Using Consultants Wisely

1. Using Consultants Wisely Kathleen Lucey Montague Risk Management kalucey@montaguetm.com tel: 1.516.676.9234

2. Overview • Why use external resources • Know what you want • How to find what you want • How to manage • Contractual considerations

3. Why Use External Resources? • Timing: short-term delivery required. • External funding is available, but headcount increase is not. • Very specialized resources are necessary for a limited time. • You have a challenge and the necessary skill set is not available internally.

4. Timing • Supplement existing staff until replacement permanent staff can be hired and trained. • Cover employee leaves. • Additional short-term resources are necessary to meet unbudgeted management mandate. • Incident management and recovery requires very specialized short-term resources.

5. When to Use Staff Replacement • You know what skills you need. • You know what work needs to be done. • You know how the work is to be done. • You want to actively manage the contractor. • You want to be able to terminate the contractor at will.

6. When to Use a Consulting Firm • You don’t know what needs to be done to achieve the defined objective – or perhaps the objective needs to be better defined. • You don’t know how to organize the necessary project tasks. • A variety of specialized skill sets are necessary – and you or your available staff do not have them. • You want tangible proof of management buy-in. • You want to transfer some of the project risk.

7. Characteristics of an Agency Contractor • Agency, not the individual contractor, assumes risks associated with this contract. • You contract with the agency for hourly services using an addendum to a master contract. • Contractor is generally a freelancer. Paid by agency, much like an administrative temp: you can ask for a replacement at any time. • Usually no proposal with deliverables. • You supervise and manage the contractor, as you would all temporary personnel. • You sign agency timesheets, generally under control of a master contract. • You are billed by the agency based on hours worked x agreed-upon rate. • YOU ARE HIRING A TEMP WORKER.

8. Characteristics of a Consulting Firm • Contracts may be T&E, fixed-price, or a combination. • A detailed and clear, plain-language proposal with tasks and deliverables should be delivered to you. Your responsibilities should be described specifically. Beware boilerplate and marketing language! The proposal should address your specific requirements. • You should not be required to closely supervise members of the consulting project team. You can request replacement of any team member at any time for any reason. • You work with the project manager to resolve any issues that come up in status reports or otherwise. • You have moved most of the project risk to a third party. • You are contracting with a third-party to deliver a set of pre-defined professional services within a certain time interval.

9. Your Responsibilities Contractor • Interview proposed candidates; get references. • Close supervision: demand 1-page weekly status reports: activity of past week, planned activity for next week. Management time necessary is equivalent to that required for an employee. • Resolve any issues immediately with the Agency; replace contractor if necessary. • Know in advance the fee required to hire the contractor as an employee.

10. Your Responsibilities Consulting Firm • Interview proposed project team members; get references. See samples of similar work. See any data collection forms, plan formats, or other documents before making a decision. • Make sure that you understand the proposal. It should be in plain language, and free of excessive jargon. Know exactly what your firm is required to provide. • A Steering Committee is advised to review and sign off on project deliverables and monthly status reports at regular meetings. Your supervisory responsibility is limited to providing the resources detailed in the proposal.

11. Your Responsibilities (cont.) Consulting Firm • If T&E, sign off on hourly charges. Fixed-price is always better for all. • Authorize invoices for payment: professional services (hours), completion of deliverables (fixed price), expenses. • If problems occur, resolve them immediately with the project manager: team member replacement, specific issues. Use the proposal as your guide. • Project engineering change orders may be necessary if conditions change. But these are NOT for errors by the consulting firm in calculation of the time required to complete deliverables – unless you are at fault.

12. How to Find Staff Replacement Agencies • Talk to your colleagues at other firms • Check the yellow pages. • Check the internet • Often placement services also provide professional services contracting.

13. How to Find Consulting Firms • Talk to your colleagues at other firms. • Check BC professional organizations: DRJ and BCI, as well as internet resources. • Check industry services listings. • Send an email with 3-4 questions to candidate firms and review responses. Or send an RFI or RFP if you have time and resources.

14. Contractual Considerations Contractor • Agency replaces contractor at any time for any reason when you request. • Fee for hiring contractor is specified. • Invoicing and payment terms specified. • Approximate term of service is stated.

15. Contractual Considerations Consulting Firm: normally use a master agreement and a detailed statement of work • Firm replaces project team member at any time for any reason when you request. • The names of those persons who will make up the project team are stated. • Fixed-price contracts with payments tied to deliverables are the safest for you, and transfer more responsibility to the consulting firm. • Invoicing and payment terms specified.

16. Contractual Considerations (cont.) Consulting Firm • Length of time for prohibition of hiring company employees is stated. • Insurance requirements are clear. • Dispute resolution terms are defined: look for an arbitration requirement. • Demand that legal jargon be translated into language you can understand.

17. In Summary • Match the solution to your needs. • Do not let bad situations linger: no explanation should be required to replace contractor or consultant staff. • ALL project engineering changes must be in writing. • Know what you are agreeing to and hold up your side of the bargain.

18. Questions and Discussion Kathleen Lucey Montague Risk Management kalucey@montaguetm.com (1)516.676.9234