| Downturn triggers renewed interest in alternative ways of paying for consulting projects |
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| | With more than £8bn
spent on management
consultants by UK
organisations each year,
and between 3% and 5% of
a typical company’s
costs now going on
consultancy services,
the economic downturn is
driving companies to
look at alternative
means of paying for
consulting projects.
A new report by
sourceforconsulting.com
outlines the benefits of
using ‘risk-reward’
payment. This is a
comparatively rare
method for paying for | |
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| | consulting projects, but
the report explains that
three quarters of
procurement teams expect
the proportion of
expenditure on
consultants paid for on
this basis to grow in
the future.
Fiona Czerniawska,
one of the founding
directors of
sourceforconsulting.com
and a worldwide
authority on the
consulting industry,
commented: “Short-term
economic drivers are not
the only reason why
buyers want to move away | |
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| | evidence suggests that
such deals account for
around 10% of consulting
work in the private
sector and less than 5%
in the public sector in
the UK.
David Cox, managing
director of the
consultancy arm of Mott
MacDonald, which
sponsored the report,
draws comparisons to the
engineering world where
risk-reward deals are
much more prevalent:
“The engineering
industry has used
risk/reward
relationships to deliver | |
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| | complex programmes such
as oil platforms in the
North Sea, Heathrow
Terminal 5 and the
upgrade of the rail
infrastructure. Payment
terms are geared around
successful delivery, not
time spent.”
With contributions
from around 30
organisations, and case
studies including BBC,
National Grid and
Redcats, the report
examines whether
risk-reward arrangements
for consulting projects
can work and, if so,
how. | |
|
| | from traditional time
and materials or
fixed-price deals: they
also want to make
consultants more
accountable for their
work.”
So far, there has
been far more talk than
action, at least in
Europe. Ten years ago,
risk-reward deals were
widely touted as the
next big thing in
consulting, but the | |
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