Making the most of consultants

The Public Accounts Committee (PAC) earlier last month confirmed findings by the National Audit Office (NAO) that the spending on consultants in the public sector in England in the past three years rose by one-third to £2.8billion in 2005/2006.

Of this sum, central government accounted for £1.8 billion, and while it is difficult to say how much is attributable to local government, according to the London Centre of Excellence, £170 million was spent by London boroughs alone last year.

With this level of spending, perhaps it is now timely to review the use of consultants and to question more thoroughly whether value for money is really being received for the role they play.

current trends
Consultants, when used effectively, can undoubtedly provide considerable benefits for clients, but the PAC report also comments that consultants are sometimes used for less appropriate means such as reassigning blame and delaying implementation of policy. Most definitely more attention needs to be given to controlling the work of consultants more effectively and to transferring skills from the consultant to client teams to increase internal capabilities.

In response to its own report, and that published by the PAC, the NAO has recently produced an online toolkit, which enables public sector organisations to answer a series of questions about the use of consultants in an online form. The interactive toolkit then responds with an analysis of areas of weakness, provides guidance on how to improve value for money and illustrates what good practice can look like through case studies.

Nevertheless, at a time when public bodies are facing the need to reduce headcount, it is surely a false economy if consultants are increasingly being employed to plug gaps in the workforce, in some cases doing the same work but inevitably at much greater cost. In central government in particular, it seems bizarre that similar constraints are not placed on employing consultants as there are on employing staff. The fact that their use may enable job reduction targets to be met is surely the wrong indicator to focus on, when it is the cost of running services which remains the central issue.

Currently, in most new large central government policy initiatives, such as identity cards and lorry road user charging (the procurement of which was later aborted), much of the design and thinking behind the schemes is undertaken by sizable teams from the major consulting firms. This means that a large amount of the initial thinking is undertaken in isolation from the industry that ultimately will be contracted to deliver it. Engagement with the industry is neither insisted upon by the client nor sought by the consultant.

Consequently, there is a dangerous disconnect between policy and operational delivery and it is this that often results in the specifications on which services are procured being changed at a later stage. For some major projects this has led to delays in implementation and has been the root cause of some of the high profile IT failures.

in-house resources
In too many cases departments rush into the use of consultants without first thinking about in-house resources or engaging directly with the industry much earlier to discuss the deliverability of some policy solutions. Many civil servants fear that such engagement will prejudice the ultimate procurement process or lay the process itself open to challenge.

From an industry standpoint, earlier engagement would be welcomed because it gives greater clarity of what can be expected should they ultimately be invited to bid and it avoids wasted time in the procurement process which is costly. Interestingly, through earlier engagement, much of the work currently undertaken as part of a consultancy assignment would be undertaken by the Business Process Outsourcing (BPO) providers through the bid process as part of the cost of bidding.

skills gap
There is clearly an organisational skills gap which consultants are currently filling. A recent report by the Improvement and Development Agency (IDeA) on skills gaps in local government highlights an alarming position, confirming why it is time to redress the balance. Based on replies from 195 local authorities, the report found the most common skills gap was in organisational development and change management for 72% of responses, followed by business process redesign (61 %), performance management (60%) and customer relationship management (48%).

This is very telling since these are the skills required by an organisation if it is to change the way services are delivered. I have no doubt that the same skills gaps would be identified in central government if a similar survey was to be undertaken.

If the public sector is to modernise, the choice is therefore either to develop skills inhouse or to continue with the traditional route of buying in skills from consultants. The second is easier, more accessible and more immediate than the first but in the long term, recruitment of full time personnel and training of existing personnel must provide better value for money.

another way
There is, however, now another option to consider and this is through developing partnerships with business process outsourcing (BPO) companies in which the skills necessary for change, as identified by the IDeA, are a part of the benefits they bring to these relationships. There is then no longer any need to pay for expensive shortterm support because, through these partnerships, there is long-term consultancy capacity and operational skills available, linked with contractual responsibilities to deliver - something which is not offered by consultants. This relationship also provides true skills transfer, since teams work together over a seven to ten year period.

However, one of the biggest barriers to developing partnerships with the private sector, and therefore the ability to unlock this resource, is the lack of procurement skills in public sector organisations. This means here again, currently much reliance is also placed by organisations on consultants to run the process.

vital change required
From my experience, there is an increasing acceptance that the public sector needs the delivery skills of the BPO companies but we have yet to find a way of working together that both are comfortable with to fulfil this potential. One has the ethos and understanding of statutory responsibilities to the customer and the other the reengineering and delivery skills.

In my opinion, the time has surely come for these procurement, commissioning and re-engineering skills to be directly employed in every large public sector organisation. These are so vital to future service delivery that it must be wrong for organisations to continue to rely so heavily on external resources.

I recognise that for medium and smaller sized organisations this is more difficult but maybe there is a major role here for the Office of Government Commerce in central government and the IDeA or the regional centres of excellence in local government to support organisations by either providing these skills directly or assisting in their development through training.

This will enable public bodies to share best practice and will encourage collaboration on procurement. It will also allow bench marking on costs, sharing details of projects and monitoring performance of operators.

Above all, this will stop consultants and lawyers being paid for selling the same thing to more than one customer and will enable the transmission of knowledge on projects between authorities which currently exists mainly within the world of the consultant. In this way, I suggest, public bodies will begin to redress the balance in the current dependency on consultants.