Jul 16, 2008

How to procure and buy Consulting services

I got a call today from a market research firm who were doing some research on the consulting industry for their Oil and Gas industry client.

Their client wanted to know as to how they could make decisions on when and how to ask for consulting services.

That's a tough one. And I guess for organizations the decisions are getting to be tougher and tougher to make on what to sell and what not to give to consulting organizations.

So here's a small bit on how consulting firms bill you:

  1. Time : This is typically the most common way consulting firms (as well as other professional services) invoice. Less charitable references also call this the taxi way of billing. So long as the meter is down you get charged - regardless of the fact whether you travel or not. If you are negotiating with a consulting firm on a time charge basis ensure that you know really how much has been achieved in those hours. Can be very difficult to audit long distance - so if two consultants are travelling to your warehouse and meeting your people ask them for a timelog and detailed breakup of what each consultant did.
  2. Time and Results: This is typically a hybrid model when you pay a consultant a minimum amount for a period of engagement and a larger portion of the fees is tied up to a goals achievement. In this case you need to keep a track of what is the goal. The consultant and you need to mutually agree on the goals. Is it drawing up a process/policy/strategy is it about educating people also about it or both ?
  3. Results: This is typically seen in consulting businesses like contingent recruiters. The consultant gets paid only once their candidate gets selected.
Higher value perceived consultants figure in point 1. As the service offerings get more commoditised and buyers of consulting services get more demanding then the points 2 and 3 start to get more applicable.

Are you a consultant or a buyer of consulting services? What are the other billing models you have seen?