Comunidades hidrobiológicas

The limitations of the personal model of engagement pose signifi cant problems for busi-nesses that wish to demonstrate that they are getting the best consultants for the best money. This is especially true in the public sector where the use of taxpayers’ money means that greater levels of accountability and transparency must be adhered to when dealing with the spiralling costs of consultants in government organisations.

Governmental leadership on the issue of procuring consultants was given impetus by a series of global and European laws which pushed the themes of equality, transparency, and globalisation of services along with that of free trade. These laws were initiated with the World Trade Organisation’s Government Procurement Agreement (1979) which led to several EU Procurement Directives that developed from the mid 1980s onwards. These in turn have been translated into national laws in the USA and EU member states which govern the procurement processes in all public sector bodies.

As laws became more complex and spending became more scrutinised, responsibility for the engagement of consultants, especially in the public sector, was, in the 1990s, increas-ingly given to specialist procurement departments. Procurement departments, tradition-ally responsible for managing and purchasing supplies and equipment for large companies, provided a ready-made system of governance for companies seeking more formality in their engagement with consultants. However, as demand for procurement increased, specialist

Client Business

Owner Consultant

Figure 4.2. The personal engagement model

procurement organisations began to develop in the 1990s which promised to cut an organi-sation’s spend on goods and services by up to 40 per cent.

In its standard format, the procurement function sits in between the business owner and the consultant ensuring that costs are driven down, that engagement is legal, transparent, and fair, and that there is a central point of coordination and management in engaging consultants. The resulting diagram looks something like Figure 4.3.

This diagram shows the central position of the procurement function between the busi-ness owner and the consultants they use. A key component of the process is Preferred Sup-plier Lists (PSL) which procurers turn to fi rst when looking for a suitable consultancy. The PSL is a database of suppliers who meet a key number of minimum conditions. For example, they may be members of a consulting profession, have reliable references, have demonstrated a strong fi nancial footing, or worked successfully with the client before. Acceptance on the PSL is also usually dependent on the consultancy accepting a set of standard terms and conditions which will include everything from daily rates to liability clauses. The process for using the procurement function varies from company to company, and is defi ned in the next section.

As with the Personal Model of Engagement, the procurement model has a number of strengths and weaknesses. These are summarised in Table 4.1.

As procurement has become more important to businesses and the public sector, a number of institutions have emerged which attempt to prescribe best practice in the area. In the UK, for example, the Offi ce of Government Commerce (OGC) was created in 2000 to help public sector organisations develop procurement expertise. The effectiveness of such institutions in achieving cost reductions is a moot point (Public Accounts Committee 2007; Craig 2006) but there is no doubt that there are increasing efforts by procurers to control and commodify the recruitment of consultancies, and equal efforts by consultants to resist such pressures.

Figure 4.3. The procurement engagement model Client Business

Owner

Client Procurement

Preferred Supplier List

Procurement Law

Consultant

Strengths Weaknesses negotiate rates up to 40%

lower than if directors contracted individually.

Procurement functions are not cheap and often employ upwards of twenty people. Moreover, my own interviews with consultants found that many increased their prices by 10–15%

when dealing with procurers in the expectation that this would later be negotiated down. This fi nding is echoed by Lindberg and Furusten (2006).

Speed Preferred Supplier Lists with pre-agreed terms and conditions means that signifi cant time can be saved in negotiating terms and drawing up contracts.

In order to ensure due process when engaging consultants, procurement departments often follow bureaucratic and time-consuming paper-trails. In some cases, procured projects can take up to a year just to recruit the and the selection is made consistently on clear, fair, and consistent criteria.

Lindberg and Furusten (2005) found that their client interviewees felt that the personality match between consultants and business owners was an important factor in their future success but something that procurement systems didn’t and couldn’t take into account.

Quality performance

By increasing the number of consultancies that tenders are sent to, procurers argue that they are more likely to fi nd consultants with the right competences.

As procurers are commonly measured on the cost reductions they make, they often go for the lowest-cost consultancy (Kambil and Sparks 2001). This invites the problem of the winner’s curse, where the lowest bidder cannot afford to do a good job for the price they specifi ed.

Communication Procurers tend to ensure that all consultants get from the business owner to the procurer to the client, a game of Chinese whispers can be set in play in which project requirements get lost or misunderstood (Kadefors 2003).

O’Mahoney et al. (2008) argued that procurement is unpopular with many business owners for this very reason.

Legality The procurement function helps prevent collusion between business owners and consultants by preventing them

As we will discuss in Chapter 9, the procurement function has not prevented high-profi le cases of bribery, even in the public sector. The complicity, when it happens, tends

Table 4.1. Strengths and weaknesses of the procurement function for consultancy services

Strengths Weaknesses communicating directly

during the engagement process (Svensson 2003).

As discussed in Chapter 9 this helps prevent illegal activity such as bribery or kick-backs.

now to be between procurers and consultants, rather than business owners and consultants.

Table 4.1. Continued