In an attempt to reduce their risk, many organisations are relying on major consultancies, systems implementers or software companies to manage their projects to success. This is a high-risk approach.
Here are two examples that show that major ‘implementation’ firms have no better success rate than any average organisation to project delivery. (They just make more money out of it!)
Example 1: A major utility, fed up with its repeated failure to deliver projects successfully, decided to outsource much of project delivery to one of the major consultancies.
However, a review of how this relationship was operating found that a conservative estimate of the resultant wasted money from the new arrangements was about $42 million per annum.
What went wrong?
Firstly, the utility did not fix its project prioritisation processes — so many of the projects getting going and clocking up consultancy fees should not have got past first base. An analysis of just a sample of projects found that just over 50 percent could not justify their existence.
Secondly, the utility did not standardise or control its work request process — so anyone could request work from the consultancy, which often had a flag-fall of $70,000 just to look at it! The introduction of some primitive controls on who could request work and how, immediately started to reduce the $42 million wasted expenditure.
Thirdly, when exploring the other side, the level of consultant competence was seriously lacking. Having a 10-year contract in place, the consultancy outsourcer had reduced the quality of staff allocated to the client substantially and so their staff were certainly no better than the staff the client had had before outsourcing. Their poor quality was reducing productivity but not the charge-out cost. So, the utility was paying more because of the incompetence of the consultants!
This level of incompetence was illustrated by the consultancy turning up 3 days from the implementation of a major installation and informing the client for the first time that the solution did not work, and they did not know how to make it work!
Just one consultancy, one client, an aberration? NO!
Example 2: Let’s look at a services organisation who decided to work closely with another big consultancy — this time locking them into penalties and rewards based on their projects’ performance. They had ‘skin in the game’. All this did was pervert the consultancy’s thinking and areas of focus.
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