Consulting firms selection tips
You just started a new year and a new project is requiring some help from consulting firms. Sales rep started calling you every day to check on the status of the RFP and your budget is being highly impacted by what should be saving you time.
How to properly negotiate with consulting firms?! I fell like this is a hard one to answer. It’s like how to understand why software publishers have price lists while they are providing you with 75% discount after the first round of negotiation or why we keep the Santa myth alive while we are saying that we should never lie to children. Right?
Let’s answer this question first: “Why do we need consulting firms services on this project?”
1-Lack of time, all internal resources are overwhelmed and we cannot reschedule this project? Really, let’s evaluate the cost of rescheduling vs. the cost of having consultants on this project. Have we evaluated the ROI of the project? We better do that prior to start making any moves. Don’t under evaluate the time that will be required to benchmark, evaluate and follow up on the consulting provider. Include this analysis in the Go/No Go decision process.
2-Lack of expertise, this project does involve a very specific expertise that doesn’t require a full time employee to be trained on. This is a temporary development that we need and we will be able to administer this later on.
SO? Don’t select vendors, who will allocate junior resources on your project, who will learn at your expenses! What’s the point? You’d rather pay a little more but have the guru on your projects. It will be a waste of time to hire a Junior consultant who will spend a week struggling with your processes.
Then here is a list of questions you’d better work on prior to start the RFP. First list the criteria you want them to meet in order to take a wise and balanced decision. It will help your project to start on time, be delivered within your budget and time constraints, will help you leave the office without the frustration of having another kid (project) to babysit, and it will also help you decline some of the proposals and don’t lose hours dealing with justification for the losers.
Expertise in managing similar projects. Request 1 to 3 examples and references that you can contact to get feedback. You will learn a lot about the consulting firms but also a lot about your own project and future challenges. Prepare your notebook, those calls are usually full of tips and lessons learnt. See list of questions for an efficient reference check call.
Get to know them personally. Require to meet the consultants allocated to your projects prior to sign anything. If you cannot get along with the consulting team, who will? It will discredit the entire project and your department if your internal clients don’t like working with them. The project may fail just because they could not understand each other (off-shoring may be cheaper but guys? think about time difference and comprehension issues). Internal clients were checking blackberries or doing cross words while the consultants were leading workshops because they are damn borrrrrrrrrrrrrrrrrrrring. Who said that people don’t need be entertain at work? A successful project is a project which gets everyone attention, whatever is required.
Set up milestones and payment plans. No way you will start paying the first tier before achieving the main key steps, re-negotiate with them systematically. They want to have 50% up-front, uhhhhhhh! Da! Check the payment schedule in your proposal.
Methodology and project management. Request to see templates and detailed approach, you don’t want to babysit them. You want to have a clear visibility on what was done every day. Project Status Report is the key.
Meet with the Top Guys. Meet with Sales rep a couple of times and then involve their top management at some points. They are the only ones willing to provide you with high discount. Share some insights about their competitor’s proposals if it helps them align their prices.
Time Materials vs Fixed Price: it is a hard call. I think both are not ideal, in some situations you will feel reinsured by the fixed price, but whatever will fall out of the scope will be a change order… so what’s the point. You’d rather negotiate at the hourly rate level, get an estimate on the full scope, keep their top management involvement if milestones are delayed or if you are not satisfied by the team allocated on your project.
Plan for extras: make sure to include the extras in the proposal, such as support time. Once the project is live, you may still need their help. Make sure to negotiate the rates up-front otherwise, what will be your negotiation leverage at the end of the project?
Let me use this metaphor, that will definitely make you smile during the next meeting : Picking the right consulting firm is like picking your husband-to-be, everything looks good during the pre-sales phase but what should you expect once the contract is signed?
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