Thursday, 25 March 2010

Value of consulting

The Management Consultancies Association has produced a report on the Value of Consulting, which estimates the value of consulting to the UK economy as around £56 billion. It looks like sound quantitative research. An academic, Tim Morris, from Said Business School in Oxford has advised on the methodology:
  1. a survey of time spent on training, innovation and service development from over forty consulting firms
  2. a survey of client satisfaction on more than 1,800 projects
  3. a conceptual model of the value consultants add to client organisations and interviews with thirty clients
Thus the answer to 'how much value do consultants add to clients?' is, for very satisfied clients:
"between two and 20 times their cost, or on average, around 10 times the fees paid. This suggests that the benefits of using consultants are worth around £56 billion to UK clients, a return of £6 for every £1 invested."
At that rate, you'd hesitate to reduce your use of consultants, wouldn't you?

The very satisfied clients accounted for 58% of the survey cohort, and 41% described themselves as satisfied. I suspect however, that if you've spent a lot of money on something, it would be too embarrassing to acknowledge post-purchase that you'd made a mistake, so the 41% might actually be lower. How could that satisfied group get better value?

The MCA's conceptual model is not unlike my model of engagement, but concerns itself only with consultants, so there's no exchange of knowledge, no communication and no feedback. It models:
  • ten constituents of knowledge,
  • nine constituents of experience in project delivery
  • eleven constituents of the skills that individual consultants provide
These facets provide benefits to organisations, but so many constituents imply that clients couldn't manage without consultants. Indeed, it might surprise that many organisations don't use consultants given what they can provide.

Alan Leaman, the MCA chief executive, says in his foreword to the report that he hopes an effect of the report will be to help clients to be demanding and intelligent customers. I hope clients realise what they can provide too, so I'm re drawing the MCA's model to show a more balanced model of what knowledge, project management and people the client organisation could provide. The interface between the consultants and the clients is where they need to know how to engage - and that's my research question:
How do clients and consultants engage?
and you can't answer a how question using numbers so I must use a different methodology from these researchers.

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