step is to look at other sources of help.

What Other Sources Of Help (Other Than Consultants) Are Available?

• Other communities/organizations

Ask other communities and/or organizations about their experiences. By comparing notes, you can find out how they approached a job or problem, learn how to avoid problems or difficulties before they happen, and get other useful ideas for your own project.

• Government employees

Get advice and help from employees in various provincial ministries. For example, you could talk to staff from the Ontario Ministry of Agriculture, Food and Rural Affairs about their skills in facilitation, priority setting, organizational development, volunteer management, their training programs, and other information and advice.

• Groups and associations

Often groups or associations that specialize in any number of technical and social areas will contribute free advice or other help.

• Universities and community colleges

They will sometimes donate time and expertise to community projects if they can do research at the same time. But make sure that you can get their research reports and that the information from the research is useful to the community. Also remember that you should have a say in how they use and publish research results.

Making The Decision

• After looking at what you have locally, and the kind of help you can get from outside sources, you may decide that you need the services of a consultant. Basically, you should hire a consultant if:
• no one in the community has the time or expertise to do the job
• you tried previously to do the job (or a similar one), and failed to achieve the desired results
• the community is likely to value a consultant's recommendations or solution more than its own
• you need specialized help and advice

If you decide to hire a consultant, your next job is to find and choose the right one.

Finding The Right People

Here are some ways to find consultants:

• ask around — word of mouth across communities is still the best way to get information on many things, including which consultants have done good work in the past.
• rehire a known consultant who has done a similar or equally difficult job or ask a consultant you trust for a referral.
• use lists of qualified experts — you can get these from professional organizations, colleges and universities, government agencies and volunteer groups.
• contact consulting companies — look in the yellow pages of the phone book under consultants or management consultants.
• advertise in local or regional newspapers — briefly outline the job you want done, and ask consultants to reply if they are interested.
• keep a file of resumes from people who have expressed interest in working with your organization or community. You never know when another situation may arise that finds you looking again.

Choosing The Best Consultant

Leaders in the community, project supervisors, and citizens could serve on a selection committee.

The selection committee may be involved in the following aspects of selection:

1. Making initial contact

Send the potential consultants the terms of reference. (see next section for details).

2. Requesting proposals.

The proposals should outline how consultants would meet the community's goals or objectives and carry out the work. They should include qualifications, costs, and projected days or hours to complete the task. If the consultants ask for more details on your project, the committee should arrange to meet with them.

3. Assessing the proposals.

In assessing these proposals, the committee looks at how the consultant intends to meet the needs of the community, the consultant's qualifications and the estimated cost. Sometimes it might be helpful to score the proposed ability of the consultant to do the job separately from their cost estimates. That way neither part influences the scoring of the other.

4. Choosing a short list of four or five of the best people or firms from those who send in proposals.
5. Interviewing the short list.

The committee should focus on the consultant's technical expertise, knowledge of the community, and the proposed fee. Depending on the size of the contract it may be possible to conduct the interviews by teleconference, although meeting in person is always preferable.

6. Checking references.

The best references come from people and organizations for whom the consultants have worked. Look at the final reports of similar projects that the consultants have carried out. The committee should ask the following questions when checking references:

• Did they honour the contract terms?
• Did they finish their work on time?
• Did they stay within budget?
• Were their recommendations or reports useful?
• Did their interventions make positive change happen?
• Were they open and flexible to ideas and input from the community?
• How well did they work with the community or other client?

7. Choosing the consultant.

If you follow this selection process, you are likely to find qualified people — people who will work to meet your needs, and deliver a useful report, recommendation or suitable consultation process or other product or service at a fair price.

Note: As a courtesy to other consultants who sent in proposals, it is a good idea to tell them that you have picked someone else for the job. Unsuccessful consultants may request feedback on how they scored. The selection committee should document the review of proposals and the interview. The committee needs to decide in advance how much feedback they are prepared to give.

Terms of Reference

The terms of reference is a short description of the project and what you want produced. The terms help explain your project to the consultant and keep things on target. They also help the consultant estimate the cost of doing the work.

The terms of reference (project description) should:

• outline your understanding of the problem to be solved or the job to be done
• specify your objectives – what you expect or want to achieve from the consultant's work
• state the product you expect the consultant to produce (e.g., a policy, plan, system, procedure, report or other document) and what it will be used for
• set a schedule for carrying out and completing the work

Estimating Costs

The fees that a consultant charges to do a project or other job may vary from one consultant to another. To determine if the fee a consultant quotes is fair, consider the following:

• the going rate for providing similar services. (Professional associations often have recommended rates that consultants follow.)
• limits that funding agencies place on consultants' fees
• the consultant's area of expertise, experience, skills, reputation and knowledge
• the consultant's expectations concerning workload and completion time for the project
• benefits to the community – short, medium, and long-term
• the finished product – the kind and amount of data, reports, plans or systems produced
• the training the consultant will provide to community members.

Note that the consultants are responsible for the cost of preparing their proposals and attending meetings to discuss their ideas with the selection committee.

Your Contract With The Consultant

A properly written contract clearly states who is responsible for what and helps prevent unpleasant surprises for both the client and the consultant. When you and the consultant sign a contract, you're both part of a legal agreement. If either party feels at some point that the other hasn’t complied with the terms of the contract, each can turn to the legal system to set things right.

 You can hire a lawyer to draw up the contract, but you don't need to. Instead, you can get standard contracts and adapt these contracts to fit your own situation.

 A contract is a two-way street. You expect the consultant to do a good job, produce acceptable results, and complete the work on schedule. The consultant expects to be paid promptly for the work he or she does.

What The Contract Should Cover

The contract should include:

• the names and responsibilities of the client and consultant (who does what)
• fees and payment schedules
• other costs
• deadlines
• what the consultant is expected to deliver or produce
• who owns what the consultant produces
• to whom the consultant's report or other material may be released
• level of confidentiality expected
• if it is acceptable for the consultant to sub-contract

This is only a basic list of what you should put in a contract to avoid problems later. Use your judgement in deciding what else you should include.

Paying The Consultant

Everything in the following list should be included in the contract:

• Fees
  All contracts should clearly set a maximum amount for expenses and for the entire job.
• Method of payment
  Contracts should state how you'll pay the consultant.
• Progress payments
  Progress payments are made when the consultant has completed a specific task or reached a given point in the job. Usually, contracts provide for progress payments if a job is a large one or will extend over a number of weeks or months. Be sure to make a progress payment only when the consultant is entitled to them.
• Advances
  Advances are paid to consultants only to cover out-of-pocket expenses. You never pay the consultant's fees in advance.
• Penalties
  Sometimes a contract provides for a penalty if the consultant fails to meet deadlines either for particular parts of the contract, or for completing it. Usually you'll charge the consultant an amount of money for each day, week or month, etc. that he or she is behind a deadline.

Note: Sometimes the original timeframes are unrealistic and extensions become necessary.

Expenses And Other Costs

Make sure that the contract requires the consultant to submit receipts for all personal out-of-pocket expenses such as meals, hotels or transportation. The same is true for all other expenses like the cost of hiring other people or renting equipment to get the job done.

Make it clear that the consultant must explain if expenses will be more than stated in the contract.

Remember, the whole idea behind drawing up a contract is to avoid misunderstandings and surprises!

How To Pay The Consultant

The methods of payment most often used include:

• Hourly fees
  Use only for consultants such as lawyers and accountants who usually bill this way.
• Daily rates
  Use if the amount of time to do the work is hard to predict, but where you have to control the consultant's fees.
• Fixed price or lump sum
  This is often the preferred method of payment. It is easy to budget for and administer. The price includes the consultant's fees and all other costs to do the job. This method is appropriate when you know what work is to be done or the consultant's job is to produce a specific unit of work.
• Fixed price for fees with limit for expenses
  This method is used often. Use it when you know the amount of work ahead of time, but when you can't predict an exact amount for expenses such as telephone, transportation and printing.
• Retainer
  Use the retainer method when the consultant's services are needed on demand. You pay a set amount, and he or she agrees to be available whenever you need work done. If the amount of work is hard to estimate, you can reserve a set amount of the consultant's time for a certain period or for the life of the project. Payments are usually made on a regular schedule — for example, every 2 weeks or once per month, even if you don't use the consultant in that period.

Hiring A Consultant Means Consultation!

One of the keys to getting the right consultant to do a job that's right for your community is to work as equal partners. The important thing to remember is that you can't hire a consultant to come in and tell you what you need. You can't walk away when the consultant arrives and expect that he or she will solve all your problems. Hiring a consultant means consultation. You consult with each other.

 Before a consultant even arrives on the scene, your work has already begun. You have already defined or examined the problem. By examining the problem, you are really helping define its root or source and possible solutions.

Getting Started — Describe The Project

You begin by sending the consultant the terms of reference. This was outlined in a previous section.

Choose A Project Leader

It’s a good idea to choose a leader to manage the project. The project leader is the link between the consultant and the community. Both the project leader and the consultant should meet often and regularly to review progress and to keep track of expenses. The project leader also meets regularly with community members to let them know how things are going.

Responsibilities Of The Community And The Consultant

If the consultant and the community work together, the results of the project will better meet the community's goals and produce lasting benefits for the people within. The chart at the end of this document shows what you, the client, and the consultant should do to help make the project a success.

Did We Get Our Money's Worth?

When the consultant has finished his/her work for you, it is very useful to review the whole experience. Look at both the accomplishments and problem areas.

1. Did the consultant fully honour the contract?
2. Did the consultant's work contribute to community growth, development and independence?
3. Did the project achieve its goals?
4. Did the consultant come up with reasonable findings, conclusions and recommendations?
5. Did the plans work out as hoped?
6. Was the report (if part of the project) clear and helpful?
7. Did the project go smoothly, without misunder-standings?
8. Were expectations realistic?
9. Did you and the consultant work well together?
10. Did you allow enough money in the contract to complete the project?
11. Did the consultant provide useful information or teach skills to community members?
12. Would you hire this consultant again?
13. Would you recommend this consultant to other communities?

The bottom line is: did the consultant help the organization or community solve the problem? Is your community or organization better off as a result of the services of your chosen consultant?

Conclusion

Choose consultants carefully and you’ll usually get the kind of end result you need. Always say exactly what you want. Supervise the work performed. Be demanding — but fair — about the final product you accept.