Invaluable professional help or con artists charging extortionate day rates? Our sector needs consultants, but they must play fair

When I first started undertaking consultancy 12 years ago, a wise old lag in the same game, told me that the “market for free consultancy is endless” and that, as a consultant, “you’ll get treated like something that’s been picked up on the sole of your shoe”. There have been occasions where those words have resonated in my ear. However, whilst the lot of a consultant can be tough at times, I also think that the consultancy sector needs to reflect on its role in helping the transport industry with its cost challenges right now, which aren’t necessarily existential, but are certainly more monumental than at any point in my lifetime.

My concern currently is the extent to which the consultancy market is in danger of over-inflating costs to the industry during these challenging times in a way that is untenable and unsustainable, and in some cases pure greed. It’s an unedifying spectacle that’s being played out by some consultancies and many individual consultants. Last week, for instance, I learned of one outfit charging out middle managers (below ‘head of department’ level) for a day rate of £1,600 and many of the larger organisations regularly baulking at the suggestion of a fee below £1,000 for what I would consider junior bag-carriers.

I’ve also stumbled across lone consultants, mid to senior ranking types trying to eke out fees well in excess of £1,300 and with a whole load of trimmings on top. I’ve seen several invoices in my time for consultants, charging £2.50 for a bacon butty for lunch and 30p for a visit to the toilets at a bus station.

This obscene rapacious approach to trying to coin in as much dosh as possible does no one any favours, not least transport operators and local authorities that are under severe cost pressures

This obscene rapacious approach to trying to coin in as much dosh as possible does no one any favours, not least transport operators and local authorities that are under severe cost pressures, at a time when fewer folk are travelling on public transport. It just fuels perceptions that everyone in consultancy is “on the make” and trying to rip off the industry. There’s a danger that you mention the ‘c’ word (and I don’t mean ‘customer’) and shutters will come down and there will be instinctive feelings of suspicion. I’ve had it on a few occasions during the time I have been running consultancy businesses and it hurts when an errant senior manager will just think that I’m like all the rest trying to “mug them off”.

Of course, £1,600 is just the tip of the iceberg and some fees are as high as £4,000, predominantly for former group CEO types. To a great extent, pricing comes down to the individual and their desire to do a piece of work because they will enjoy it and also contribute to the good of the industry. I work regularly with some of the most senior and experienced transport professionals who charge no more than £800, and in return I won’t exploit their goodwill and will only put a small margin on top. It’s a “win-win” scenario for all.

The problem is exacerbated by consultancies seldom being able to find the right balance between employing full-time consultants or using an associate model. Where the latter is chosen there is a greater fixation around ‘margin’ and, of course, where there is a P and L to be assigned to a consultancy division it becomes a serious business and margins are stipulated in an often arbitrary way, sometimes as high as 100%. Work can be turned down if the margin doesn’t meet the budgeted target, even if actually doing that assignment will still be highly profitable, as very little actual cost has been incurred. By doing certain work, the consultancy and their employees can benefit from the experience which they can use as a marketable case study for future work or to win more business as part of unlocking a new relationship with a client or deepening their bond with them further. They might also want the kudos of actually being able to feel part of giving something back to the sector in terms of solving a problem it might be facing. Consultancies talk a lot about “innovation hubs” but often, these are money-making ruses.

Margins can often be incendiary. It’s foolhardy to think that the consultant you are paying a modest amount won’t discover he or she is being charged out to the client at some exorbitant rate. They’ll see the invoice stuck in the finance manager’s in-tray at some point and they’ll just become resentful or encourage the client to save money by trading directly with them. The client will also not unreasonably demand that the owning consultancy really justify the ‘mark-up’. I’ve always taken a view that in return for the mark up, the consultancy will performance manage the consultant and also draw on other, like-minded experts within its team, so the client is benefiting from a range of insights, networks and experiences as part of the assignment. It does fill me with disquiet when some consultancies turn their noses up when a margin is, say, less than £150 per day, when all they are doing, in effect, is invoicing the client, then paying the consultant.

It’s really important that the engaging consultancy has an interest and knowledge of the subject matter at which they are trading a consultant out on, otherwise all they are doing is ‘body-shopping’ (a term that is the ultimate insult to a consultancy) – performing as an “agency” and nothing more. So too, when setting their own budgets, internal targets and developing a pipeline, it’s vital that they fully understand the transport sector and the issues that might impact on their ability to win work and price consultants realistically.

Other areas where consultants don’t help themselves is when they clock-watch, either dragging out an assignment or literally charging for every hour. I recall early in my consultancy days, I engaged a team of consultants and one downed tools half-way through the assignment because she claimed to have used up all her hours, even though we’d only completed 50% of the assignment. A failure to realise that there is a budget to complete assignments, and this is to be stuck to, is the most heinous of crimes among consultants and gets them a bad name. Try that once on me and I’ll never use them again.

As much as it pains me to say this, though, clients often don’t do themselves any favours. Many will choose a consultancy just because they are a big blue-chip name, even though in many cases they will only have very junior folk assigned to them who are lacking any sector experience. They do this by using the established, London-based headhunters, with their lavish, overpriced, over-engineered processes – it’s an insurance policy, when they say they commissioned household names.

We need consultancy also to be viewed as a career, rather than the siding or terminus. The consultancy sector needs bright stars in their late 30s and early 40s to breathe new life into it.

Experience isn’t everything of course and one of the challenges the consultancy sector has is to breathe diversity into its ranks. ‘Knowledge is power’ has always been a key selling point of consultants and with that the accumulation of years of experience, which can mean that it is an industry shorn of young folk and predominantly male dominated because most of those who have found their way into consultancy in their twilight years started their career when females in seniority were few and far between and diversity in terms of ethnicity was also sadly limited. We need consultancy also to be viewed as a career, rather than the siding or terminus. The consultancy sector needs bright stars in their late 30s and early 40s to breathe new life into it.

Other frustrations are that on some assignments clients will lose interest very quickly, enacting a consultancy report but being lethargic. Many relationships between consultants and clients are brilliant – my closest clients have become good friends and I take calls all times of day and night with them to discuss business, their problems, as well as model railways and county cricket. But I’ve also known assignments to be challenging because it’s so onerous to find a way into a traditionally ‘closed shop’ supplier framework, with requirements so stringent they dwarf the size and scope of the work required, and then it is a tedious process just to get paid within a respectful timescale.

Clients are often obsessed with Return on Investment (ROI), when in reality, however frustrating, consultancy outputs can be multi-faceted, nuanced and intangible. Retainers are always better scenarios – clients get closer to consultants. Time isn’t spent focusing on bureaucracy such as generating regular purchase orders and invoicing, and relationships rather than timesheets take priority. Clients often forget the sacrifices that many consultants make to do their role, particularly only getting paid when they work and having to generate sales themselves. It’s not an insulated lifestyle at all.

“Big personalities” within clients also can breathe energy into assignments, having the guts to stimulate and accept a need for external expertise. But they can also be a negative force; sometimes, a consultancy will be foisted reluctantly on a struggling senior leader and they will do everything to resist the intervention or just be disrespectful. They tend to be those egomaniacs who are dismissive of consultants and see them as a threat – they hate to think anyone might have more knowledge than them on a particular subject and they are generally over-bearing leaders that love to be at the heart of everything internally and on everyone’s lips, and see an outsider’s presence as diminishing their importance. They’ll be slow to pick up the phone, quibbling over every invoice, dissing you to colleagues and imagining that the owning consultancy is charging some ridiculous finder’s fee or mark-up.

Talking of fun, I do titter watching these prima donnas behave this way, knowing that in about a couple of years when they get fired (they always get their comeuppance, don’t forget), they’ll be straight on the phone asking to be considered for assignments or non-executive jobs where they can be all strategic (code for ‘doing nothing’) and explain how they’ve made a conscious lifestyle choice as opposed to being given the bullet. They’ll also tell you their exorbitant rate and then I will have a period of a few weeks trying to adjust the expectations of their self-worth. They always fail as consultants because they can’t take no longer being the centre of attention, or they don’t want to get their hands dirty.

The consultancy sector needs to raise its game at a time when the industry is under cost-cutting, survivalist pressure, but also conversely requires the knowledge and experience of consultants more than ever as it reduces headcount

These are all issues that play on my mind as my team and I continue to provide a range of services across public transport. I’ve been commissioned by, and an employee of, some great consultancies in recent times. However, as a whole, the consultancy sector needs to raise its game at a time when the industry is under cost-cutting, survivalist pressure, but also conversely requires the knowledge and experience of consultants more than ever as it reduces headcount. Self-awareness is vital – consultancies need to reflect on whether the quality of those they are charging out are genuinely worth the price or, as is often the case, they lack experience, are career failures or just plain mediocre. I’m also a big advocate of a transparent grading or pay scale for consultants in the industry.

The industry should respect consultants to a greater extent, but that respect needs to be earned. Right now, not enough are earning their money and this just breeds suspicion, resentment and ultimately less work for consultancies at a time of chronic challenge for the industry and when they should be being utilised more than ever to help dig it out of the hole it’s in.

ABOUT THE AUTHOR: Alex Warner has over 29 years’ experience in the transport sector, having held senior roles on a multi-modal basis across the sector

This article appears in the latest issue of Passenger Transport.

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