Guiding Quote

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” Einstein

Thursday, May 3, 2012

Project Managers and Consultants - Gota Bill!

Most consultants are decent intelligent people who can add value to a lot of companies. Consultancy firms are another matter. Their job is to be billing machines who measure success not by the value they provide to the customer, but purely on how much revenue they have extract from a given victim.

Strong words I know, but rooted in personal experience. When you’ve seen sensible people driven to perform in an unprofessional manner by their company’s utilization targets, like I have, then you’d use strong words to.

The first adage in a consultants business life can best be summed up in a paraphrase of Gene Kelly's line in the movie 'Singing in the Rain', which was: "Gotta Dance!": for consultants it's Gota Bill! Gota Bill!

So the first thing to do is to recognize that a consultant is just like a taxi; the meter is always running! If they’re on site with you or assigned to your project and you don’t get them working straight away they’ll still be billing you. When I worked has a consultant clients would sometimes apologize for keeping me waiting. I would smile, say it was fine and inform them that I was a taxi and the meter is running! I usually didn’t find myself waiting too much after that.

Consultant are measured on how much they bill you or your client. Typically consultants are given utilization rates of around 90%. That means that in a regular forty hour week they need to charge for thirty six hours. But the target in general doesn’t account for vacation time, holidays, travel time, sickness etc. So avoiding tedious math it generally means that the consultant is driven to bill more than forty hours per week on your project.

So, in the context of “know your enemy”, if you have consultants working on your project make it you’re first task to find out what their utilization targets are. They will have a significant impact on your budget. If you’ve been planning on a burn rate of forty hours a week and they are billing you forty four hours then it won’t take long for this to show up in your project metrics. You’ll either need to adjust your project plan to reflect this, so they have forty four hours of work to complete per week, or continue to plan on forty hours and tell them, and their management, that up front.

Also watch out for “extra services” that you didn’t know were coming. One device for extra billing is to assign a proportion of their manager’s time to the project. So you suddenly find on the invoice a bill for the efforts of a person you’ve never seen.

Another addition is training time. Some consultants will charge you for their internal training or for internal meetings, your project’s money paying for non-project activities. If you see this type of billing, challenge it straight away. 

Billing is always an issue on projects when consultants are involved. The best political strategy is to have a meeting very early in the project, first week should be the goal, and thrash out the billing process and their billing philosophy. Ask the hard questions and get some concrete answers, no consultant flannel. Then check the first few billing cycles to see what they are actually doing and challenge them if they are doing something other than what they promised. Better to have a discussion when the amounts are small than wait until they are large and it becomes a major point of contention.

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