Lawyers constitute the irreducible minimum when it comes to the external advisers you will need in order to set up the contract, but it is unlikely you will manage without anyone else. How many other advisers you engage is up to you – and your ability to pay them. There will never be as much money available as you would really like, but setting up this contract is not something that should be done on a shoestring budget. Cheap bad advice costs more than expensive good advice. Expensive bad advice costs even more, but the point is not how much you are paying, it’s whether you are getting value for Government’s money.
Although requirements will vary from project to project, it is likely you will need both financial and technical advisers.
Just as you consulted with the General Counsel in relation to legal advice for setting up the contract, you need to consult the chief financial officer in relation to financial advice and assistance. Some of the help you need will be with internal budgeting and reporting: this capability should be set up within your own team. Do make sure you have a ring-fenced budget for setting up the contract. Accounting practices can lead to perverse outcomes. If the costs of setting up the contract will be deducted from the Agency’s operational budget if the contract is not signed, but from the capital budget if it is, you can come under unhelpful pressure to conclude a poor contract just to protect the operational budget.
The greater part of the financial expertise will be required in relation to the structuring of the commercial deal to be offered to the market and in evaluating and negotiating the financial aspects of the bids received. For this you will probably need external help. It is unlikely, although not impossible, that sufficient expertise will be available within the Agency. The UK Department for Transport decided to manage without external financial advisers in its failed attempt in 2012 to set up the InterCity West Coast franchise. Although the Department had previously set up many franchises, it was attempting to implement for the first time policy changes that significantly affected the risk allocation on a £5.5 billion franchise contract. Managing without financial advisers was always going to be a somewhat courageous call. They might have got away with it if the internal financial team had agreed terms of reference or deliverables for the project, but no one took responsibility for the use (or misuse) of the financial model, which was neither audited nor fit for purpose, and the tender process had to be cancelled.
Financial advisers are normally paid hourly rates, although you may negotiate a fixed fee for discrete pieces of work. As with lawyers, the rate per hour has only a tenuous relationship with the total cost to Government, so do not allow the rate to drive your selection.
Although hourly rates are usual, financial advisers are more likely than other advisers to seek a success fee, particularly where the Government is selling assets or businesses rather than setting up a project, whether the sale is done by way of a public offering of shares or as a negotiated or tendered trade sale. In such cases, financial advisers may want part of their fee calculated as a percentage of the sale price, usually payable as a bonus on completion so you feel you are getting something for the money. You are not obliged to agree to this. Consider whether the lower up-front payments and any extra level of service you are offered will be worth the bonus. It is embarrassing to Government when the reward to an adviser appears to bear no relation to the value achieved.
It is embarrassing to Government when the reward to an adviser appears to bear no relation to the value achieved.
If you adopt success fees in any form, be extremely careful how you define success. Construction contractors are not the only ones who follow the money. The last thing you need is a financial adviser with an incentive to close a poor deal. One of the criticisms made by the National Audit Office of the Royal Mail privatisation in 2013 was that the independent corporate financial adviser was only incentivised to achieve the sale, not to optimise value for the taxpayer. Since the shares rose 38 per cent on the first day of trading, and remained 72 per cent above the issue price five months later, it is unsurprising the National Audit Office found the Government could have achieved better value. One cannot, of course, blame the share price entirely on the structure of the financial adviser’s role, but there was clearly scope for a better alignment of incentives to result in a better outcome.
Management of Financial Advisers
You need within your team someone who is capable of managing the financial advisers. Anyone can learn to kick tyres on advice submissions – one of the characteristics of the best executives and project directors is an ability to ask penetrating and revealing questions on subjects they know nothing about – but ideally you want someone capable of looking under the bonnet and understanding what they see. You get the best results when a genuinely independent adviser examines and explains the advantages and disadvantages of the available options and the client is capable of making a judgment on the professional skill with which the analysis has been conducted. The ability to press advisers to do better is partly a function of understanding what they ought to be capable of.
The ability to press advisers to do better is partly a function of understanding what they ought to be capable of
You may not have a finance person reporting to you at the relevant moment, because in the public sector it often takes a lot longer to run a recruitment process to engage a finance employee than to run a procurement process to engage a financial adviser. If you are in this position, connect with the chief financial officer to secure assistance in defining the terms of reference for the financial advisers and in selecting and managing them until you have the necessary expertise within your team.
Conflicts of Interest
If the transaction involves financing, you need to be particularly careful to define the role of your financial advisers to avoid any problems associated with conflicts of interest. Conflicts become more and more dangerous the more money is at stake. Even where a conflict is properly managed, reputational risk persists.
The independent corporate financial adviser in the Royal Mail privatisation in 2013 was paid £1.5 million in fees. Another company in the same group was selected as one of 16 ‘preferred investors’ and received a priority allocation of six million shares in the privatisation. Precautions were taken to manage the potential conflict of interest and neither the National Audit Office nor the Business, Innovation and Skills Committee of the House of Commons, which investigated the privatisation, reported any impropriety. Nonetheless, media reports that the six million shares were promptly sold for a profit of around £8.4 million did nothing for the reputation of anyone involved.
Any project on this scale will involve financial modelling, so modelling capability should be one of your criteria in selecting a financial adviser. While you will naturally want to engage the best available, do not allow yourself to be overawed either by their expertise or by the complexity of the models they produce. Financial models can be dangerous without the application of common sense and a healthy dose of scepticism. Neither of these qualities requires you to be a hotshot spreadsheet jockey, so don’t let any deficiencies in your spreadsheet skills put you off exploring the issues with the modellers.
Financial models can be dangerous without the application of common sense and a healthy dose of scepticism.
Your first task is to decide what the purpose of the model is. It is no use seeking warranties from your advisers that a model is fit for purpose if you fail to define what the purpose is. Typical purposes would be:
establishing a business case for the choice of project or procurement option;
modelling costs and benefits of risk management options;
evaluating the financial impact of tenders received;
building a ‘public sector comparator’ to determine whether better value could be achieved by retaining activity within the public sector rather than outsourcing.
It is possible for a model to serve more than one purpose. It is not necessarily a good idea. In the Intercity West Coast franchise case a model was developed to assess the risk of franchisees becoming insolvent in various economic scenarios, in order to test and calibrate a contract mechanism intended to allocate to the Government most of the risk of changes in GDP. (Passenger train revenues are highly correlated to GDP, because of the high proportion of commuter journeys. In recessions, there are fewer jobs and therefore fewer commuters, no matter how attractive the service provided by franchisees.)
The same model was then extended to calculate the amount of a subordinated loan facility to be provided on behalf of the franchisee: it was not fit for this purpose. The Department for Transport didn’t like the output and decided not to use it. Failure to use something not fit for purpose ought to have been a good idea, but unfortunately they had represented to the bidders that the model would be used, so everything came unstuck.
The size of the spreadsheet workbooks is not a guide to the usefulness of a financial model. Always review closely the underpinning assumptions. A supplier seeking a negotiated outsourcing deal once provided me with an ingenious set of spreadsheets supposedly demonstrating it could carry out hundreds of millions of dollars’ worth of maintenance activity 25 per cent more cheaply than the Government agency responsible. I was interested to know where they thought savings could be made, but the spreadsheets left me none the wiser: they gave an inaccurate estimate of figures for the current activity, then applied a 75 per cent multiplier throughout. Not so much ingenious as ingenuous. Needless to say, the Government agency decided to pass up the opportunity.
Ask your modellers where input figures have come from. If they are from ‘comparable’ projects, think about the comparison. Cost per metre for tunnelling through sandstone will not be comparable to the costs of tunnelling through basalt or gravel. Cost per helicopter for an order of two helicopters will be higher than the cost per helicopter for an order of 200. A development in the suburbs is unlikely to generate the same revenue as a similar-sized development in the central business district. You do not have to dig these things out of the model yourself. Sit the modellers down with their list of assumptions and ask them to talk you through it.
If your large project is part of an even larger portfolio of projects, check your assumptions are not out of line. If an airport is to be served by new road and rail links, an assumption of a road market share of 80 per cent, even if not unreasonable, will embarrass the Government if the rail link contract has just been awarded on the basis of a market share of 35 per cent.
Monte Carlo simulations
More complex financial models can deal with uncertainty through the use of probability simulations. Where cost or revenue items are uncertain, you can assign different probabilities to different outcomes for each line item. Probabilities can be linked to show correlations: for instance, prices of different manufactured inputs may be likely to move in the same direction.
The computer will ‘roll the dice’ thousands of times (hence the name ‘Monte Carlo simulation’) and come up with a range of answers for the overall financial outcome. The ‘P90’ cost is the point where 90 per cent of the scenarios predict the project will be completed for that amount or less. It is not a promise that reality will not align with the other 10 per cent. Look at the distribution curve to get a flavour of the possible financial outcomes: see for example the probability cost curve shown in Figure 11.1. The P50 is not in the middle of the range and the P99 is a great deal more than 9 per cent higher than the P90. There are very few ways to bring a project in more cheaply and lots and lots of ways to have a cost overrun.
Don’t be complacent if the P90 looks good. Just because the software will calculate to ten decimal places doesn’t meant the estimate is accurate to ten decimal places. Or even one. Bear in mind the outputs can be no better than the inputs. The probabilities were only estimates, failure to correlate risks correctly can make a huge difference and you have yet to make the acquaintance of the ‘unknown unknowns’.
Lies, damned lies and financial models
Any financial model is capable of being manipulated to give a particular outcome, which is why you need to be so careful about the assumptions. It doesn’t take much. Reassessment of a few key probabilities. Choosing the P75 rather than the P90. Finding a reason to prefer the more optimistic demand forecast. Deciding certain costs are more properly allocated to someone else’s budget. These are all matters of judgment and anything that requires judgment has a range of defensible choices. A tweak here and a tweak there can push the dollars all over the graph.
It is probably not entirely a coincidence that once a project has been announced by the politicians, the public sector comparator never demonstrates better value for money than the proposed outsourcing and the updating of the business case to reflect the selected tender never shows the project isn’t worth doing. Models can be manipulated, and they are.
Often it doesn’t matter. Window dressing is not important. Crafting attractive numbers for the media release is the same as crafting attractive words. Everyone knows the words and numbers are being chosen to give the project the best possible look, and any complexities are being glossed over. A media release is no place to try and explain the difference between real and nominal costs or what a net present value is. If the politicians are keen on a particular headline number, there is usually a way to make the number fit.
Asking your financial advisers to make the numbers look attractive is one thing. Asking them to make the numbers come up with the wrong answer is quite another. When you are using a financial model to make choices between strategies or between bidders you want those choices to be clean: no error and no bias.
Cleaning out error involves having the model independently reviewed. Even experienced modellers can make simple mistakes, entering a plus sign instead of a minus sign or referencing the wrong cell. The model in the Intercity West Coast franchise case was later found to use a different GDP baseline index from the one used in the franchise agreement for the GDP risk sharing mechanism, which rather undermined its fitness even for the original purpose it had been designed for. An independent check is ordinary good practice, not a vote of no confidence in your modellers, so there is no need to feel shy about it. Quality assurance is in everyone’s interest.
Bias can be harder to eliminate than error. Run scenarios with different parameters to check the sensitivities of the variables. Push the parameters to extremes to see what happens. What variables make the most difference to the outputs? Do you understand why? Are the outputs plausible? Be honest with yourself about what results you are hoping the model will provide – and be deeply suspicious of assumptions that support those results. Demand forecasting is notoriously over-optimistic. The operators of two motorway tunnel projects in Sydney, the Cross City Tunnel which opened in 2005 and the Lane Cove Tunnel which opened in 2007, each went bust within three years of opening because traffic was less than half the original forecast. London’s Millennium Dome revised its visitor projections from 12 million to 4.5 million within months of opening. If you are basing assumptions on a project similar to your own, the similarity should be between the actual projects, not between the demand achieved by the other project and the demand you are hoping to achieve for yours.
Other Uses of Financial Advisers
In any procurement, there needs to be an avenue for tenderers to express concerns about the process. Bidders often prefer not to complain directly to the project director, since they are in marketing mode and wish to radiate an aura of enthusiasm and cooperation. The UK does not follow the Australian practice of appointing an independent auditor of the procurement process, who will field any process issues raised by the bidders.
In any procurement, there needs to be an avenue for tenderers to express concerns about the process.
Financial advisers are traditionally the ones to fill this gap. If there is any problem with the process, the financial advisers to the bidders will be on the phone to the Government’s financial advisers, or the investment bankers will be having slanging matches in the corridor (few investment bankers are shy and retiring). You should select financial advisers capable of holding their own in the corridor stand-offs but also capable of listening to concerns and coming to you with suggestions of how to deal with genuine problems.
Although it wasn’t picked up in the Laidlaw Inquiry, I suspect this may have been an issue in the InterCity West Coast franchise case: the decision not to use external financial advisers was a problem not only because financial errors went unnoticed but also because it took away the traditional intermediary for sorting out process issues. Not understanding that people have more than their obvious function commonly ruins organisational change exercises. I call it the screwdriver error: most screwdrivers are vastly over-engineered for turning screws, but good hardware shops don’t sell the cheap thin ones – customers complain because the screwdrivers break when they use them to lever the lids off paint cans.
With lawyers and financial advisers, you expect that their work will essentially be over once the procurement phase is complete. Yes, you will need to get the lawyers back if a dispute arises; yes, you may need financial advice from time to time, particularly if there are variations on a contract involving private finance. But technical advisers are much more likely to have an ongoing planned role during the delivery phase.
When you are preparing to set up the contract, technical help is primarily required with the specification: working out what you need to ask for; how to ask for it in a way that means tenderers will understand and give it to you; and whether the bid submissions match the requirements of the specification. It is absolutely critical to get this right.
Contract variations put up costs, delay delivery and diminish accountability, yet they usually result from things people could have sorted out when the specification was drafted, if only they had made the effort.
Contract variations … usually result from things people could have sorted out when the specification was drafted, if only they had made the effort
Failure to understand the market, failure to involve the right stakeholders, failure to incorporate the winning design into the contract correctly, unwillingness to deal with an issue that was never going to go away: all of these things lead to unnecessary variations. The right technical advice during the procurement phase can make all the difference.
There is often also a requirement for technical advice during the delivery phase. It is tempting to believe all you have to do is sign the agreement, leaving the contractor to deliver on its obligations without any level of review or audit or inspection on behalf of the Agency. Tempting but foolish. A contractual right to refuse a delivery that isn’t in accordance with the specification is easy enough to enforce when the delivery is a van load of office supplies. You don’t get a second chance at a mega-project. Trains that are two tonnes overweight when presented for acceptance will not become two tonnes lighter when you discover they don’t match the specification, and good luck with refusing delivery if the politicians want the trains in service before the next election.
If you don’t want to be caught out, the contract manager will need to undertake at least some level of review or audit of work in progress during the delivery phase. Sometimes the Agency will have internal resource to undertake this, but often it won’t.
This is not simply a matter of expertise. Government agencies may have restrictions on travel that make it difficult to use employees to conduct audits or inspections at foreign manufacturing plants. Assistance from technical advisers may be needed to review the contractor’s project plans and schedules, assess design documentation, or inspect units or work stages presented for acceptance.
Engaging the Technical Advisers
Given that technical assistance may be continuously required throughout the project, should you run three separate competitive tenders to engage technical advisers for specification development, evaluation support and delivery support, or should you set up a single contract covering the entire period of the contract?
There are various factors affecting your decision. Mega-projects last for years. The Agency may baulk at setting up a long term advisory agreement. Spending money on consultants is one of the things that gets Government a bad press, so agreements of this type may require specific authority from the Minister. The quantum of money you will pay out over a period of years will be tiny in comparison with the overall value of the project, but in absolute terms may involve a larger commitment than the Agency is willing or authorised to undertake. On the other hand, a firm selected for the first part of the process is extremely well placed to secure the advisory contract for subsequent phases. Awarding only a small contract for the first phase starts to look like order splitting when the firm keeps being re-engaged, which can cause the auditors to give their frown muscles a serious workout.
Because the task of the technical advisers will be significantly different in the procurement and delivery phases, a possible compromise is to split the engagement into three parts, but use only two contracts. The first two parts, specification development and evaluation support, are the most closely linked: the technical adviser responsible for assisting in specification development will have a deep understanding of the requirements that will be particularly valuable in evaluating the tenders received. Procure the first two parts through a single tender process, with the second part structured as an option (to give you an easy way to dispense with their services if the advisers don’t measure up) then run a second procurement process to cover the support required in the delivery phase. Whether this approach is sensible will depend to some extent on the state of the technical adviser market. Since you need to have the delivery phase team poised and ready to run at contract award, your second procurement process would take place while the tender for the main contract is still in progress, so any firm then assisting the bidders would be conflicted out of working for you. If that is a problem, you will have to work out a different contracting approach.
The need for technical advisers in the delivery phase can be greatly reduced (although usually not eliminated) by including an independent certification process into the contract. An independent firm is appointed jointly by the Agency and the contractor and is there to certify whether or not the contractor has done various things in accordance with the contract. They would commonly provide a certificate that designs produced by the contractor will meet the contract requirements; that a proposed testing programme will demonstrate whether or not the deliverables have been properly completed; and that the deliverables have passed the testing programme and meet the requirements of the contract. Other certificates might be required whenever the contractor is to receive payment for completion of a package of works.
The system is a good one. Contractors are under enormous pressure to meet their monthly budgets. If a deliverable attracts a payment, the importance of collecting the payment may lead them to put forward a deliverable which is not really complete: a project plan that is poorly developed, a design without evidence that community consultation has been taken into account; ‘completed’ works that omit the site clean-up. I know of one contractor who put a stage of works forward for acceptance when there were more than a thousand items on the ‘snagging list’ – and got away with it because of the political pressure to declare a success ahead of the forthcoming election. The requirement for independent certification before submission goes some way to discourage this practice, and certainly takes much of the headache of dealing with it away from the Agency. You do need to have confidence in your specification: if the requirements are ambiguous or inaccurate, the involvement of an independent certifier will complicate the issue rather than make life easier for the contract manager.
Reliance on Reports
Sometimes it will be convenient for the bidders to rely on technical reports obtained by Government, such as geotechnical surveys. If you want the bidders to be able to do this, make sure it is included within the brief when you engage the relevant adviser. Part of what you pay for with professional advice is the benefit of their professional indemnity insurance. If a third party is to be able to rely on the report, the advisers must supply the report on that basis or the insurance will not cover it.
Part of what you pay for with professional advice is the benefit of their professional indemnity insurance.
If you use any fee structure other than hourly rates or fixed fees, make sure you understand the implications.
The UK National Audit Office (NAO) report in 2000, on the Holyrood project for the construction of a new Scottish Parliament building, found that fees for project consultants had risen from £10 million to £26 million, largely because the fees were calculated on a percentage of construction costs, and construction costs had more than doubled. The increase in construction costs was not foreseen, but the NAO pointed out the risks would have been shared more fairly if a mechanism had been included to reduce the fees as a proportion of construction cost as the level of cost increased.
No action was taken to renegotiate the fees with the Holyrood consultants until 2003, which was unfortunate, as construction costs went up a further 220 per cent. By the time of the NAO’s next report in 2004, the fees had risen to £50 million.
Agency Technical Experts
Difficulties in the technical field tend to arrive from opposite directions: either you have an Agency that is completely clueless about the subject matter of the contract or an Agency that is stuffed full of opinionated technical experts. A different approach to the engagement of advisers is needed in each case.
The trouble with being clueless is that you have no way of telling whether you are being right royally ripped off. The less expertise the Agency has, the more it is obliged to delegate to the advisers and the less well equipped it is to know whether the advice it receives is any good. With zero expertise, decisions effectively become the decisions of the adviser, not of the Agency. This is usually bad news, even if the adviser is genuinely expert, because what they are expert in is the technology. Technology expertise is only one input into making good decisions. It is not necessarily the most important one.
If you find yourself in this trap, your first objective should be to recruit one or more suitable experts onto the Agency staff. If this doesn’t work (and it might not, particularly if you are unable to offer the going market rate) look around for an individual consultant who is well regarded in the industry. You need someone with in-depth knowledge and experience: grey hair usually comes with the package, but this is not essential. A single individual will of course not be able to provide you with all the technical support you will need for a project on this scale. What they are able to do is help you understand what support you need, pin it down into terms of reference for the technical adviser and help you to select a firm that can do the job. They can later provide an independent review of the technical adviser’s work. You may also want to use them as an independent member of the Evaluation Committee for the main contract.
You need someone with in-depth knowledge and experience: grey hair usually comes with the package, but this is not essential.
While the use of an independent certifier will reduce your dependence on technical assistance during the delivery phase, it does not mean your contract manager can cope without technical support. There are two issues.
The first is that the independent certification process only kicks in when there is something to certify. If the contractor is falling behind schedule and isn’t giving you a plausible explanation, you can’t send in the independent certifier to find out what’s going on.
The second is that while you may trust the independent certifier to be intelligent, expert and unbiased, if there is disagreement between you and the contractor, would you really feel comfortable that the independent certifier would decide the issue without receiving submissions from both parties?
The normal practice is for the contractor to be required to copy the Agency in when it makes a submission to the independent certifier, giving the Agency an opportunity to comment before the certificate is given or refused. You won’t want to conduct the same detailed checks that will be undertaken by the independent certifier, but you do need the capability to understand what you’re looking at. There may be a fine line between a minor defect that can be fixed later and a major defect that needs to be fixed before you move on: don’t expect borderline cases to be decided in your favour if you don’t have the expertise to comment to the independent certifier.
Having a great deal of expertise within the Agency is generally a much better idea than being clueless but it does carry its own problems. Experts are people who have opinions on their area of expertise. Unfortunately, many people have opinions on areas of expertise in which they are not expert, a phenomenon that wastes a lot of your time when it manifests itself on your steering committees. But experts have expert opinions. Inconveniently, they don’t all have the same ones.
Some of the divisions arise between experts on widgets and experts on the cost of widgets. Engineers are always accused of wanting to ‘gold-plate’ assets. It is obvious to an accountant that it is better to buy four widgets with a design life of five years than one widget which has a design life of 20 years but is more than four times as expensive. It is less obvious to the engineer, who has to organise four installations instead of one, or more likely see a slender maintenance budget burdened with making five-year widgets last 20 years because some scrooge of an accountant won’t cough up the promised capital for replacements.
The problem that often arises is not that you have to persuade the Agency engineers the accountants are right, it is that you have to persuade them their own opinion doesn’t matter. Experts hate being irrelevant. But if you are going to market with a 20-year contract, and widget failure is a risk allocated to the contractor, then it is up to the contractor’s experts, not the Agency’s experts, to make the call on whether to buy four five-year widgets or one 20-year widget.
If you ask an independent technical adviser to tell you whether a bidder’s design is in accordance with the specifications, then that is the advice they will give you. If you ask the same question of an Agency expert, they are quite likely to tell you whether the design is in accordance with their personal view on the best way to meet the specification, which is not necessarily the same thing at all. External advisers are not immune from this syndrome, but can usually be more objective. Agency experts may find it difficult to set their personal opinions to one side, particularly if the contract involves outsourcing and their jobs are the ones that will be lost. The presence of a respected external adviser to assist them can be helpful.
In times gone by, Agency experts would usually do part of the design work and sometimes even all of it, with contractors being engaged merely to construct to the Agency’s design. Many an Agency expert wishes this was still common. When I was growing up in Sydney, I learned about the engineer John Bradfield and thought how amazing it would be to be able to point to the Sydney Harbour Bridge and say, ‘I did that.’ Mega-projects give a lot of people that kind of buzz. How often in a lifetime does an engineer have the chance to design an iconic bridge, or a fleet of submarines, or a bullet train? These days the Agency experts generally have to sit back and watch a contractor’s employees have all the fun. The temptation to join in can be hard to resist, so if you decide to run with internal experts only at any stage, reduce the risk by agreeing their remit as you would for an external adviser.
How often in a lifetime does an engineer have the chance to design an iconic bridge, or a fleet of submarines, or a bullet train?
Finding Other Advisers
Depending on the nature of your project, you may need more advice and assistance than can be provided by your main legal, financial and technical advisers. There is no area of mega-project expertise lacking in consultants salivating at the prospect of selling you their assistance. There are communications consultants, computer systems consultants, industrial relations consultants. Management consultants, risk management consultants, project management consultants, change management consultants, environmental management consultants. Demand forecasters, schedulers. Whatever. If there is something you need help with, there is someone out there who can help you.
There are also a lot of people who would happily charge you for their services while being of no help whatsoever. Competitive tendering for a clear scope of work is usually the best route to value for money.
If you aren’t quite sure what you need or which type of firm to engage, ask around. Your procurement department should in theory be able to help, although they don’t always have someone who understands the relevant market. Often the best source of information is the advisers you already have. They will have worked on projects for a range of clients and may well be able to tell you what has been done elsewhere to solve similar problems.
Do not engage anyone to produce a report unless you know what you are going to do with it. Government archives are littered with consultant’s reports that were never even read, let alone acted upon.
Government archives are littered with consultant’s reports that were never even read, let alone acted upon.
It can sometimes be convenient to engage advisory services through the medium of one of your principal advisers. A report on the financial strength of the companies bidding for the contract, for instance, may be better done by a firm that specialises in providing such reports than by your principal financial adviser. Rather than appointing and managing two advisers, you could include the financial strength evaluation in the remit of your principal adviser, on the basis that they will subcontract the work to the specialist firm.
Where you need advice in a hurry, it may also be quicker to arrange for it to be subcontracted by an existing adviser, who is not constrained by public sector procurement processes. Take care with that one, though: the bureaucracy may grind slowly but it is there for a purpose. Achieving an outcome more quickly is one thing; achieving an outcome that would not have been permitted under Government rules is quite another. Don’t bypass the bureaucracy if by doing so you also bypass good practice.
In some cases you may consider using advisers not only as independent experts to give you advice, but also as a resource pool, a source of people who can be seconded in to work under your direct control. Where the project resource needs fluctuate significantly, it can be difficult for the public sector to be sufficiently flexible in staffing the project, leaving you from time to time with a team that is either horrendously over-worked or sitting around doing very little. A large law firm can lend you a paralegal for a week or two here and there without their own practice missing a beat. Extended secondments for more senior staff require a bit more forethought and negotiation, but don’t overlook your advisers as a potential source of temporary staff as well as of advice.
Occasionally a stakeholder such as Treasury or the Prime Minister’s Office will foist an adviser on you, to plant someone they trust into the project because they don’t trust you. When you are conscious of your own trustworthiness this can be deeply irritating, particularly when the adviser has to be paid from your budget, but don’t take it out on the adviser. It probably isn’t their fault, and even if it is, you need them to take back favourable reports. Recognise that the stupendous amounts of money involved in a mega-project make your stakeholders nervous, particularly if there has been a recent fiasco, and this is just one way to keep them happy. It isn’t all downside, either. The adviser won’t have won the trust of the stakeholder by being useless: take advantage of their skills and treat it as a bonus.
Recognise that the stupendous amounts of money involved in a mega-project make your stakeholders nervous.
More often, an adviser is foisted on you because your project has interfaces with other things going on in the Agency. If your project involves outsourcing, for instance, you will need a whole stream of work around managing the employment transition and communicating with the affected employees. Where there are other changes happening in the Agency, it is likely to give a better outcome for the Agency – and the employees – if communications to employees about all of the different changes are properly coordinated and presented in a consistent format. Where communications consultants are to be used, the Agency is unlikely to want more than one firm involved. Unless yours is the first project to need the consultant, you will be expected to use the one the Agency has already selected, and someone else is likely to be managing their contract. Do not let that stop you agreeing a remit and specific deliverables: the standard services they are providing to everybody else may not be enough for you.