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More for less for contractors: Up for a fee fight?

Consultants are in the firing line. How can they contribute to cutting 20% off infrastructure costs? Jackie Whitelaw reports.

More from: More for less

Right on the front line in any discussion about reducing waste, cutting costs and delivering more for less is the consultancy sector. Unfair, you can hear consultants say. And maybe so, but from government, major clients and local authorities the line about “axing spending on consultants” is being presented as one of the big solutions to cutting the public spending deficit.

When government takes a hatchet to public sector capital spending and private clients follow suit, then being seen to offer added value is a given. Consultants are going to be expected to explain how they can contribute even more, for less money − with 20% less being the figure that’s been alighted on from who knows where.

More is the easy bit: consultants have much to offer particularly in terms of low carbon technology solutions that will help clients reduce energy bills and avoid carbon taxes.

“We need to be looking a projects early and asking: do we need them; is there another way?”

Ivor Catto, Hyder

All are eager to move up the intellectual food chain and advise clients on the right solutions to their particular needs. That would include advising not to build something or adapting something that already exists and reducing investment costs that way.

“Twenty per cent off is a good challenge,” says Hyder chief executive Ivor Catto. “We need to be looking at projects early and asking ‘do we need them; is there another way?’”

Consultants shouldn’t be offended or frightened of the claim that there’s 20% to come out of costs, he says. “You have to have necessity in order to make changes happen. Now there is that need.” The 20% doesn’t have to be 20% off fees, just off the investment, he suggests, and consultants can advise where that saving can be made.

However, cutting fees is an option that consultants should offer, says one top 20 consultant who ran a very large government client body. “I think it’s something we should do,” he says. “I’ve been telling my chief executive that. Cut fees and we’ll win more work. It’s the way to go.”

Ivor Catto

Ivor Catto

Certainly the whole approach to hourly rates may have to change, particularly with regard to re-work, with consultants taking more responsibility for getting their designs right first time. They are going to have to react to complaints from their clients about designs that position air conditioning units at head height in the middle of stairwells and the “contractor to detail” elements of drawings.

“They are drawing these things up miles away from the site, no one’s been to look at the job, the designs are not checked and when they are wrong we have to pay the consultant again to put it right; or we have to pay the contractor’s designer to do work which we thought we were already paying our designer to do,” says one public sector client.

Another client is still astonished at a presentation for a major project he received from some leading designers that presented him with a scheme that was twice what he had the budget for. When he fired them, he still had to cough up close to £1M in fees for the work that had been done; £1M that then came off his job’s budget.

Re-work is not always the fault of consultants of course. Clients have been known to change their minds. But Mott Macdonald director Richard Williams says that reducing re-work is something that his company has in its sights.

“It would be novel if clients and their consultants put a real focus on preventing loss through re-work”

Richard Williams, Mott Macdonald

“We have a whole programme aimed at preventing loss through re-work,” he says. “It would be novel if clients and their consultants put a real focus on that. It would give real results.” Industry wide, it could cut as much as 25% off the cost of producing designs, he estimates.

“Front line reduction in local government spending will impact consultants,” says Amey’s managing director, consulting Andy Milner. “The one’s who can innovate and move to a position where their business makes a profit by saving the client’s money will prosper.”

Consultants will have to be tied into outcomes of the schemes they are involved in, he suggests. Rather than being paid fees, they will be paid on performance and will be taking stakes in projects.

“If you can be tied into the outcomes like coming in under budget, on time or operability levels you are likely to find solutions that are of benefit to all.”

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