Inspired by a conversation with a trusted colleague about what’s gone wrong with a range of Infrastructure projects, I’m going to wade into the – frequently – controversial space of the use (or misuse) of external consulting services.
An explosion of ever-more complex roads and rail infrastructure projects is transforming Australia’s major cities and regional centres.
This has led to a major ramp-up in demand for external project strategy advisory and implementation services. Of particular note is the increase in multi-disciplinary consulting and contractor teams supporting major projects. Recent NSW-specific examples include Laing O’Rourke & WSP as Managing Partner for the Pacific Highway upgrade from Woolgoolga to Ballina, Bechtel as Delivery Partner and Definition Phase Project Manager for Western Sydney Airport Co and the – in procurement – Development Partner for TfNSW’s Western Harbour Tunnel.
Of course, the use of development & delivery partners for major infrastructure works is not unusual. For some time, the Defence industry has used major contractors as Managing Partners. So too, Sydney Water has moved towards a greater use of Delivery Partners for services across Greater Metropolitan Sydney.
Noting then TfNSW’s extensive reliance on consultants and contractors in delivering its Transport Infrastructure program, a surprising lack of trust still shows up between client and external provider.
What’s driving this?
If I honestly reflect on the strategy advisory and project implementation work I’ve undertaken and been involved with – for organisations large and small – the assignments that have not gone well (and there have been one or two over the years) were missing up front clarity regarding what needed to be done to achieve the client’s required outcome.
Two questions are at the core of this issue:
- When is it best to hire consultants? (maybe the better question is when is it best NOT to hire consultants?); and
- What is it best to hire consultants for?
I believe that the underlying key to resolving these questions is for the Project Owner – the Client – to be clear and aligned regarding the scope and overall project strategy (WHAT is to be done) BEFORE moving to implementation.
Clients from time to time appropriately seek external input regarding project scoping and strategising.
I’ve found that considering this process from the perspective of both large and small organisations highlights the core challenges in achieving clarity and alignment at this stage of a project.
Larger businesses typically run the risk of getting stuck in getting the relevant stakeholders aligned at the strategy stage of a project and consequently struggle to move to implementation. Sometimes the temptation to prematurely jump into “doing mode” becomes too great (“We’ll just sort this out as we go along” are dangerous words to hear at this point).
Smaller businesses more often than not skip straight from project concept to implementation – thereby bypassing the strategy formulation and documentation stage. The lack of a documented strategy makes things much harder to resolve when the project inevitably veers off track (“What were we trying to achieve in the first place?” Or even worse “Why are we doing this project?”)
NB. For smaller business I’ve found the best way to overcome the reluctance to document a strategy is to apply a methodology based on co-designing the strategy with the Client, rather than risking the client not properly reviewing an externally prepared document.
Let’s consider more widely what’s happening in the area of corporate business strategy.
Expert360 is a digital platform-based business that facilitates connections between independent business consultants and companies looking for project services. The business is at the pointy end of a corporate trend towards greater direct engagement of specialist freelancers, as an alternative to procuring services packages from traditional consulting businesses.
In the 2017 Expert360 publication “Getting Trendy: How large organisations are driving the growth of the contingent workforce” Bridget Loudon & Emily Yue explore a global trend towards decreased corporate reliance on external strategy teams.
Whilst demand for premium management consulting services, such as those offered by Boston Consulting Group, McKinsey etc have grown slowly but steadily over the past 10 years or so, larger organisations globally have reduced their total reliance on external strategic advice by building internal strategy teams. This trend has been driven by factors including increased pressure from boards and senior executives to justify professional services return on investment, a desire to build internal IP and an interest in ensuring more continuity when it comes to implementation.
The success of this model comprising an internal strategy team, is largely determined by the organisation’s ability to identify which specialised skills need to be brought in and when.
Expert360 have observed that organisations can successfully engage specialist talent to support with both strategy and implementation work. This augmentation can come in the form of either contractors (for internally led projects) or consulting talent (for externally led projects).
This allows firms to achieve a ‘happy medium’ in implementation by running some initiatives in-house and engaging consultants for others. This increases the likelihood of successful strategy execution.
Determining what capabilities should be developed internally as opposed to sourced externally (“make or buy”) is one of the most fundamentally important decisions businesses make.
If I consider when consultants should best be used for projects, an approach that results in enhanced internal capability for the organisation procuring the services, represents a great answer to this seemingly vexed question.
Peter Wilkinson – Director, Sam Wilko Advisory