NZTA’s spending on consultants has been in the news recently; millions of dollars have apparently been spent on investigation and design for the RONs. Some people, such as Gordon Campbell, have suggested the money is being spent on “consulting oligarchs.”
As a consultant myself I find such discussions very interesting. Afterall, someone has to design these things and we sure as hell want to get it right: Auckland is littered with examples of poorly designed transport infrastructure. For this reason I suspect society is prepared to pay quite a lot for well-designed transport infrastructure. On the other hand, there are valid questions to be answered about whether our spending on consultants is as effective as it could be. I think not, even if I know that talk of “consulting oligarchs” is a tad OTT.
In this post I will attempt to provide some brief personal insights into how transport consultants actually operate and some personal reflections on whether it is effective and how it might be improved. The best starting place is to think about the ways that consultants get work. That is, is the money handed to them on a plate? Or do they have to kow-tow to the Government Gods by upping quality and trimming their prices? The truth, as usual, is somewhere in between. By way of background, consultants typically get work through one of three unique channels:
- Direct referrals – Where a particular consultant is shoulder-tapped by the client to deliver a particular project. These are usually awarded where a particular consultancy has done the hard yards in drumming up interest in a project, or is the obvious market leader in a particular area.
- Invited tender – Where a select group of consultants are invited to submit proposals for a particular project. These occur where the government client has a good idea of what they want and also which consultancies have the skills to do the job, but they want to provide some scope for competitive tension and innovation while maintaining transparency.
- Competitive tender – Where the government client knows what it wants but wants to see what the market can offer either in terms of quality of price or both. This is really the neo-liberal nirvana …
Now most people would intuitively think that #3 (competitive tenders) are the way to go: After all surely this option provides the best way for government clients to receive the best combination of quality and price?
The problem is (and it’s a big problem) is that #3 can be extremely inefficient, especially for small projects. The reason being that competitive tenders are very resource intensive. In preparing a response to your average $200k transport project a company might incur $20k in costs. And in the long run these tendering costs will ultimately be borne by the government client, because consultants will need to make back the costs of tendering from the jobs they win. If they do not recoup the tendering costs overall then they will eventually go out of business, which reduces competition.
But that is not all: Having received the tenders the government agency must then spend considerable time carefully evaluating each one. This is not a quick and easy process: Think of the costs involved in having people to read 10 proposals of 100 pages each, before then getting together to evaluate which is best.
All in all I think that competitive tendering ends up costing our government clients considerable amounts of money, both directly and indirectly. Intriguingly in some instances, especially for small projects, the costs of tendering is likely to exceed the social value of the project, i.e. society experiences a net economic loss from a competitive tendering process.
Fancy that I hear you say?!? Competition that yields higher, rather than lower costs. From an economic perspective competitive tendering can be characterised as an arms race with imperfect competition. The arms race occurs because tendering costs are a “race to the bottom” – consultancies throw everything they have into the tender because the pay-offs are highly asymmetric; you either win and take all the booty or lose and get nothing. Just like in nuclear war, although in this case “winning” means avoiding annihilation, which is the fate of the loser.
But that is not all, competitive tenders are also characterised by imperfect competition because:
- There are large barriers to entry into the transport consultancy market – such as specialized/local knowledge, which prevent new consultancies from simply starting up in response to high prices; and
- There are economies of scale, i.e. the optimal firm size is larger than the level that delivers effective competition. This is largely due to the presence of fixed costs and cyclical demands creating a need for diversification.
The combined effect of this arms race and imperfect competition is that transport consultants know that ultimately (and at some point) they can pass on the costs of competitive tenders to their government clients – and that their competitors are doing the same. And this ultimately will mean that the costs of consultants will be higher than it should be in a case of marginal cost pricing.
But enough with the theory, what about in practise? Well, I think that up until recently (i.e. early 2000s) NZ’s transport consultancy market was dominated by big players, such as Opus, Beca, Aecom, SKM, GHD, and Connell-Wagner. These consultancies knew that they had market power and boy did they exercise it: Consultant rates boomed and high profits resulted.
Recently, however, I suspect that a combination of factors have driven profit levels down. The first is simply that the rents extracted by the consultancies stimulated increased competition. This competition was aided and abetted by improvements in telecommunications and lower cost airfares, which made it possible for smaller, niche companies to overcome their lack of scale and local presence by pooling resources across countries and thereby servicing the NZ market. This is the story of my company.
The second important recent factor is that government clients have started to manage the tendering process better and in the process help to make the consulting market more efficient. This has been achieved, for example, by filtering potential consultancies and managing proposal costs. This ultimately means the the average costs incurred in winning work across the industry has probably come down, benefiting our government clients.
Let’s briefly consider how government clients might extract better value from transport consultants; some of my ideas include:
- Proactive pre-filtering: Combine the best elements of competitive tendering and invited tender by going to market early with a very specific request for expressions of interest. Invite respondents to come and present workshops to your staff. The government can then select the top 3-5 consultancies to submit more detailed written proposals. It’s better to let consultants know early that they do not make the grade, rather than have them incur considerable costs for no cigar.
- Reduce tendering costs: Don’t think that you can externalise costs onto the consultant. In the long run costs will be reflected back to our clients, just in an indirect way through higher average hourly rates. For this reason it is in your (collective) interest to reduce the costs of tendering through, for example, being clear in your requirements. I would strongly suggest you specify a page limit (say 20 pages) and also specify your budget (especially for smaller strategic projects) so that the consultancies’ effort is invested in quality rather than a guessing game about the budget and other people’s prices.
- Reduce barriers to entry: In my experience, NZ government agencies have an almost pathological attachment to receiving hard copies of tenders. This creates a huge advantage for local firms who effectively get an extra 1-2 days to develop their proposal, compared to consultancies located in other cities who must instead courier their proposal in. Many Australian tenders now accept electronic submissions, which is a really good way to increase competition from consultancies located elsewhere (and also reduces costs).
- Reduce risk: I think one of the major issues with competitive tendering is the “winner-takes-all” mentality. While in some places this makes sense (e.g. where considerable intellectual IP is being involved) in others it does not; for example reports that will eventually be made publicly available. For these types of projects government clients could possibly consider a process whereby they force different consultants (say the top two) to work together on a project. Or alternatively, the top consultant could win the job while the second best consultant is commissioned to perform a peer-review of their work. In this way the risks of not winning are reduced and the arms race mentality of competitive tendering may be subverted.
I should also say that I tend to agree with Gordon Campell when he suggests that government clients would do well to internalise more of the simple, repetitive functions that they have outsourced to consultants during the last few years. The way to do this is simple: Make sure that you are not using consultants for cookie-cutter projects; instead develop your internal capacity. As Tim Hazledine has noted in his critiques of NZ’s economic reforms, transactions costs are not insignificant and sometimes best overcome by simply developing the capacity of the public sector (again, a good topic to raise with your neo-liberal minded friends).
Finally, what does this mean for salaries? Are transport consultants over-paid? Well, in my experience they are not relative to what they could earn in other professions. A new graduate might earn between $50-$60k depending on their academic background and level of knowledge, whereas someone like myself with 7 years experience can expect to earn between $80-$100k. Salaries in the sector go up to about $200k depending on the level of management responsibility you take on. So in my experience transport consultants are fairly well paid, but not excessively so.
And this indirectly answers the question posed in the title of this post: Do consultants fees reflect private super-profits or public sector waste? My suggestion is, in the past, super-profits were earned, but that the market is increasingly competitive and further gains are most likely to come from improving public sector procurement practises (which currently rather ironically tend to externalise costs onto the private sector). But I’m only a relatively young buck so I’d be interested to know what some of the other wiser heads that read this blog think about the effectiveness of consultants and the wider tendering process?
You advertising or pitching something there Stu with the last three paragraphs
– also welcome back from your leave?
The first question that comes to mind is the old debate of In-House and Tending to Consultants. I can already hear Penny Bright and the Centre-Left in Council chanting “In-House” for work on projects such as transport, while I can hear Brewer and Quax chanting the neo liberal – consultant model rather loudly.
So which shall it be: public “in-house” or those consultants
I know with Kiwi Rail that is a vexed and hotly debated topic especially with the DL locos, new freight wagons and to a point the Auckland Rail Upgrade projects.
As for Do consultants fees reflect private super-profits or public sector waste? – probably both – especially with our current government.
I know this sounds like fence-sitting but you need both in-house employees and external consultants. The in-house employees can get standard things done in a timely way and with low transactions costs. The external consultants can provide an external point of expert reference. The right balance depends on the project and is achieved only through careful thought.
One of the sad things about our current model is the lack of accountability – for example, when I come across a poorly designed signalised intersection (e.g. Victoria and Kitchener) I can no longer go to the council and complain and find out who did the design. Instead the details are buried somewhere in a report that no-one knows about. I suspect that a greater in-house presence would deliver this accountability, but I’m not completely sure.
Agencies also need the in-house expertise to be able to evaluate quality, both during tendering and afterwards. Getting rid of public servants has costs.
completely agree.
Thanks! Good to be back.
I general I agree with your post, but in this discussion largely misses the pint that Phil Twyford and Julie Anne-Genter made about NZTA consultant spending. The real issue is that huge amounts are already being spent on the RONS over the last few years, and I guess this draws the attention that huge sums can be spent planning before any sod is turned.
The other issue is that more and more of this projects are being delayed, so poor timing of spend is also important. And if this poor timing results in concurrent spend in the same area, will push prices up, and companies able to be more monopolistic as enough work to go around. The rushed nature of the RONS planning would also add costs due to lack of prior planning meaning that tenders would be uncertain, and would be high provision for variations due to route changes/ geological changes etc.
Often also consultants contract consultants with there being several layers. My company does alot of work for NZTA but we actually contract to the Property group who NZTA outsources all their land related legal work too. For larger jobs like RONS work much more likely to go to one of big players, who would then subcontract specialist work to specialist small consultants if required.
Yes I agree – Phil T and Julie G were commenting on the wisdom of spending on consultants for the RONs project which are years away, not spending on consultants in general. But it provided the prompt for me to bang out this post, which had been rolling around in my head for some time
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“Phil T and Julie G were commenting on the wisdom of spending on consultants for the RONs project which are years away”
That’s also true of non-RONS projects. Planning, conceptual design, and business cases all cost a bomb. Especially if you allow for the RMA, a few rounds of public consultation, and a visit to the Environment Court. The CBD rail tunnel hasn’t even been approved yet, but the spend so far to protect the route will likely be tens of millions of bucks.
But in general, your experiences mirror mine in the IT sector. Printing four bound copies of a glossy 40 page proposal will set you back $250. Because you won’t win with something printed on your desktop printer, and the government agency won’t accept an e-mailed proposal. I’m all in favour of small tenders and small responses… Some of the larger tenders look as if they’ve been thrown together by committee, combining everyone’s questions so that you see (essentially) the same question or requirement listed in two or three places but with slighly different wording. We’ve not responded to tenders because the work involved is too great and because no one in the team wants to spend a couple of weeks addressing requirements that are so stupid they’re insulting. For instance, warning bells go off when agencies want you to include the last four years of your multi-national corporate accounts, or ask for biographies of your directors, or ask a dozen questions about your health and safety policies.
I get the point over open tender versus other selection methods. But the open tender method has one thing going for it: Anyone can respond. It REALLY pisses me off when IBM or Oracle are handed a huge contract without a competitive process, when we would have quoted half the amount and done a better job if we’d been allowed to bid. IMHO there are too many contracts allocated to friends (or allocated on the grounds of inertia) in NZ.
1. Yes – in principle I don’t object to spending money on consultants for planning purposes, including for the RONs. Julie’s comment below raises questions about the quality of the spending to date, which is something that I’m not prepared to comment on although it does not surprise me to hear suggestions of a “you scratch mine and I’ll scratch yours” approach to these projects.
2. Yes – competitive tender is great for reducing barriers to entry for new firms. I think combining competitive/invited tender is the best way to go though – let everyone present in person, but only invite the best consultants to tender. That way the small companies have a chance of getting their name in the rung, but you don’t incur huge costs in doing so.
All great points, and yes, my criticism was more about the huge scale of spending on unproven, political projects like the RoNS, than about who is doing the work.
Interestingly, though, much more $ was spent on the Wellington RoNS. Now, I happen to have an insider view, both having worked for one of the big fish consultancies and having friends who worked at said consultancy in years after I left.
I know that there were regularly workshops held, with 10-20 senior managers who all would have charged at least $250 an hour, and NZTA. Such a workshop wld’ve cost $15k a pop, and judging by the account I heard, the content was pretty appalling. As in, they were laughing at the entirely logical (and since, proven) suggestion that rising fuel prices would reduce growth in traffic volumes in the future. Sigh.
Since then, the senior consultant who previously managed the relationship with Transit NZ has gone to work in the SH section of NZTA, and the consultancy has been paid millions for investigation and design of some of the RoNS.
As Stu rightly said, there’s nothing necessarily wrong about commissioning specialist independent advice from consultants. My worry wrt the RoNS is more about the ability of the big consultancies to provide advice that isn’t just what the Govt wants to hear, especially when they can pick up lots of design and project management work subsequently. I suppose that if the work was done in House though, it mightn’t be easier to change direction either…
More important to highlight just how insanely costly these projects are, and how they will only affect a tiny proportion of daily vehicle trips. Probably less than 5%…
Many can’t think of a good word for RoNS. I can: boondoggle.
The term “Boondoggle” may also be used to refer to protracted government or corporate projects involving large numbers of people and usually heavy expenditure, where at some point, the key operators, having realized that the project will never work, are still reluctant to bring this to the attention of their superiors. Generally there is an aspect of “going through the motions” – for example, continuing research and development – as long as funds are available to keep paying the researchers’ and executives’ salaries.
The situation can be allowed to continue for what seems like unreasonably long periods, as senior management are often reluctant to admit that they allowed a failed project to go on for so long. In many cases, the actual device itself may eventually work, but not well enough to ever recoup its development costs. While cost overruns are a common factor in declaring a project a boondoggle, that does not necessarily mean the project has no benefit.
http://en.wikipedia.org/wiki/Boondoggle_%28project%29
“Competition that yields higher, rather than lower costs” – this is rubbish anti-free market drivel. The problem isn’t that competition increases costs its that the competitive tendering process increases costs! Surely there is an element of competition in the direct and indirect tendering process too – i.e. the tendering government agency selecting the best suited company from an array of options. The competitive tendering method isn’t more competitive by nature, it just has the word competitive in it.
Slightly confused by your comment … this is a situation where competition can lead to increased economic costs. Consider a situation where 10 companies spend $5k on a tender = $50k economic cost for a winning proposal price of $100k. If 20 companies compete for the same tender, then total economic costs increase to $100k, while the price may drop to only $90k. In this case the public sector has procured $10k of savings, but in doing so the private sector has incurred $50k in additional costs, of which a large proportion will, at some point in the future, end up being lumped onto the public sector.
Not sure what you mean by “anti-free market drivel”? For the record I’m fairly pro-free market, but that’s hardly relevant?
I think you might just be equivocating with the word ‘competitive’ to make the facts fit your economic dogma.
Sorry Ian, who/what dogma are you referring to here?
P.s. I should have used the word “open tender” rather than “competitive tenders” because for various reasons open tenders are not necessarily competitive.
So sorry. I meant to quick reply to Chris. Ooops
Competition always increases costs. It must do due to the duplication of services. This isn’t to say that competition should be dropped, it has it’s place it’s just that that place isn’t everywhere.
Julie Anne Genter said, “My worry wrt the RoNS is more about the ability of the big consultancies to provide advice that isn’t just what the Govt wants to hear, especially when they can pick up lots of design and project management work subsequently.”
This is the real problem with the process. Working in a university, pitching for consultancy projects is very much like putting together research proposals, and a considerable amount of energy is expended on second-guessing what it is that those putting out the tenders think they want. with the current govt’s evident bias in favour of roading, it’s hard to imagine that consultancy-land is not well aware of those preferences. Of course, the same is very likely true of AT and calls for work on the CRL – no prizes for guessing what that client wants to hear either…
Chris said ‘ “Competition that yields higher, rather than lower costs” – this is rubbish anti-free market drivel.’ This betrays a lack of understanding of economic theory. Stuart made it very clear which particular departures from the free market (more or less never realised) ideal of a perfectly competitive market add cost to the competitive tendering process. There is at the very least, no doubt whatsoever that many of the more cookie-cutter projects currently put out to competitive tender could be more cheaply and efficiently delivered by NZTA employing more in-house expertise and avoiding paying the risk-overhead involved in making consultants compete for such work. I for one am impressed by Stuart’s even-handed take on the nature of his business!
Many (most?) of the consultants we are talking about are probably members of professional institutions like IPENZ, ACENZ and NZPI. All of these organisations have Codes of Ethics that members are expected to abide by; generally they include requirements like sustainable management of the planet’s resources, contributing to the well-being of society, giving advice that is their true professional opinion, etc.
I have some difficulty that all of my professional colleagues can, hand on heart, say that they have taken on board all of these considerations when providing advice to their Clients (a similar point could be made about those professionals directly employed by the Client). If that were the case, I would have expected to see a lot more situations where the answer was “actually I don’t think this is the right option” or “I believe we should be looking at this alternative instead”. But of course the risk with sticking to your ethical principles is that you don’t get any further work from that Client or you get fired from your company for causing trouble…
Maybe that’s why I am enjoying the switch from consulting to academia – it’s in my job description to be the “critic and conscience of society”…
Completely agree; IPENZ need to think a bit more creatively about encouraging members to act in line with the profession’s code of ethics, rather than their company’s interest. And government clients need to respect a consultant when they don’t support a particular request.
Academia certainly has that appeal about it …
Hi Stu, great blog post. Very thoughtful. I love the suggestion to stop requiring hardcopies of bids. It can be a real pain when competing for work outside of town.
Re the developing specialised in-house nouse, I think the biggest improvement I’ve seen in this space was the Auckland amalgamation. They’ve now been able to develop specialist roles and skill areas equivalent to central government, and can fund the same kinds of external advice that central government agencies buy. If only Wellington councils would learn from this…
Re some of the general vibes coming through in the comments, I haven’t seen any blatant actions that aren’t in the clients interest. If any frustrating directions are being taken that can be more driven by the structure of the contracts and the context and scope placed by clients. Often clients may change what they want halfway through, but consultants are still legally obliged to follow through with the thrust of the RFP, proposal and ultimately the contract, unless it’s formally changed.
If I have beef it’s with procuring research (i.e. the stuff where you don’t know what you’ll find until you’ve found it). It’s still procured as though consultants just provide widgets…
Hey Chris –
Thanks and yes I agree with you – the formation of the Auckland Council and Auckland Transport has helped to suppress consultant procurement costs, at least in the fields that I work in. The main advantage has been, as you note, the way that the internal economies of scale have flowed through into more specialised positions that in turn helps them procure work in a way that balances costs versus competition.
From what I know of the people at AC and AT they are making a really good fist of over-coming the challenges they face, not the least of which was simply the “loss time” associated with working through the re-organisation and said people getting feet under desks. The staff at AC and AT are now working really hard to catch–up and get ahead of the curve. It’ll take time but I’m fairly confident they will get there.
On the other hand I don’t have such a good feel for Wellington but will take your word for it!
Yes the procurement of research is an interesting questions – and one where you would think there was scope for the government to foster some form of “competitive collaboration”. Maybe more of a panel/bulk but contract? Get a panel of researchers together, give them a few projects to finish and a lump sum of money and go to it. Also, because the IP is all ultimately ‘public’ I would expect that consultancies would not mind working together so much.
.s
There’s this remarkable invention called university that that competitive collaboration you mention works well in.
“where that competitive…”
Minor correction.
the tender process (as you a have mentioned direct, competetive and invited) is only one part of the overall procurement and delivery process. You are actually referring to supplier selection methods. Also, each of the different supplier selection methods that you have stipulated have a number of different evaluation methods that can be utilised.
I also note that the wording that you have used to describe direct, competetive and invited are incorrect and have either been taken out of context from another source or from a lack of understanding.
Your four ideas to get better value, again, show that you have not done your homework:-
1. Proactive pre-filtering: THIS ALREADY HAPPENS. Refer any procurement manual from a government agency. Expression of Interest phases are commonly included in the process if they can add value or minimise costs to all parties.
2. Reduce tendering costs: THIS ALREADY HAPPENS. Page limits, again, are included in pretty much all tenders. A number of agencies already also run Pre-Qualification systems so suppliers dont have to provide reams of information each time including AC, AT, Watercare, Kiwirail, Vector etc .On more advanced tender evaluation and selection processes details of the clients budgets and estimates are clearly shown.
3. Reduce barriers to entry: THIS ALREADY HAPPENS. Refer LG Tenders On-Line, GETS and the new AT Electronic Tender Portal. These things have been in use for ages.
4. Reduce risk: THIS ALREADY HAPPENS. Auckland Transport quite regulalry appoint Primary and Secondary suppliers to carry out works and have also in the past selected a Supplier Panel. Also, pretty much all reports in particular are peer reviewed. Peer Reviews alone are some consultatnts only jobs, as there is that much of it. Also do you understand the Producer Statement process? Your comments about forcing consultants to work together is unrealistic. ‘Forced Marriages’ have ben tried in the past and they have failed miserably as the commericial arrangements of seperate companies do not work unless they are set up specifically. This is OK if this is the plan from the outset, but forcing things ends up in disaster.
I dont want to give you a hard time, but i also work for a consultant and the comments you have made actually worsen the already negative view that consultants have.
You will find that an orginisation such as the Auckland Council will evaluate a project and how it is delivered with a range of supplier selection and tender evaluaiton methods to understand the best way to get what they need.
If you just focus on the area that you have highlighted, you can use the tender value (raw cost), to create a picture of the tendering process that is sinister and plain wrong.
You need to pitch your comments in the context of the bigger picture which includes Supplier Selection Methods, existing supplier agreements, Evaluation Methodology, Conditions of Contract, Whole life costs (including to industry) and other legislative requirements.
If Stu’s guilty of being idealistic, then so are you Jim. Just because there are well developed procurement processes and ideas in existence doesn’t mean that everyone procuring is doing things as well as they could. There’s huge variety in the scope and quality of those procuring. That could be driven by the huge difference in the experience of those procuring; some like NZTA outsource nearly all of their planning, appraisal, design, construct etc, and for many things they’re very good procurers, because that’s their bread and butter. (They’re not perfect — the more something is a one-off then the more the problems.) For many other people procuring they have very little experience, maybe running a procurement only once every year or two.
Stu’s main point that there’s a very big cost loaded onto industry to comply with procurement processes is very important. I think if there’s one key message to take away from Stu’s piece it is that. And you seemed to have missed it.
i havent missed the point, but maybe failed to elaborate. It is very easy to say that things can be done cheaper, but that needs to be qualified. I also agree that there is always room for improvement
if you only look at the costs of tendering as an indicator for the cost to an industry/economic perspective, this doesnt tell the whole picure.
skill of procurement staff – if they have to outsource or expend more resources carrying out the task then what are the options? You could train them or employ higher skilled staff, but who pays for that. If i want to go to sydney i pay Air NZ for a ticket, i dont go and get my own pilots license.
Government agencies have got to demonstrate accountabillity when they are spending public money and that they are discharging their responsibilities appropriately such as engaging a LBP, they cant just award work to anybody. This process costs money.
On the otherside, the suppliers have got to demonstrate that they can do the job and do it properly. this also costs money.
There is always a cost to business (a lot of it boils down to compliance) and whilst i agree that processes could be smoother with less red tape, some of these activities still need to be done.
My main frustration with the original article, whilst you consider the sentiment to be sound, is that the comments and descriptions are incorrect, out of context and the later remark regarding ethics is shocking. They serve to perpetuate the idea that consultants are wasting money, as it shows that some consultants dont know what they are talking about.
Jim, if the costs of tendering outweigh the value of the work then it’s not worth doing the work. So in these instances (which I’m certain have occurred in the past and will continue to occur in the future) we’d be better off not doing anything, or – to use a controversial example – select consultants at random.
Compliance is important – but if the compliance costs of getting the work done externally are too high then either compliance processes need to change or the work needs to be brought in-house.
Not sure what you are referring to when you mention ethics.
how do you define the value of the work?
Hi Jim,
Yes I am talking about procurement and supplier selection methods in particular. Comments on the post indicate that people have understood what I am talking about – so common sense suggests your criticisms of my terminology is a bit anal. Much of what you mention is not relevant to this post, which is focused simply on how transport consultants win work and whether they do so at a reasonable price to themselves and ultimately their clients.
With regards to doing ones’ homework, I’ve been around and about for seven years now, obviously not long enough to know much but don’t despair I will keep at it and hopefully know more by the time my number’s up. In my defense, if you read the 3rd paragraph in my post you will see that I have used the word “personal” twice – this was a conscious effort on my part to put my hand up and openly say “I may not know much but here is what I think I know and I thought you may be interested.” So I feel like I have been completely honest about the personal origins of my comments, and (notwithstanding what you feel) the general comments indicate that most readers have learnt something, if only what my perspective (“confessions”) is as a consultant. For this reason my reaction to your comments is generally one of: Calm the fudge down.
That said, I am sceptical to your suggestions that “this already happens”. Yes these things do sometimes happen, but so does snow north of the Bombay Hills so what’s the rub? More specifically, in my time as a consultant I’ve seldom seen page limits specified (once from memory) and/or gone through an electronic only submission (three organisations, two in Australia). And just the other day I submitted a high-profile proposal for a relatively large project (to a relatively large NZ council) that required electronic copies to be submitted on CD or USB – as well as hard copies. I wanted to scream “have you heard of the INTERNET”?
Some of your other comments completely miss my point: While pre-selection processes are common, they are usually vague and quite meaningless exercises that consume more resources than they save. Quite often they also tend to heavily favour the incumbent consultancies and do not allow new entrants to gain face time with potential/prospective clients. Instead, you get your name on the panel and that’s the end of that – they gravy train chugs nicely stopping at the good old boy stations while new kids on the block are left wondering what happened.
Thinking back, I have never experienced a robust/efficient pre-selection process for a specific project. For example, the typical process is EOIs –> Tenders (always) –> Interviews (sometimes) –> Award. But in terms of total costs, tenders is usually the biggie so in my post I have suggested EOIs –> Interviews (always) –> Tenders (sometimes) –> Award would be more efficient. In this way you push the big cost associated with tenders to the end and save everyone a lot of time and money. I think you may have missed this distinction.
I can’t see how my comments worsen the perceived view of consultants at all – at least compared to the earlier comments on NZTA’s spending on consultants. If anything I’m defending what we do and are suggesting that if there are costs to be saved then it’s from more efficient processes rather than screwing down consultants. And with regard to AC/AT if you read my response to Chris’ comment you can see that I view their supplier selection methods relatively favourably.
The open tender process (your language) is not sinister in my opinion, but it is extremely inefficient – to the point that society would actually in some cases be better off without it, at least for projects under a certain size. Your comments suggest that the open tender process is well-managed, of which I’m sure it is, but if anything that only increases my suspicion that the process costs more than it delivers.
Regards,
Stuart.
Thanks Stu, yes more collaboration on research directions would be great. There are a lot of consultants out there that actually like working on interesting projects with interesting people across the traps and will make a good go of it.
Really interesting post. Thanks.