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By khalid on March 20, 2008 2:11 am
Posted in (Business)

1.    Over promise, under deliver:  Your sales person is there to sell. He or she gets paid based on the amount of revenue he is bringing in for you. As a result, many sales reps are willing to promise the sky during the sales process, only to have your project team end up with too many tasks that are difficult to fulfil. As result, you end up with an unhappy client and an unhappy team.

How do you make sure your sales team does not over promise?

Every proposal must be reviewed by a delivery team before sending it out to a client. That ensures that there is a buy in from the delivery team who are responsible for the bulk of the work.

2.    Fix the bid on the project before defining scope: Let’s face it, every clients wants to know how much a project is going to cost before signing a contract. It makes business sense. But from a consulting company perspective, committing to time and a budget before defining all the work involved in the project spells disaster.

How to deal with a client who insists on getting a fixed bid?

Bid the portion that we know. As for the unknown work, we tell the client that we will be able to bid that better after work is completed on the initial phases.

3.    Assign inexperienced project managers to run a critical project: Too many people think project management is an easy task. As a result, they are willing to assign green project managers to critical projects. Some do succeed, but many fail.

If you have to assign an inexperienced PM to a project then make sure you have someone to mentor, advise them and monitor their progress.

4.    Careless management of project scope: I am a firm believer that the scope must be actively managed on a project. Too many consultants are willing to go out of their way to please their client. That is great attitude to have. But too many clients abuse that attitude. As result, your team members will get exhausted, and you will end up doing a lot of free work.

5.    Fight with the client over every little project change request: This is the complete opposite of the above point. Teams not willing to change anything within project scope without a change request will leave a bad taste in the client mouth. Be flexible but maintain the agreed upon time etc.

How to deal with project scope?

Consultants need to know when to give in and do small changes and when to ask for a change of scope requirements

6.    Starting implementation prior to closing the requirements phase: Regardless to the nature of the project, no actual work should start before fully understanding all of the client’s requirements. I have been on projects where code was being released to production and requirement documents and design sessions were still going on.

How to deal with clients who are not able to close requirement and design phases?

  • Your project management team must plan an effective role in guiding the client through those phases to help bring them to a close
  • Client top management must have full support of project goals and should help direct its team members to move forward
  • Make sure the client is aware of any schedule slippage or increase in project scope due to delays in gathering requirements.

7.    Lack of transparency with the client: At some point or another, hiding some truth from the client seems like a good idea. Whether it is scheduled delays, actual implementation details, staffing issues, or anything else, it is important to be open with the client.

What to do if you are faced with a difficult choice between informing the client or not?

In my experience, 8 times out of 10, the client will find out what it is you are trying to hide. Now, that does not mean that you should run to the client with every little problem you face. I think you should let the client know about anything that might have an impact on the project time or budget.

8.    Let the client manage the project: The client can have as many project managers as they would like, but you should staff your own project manager on each engagement. One of the important roles a project manger plays is “isolating” the project team from the client and managing scope. There is a clear conflict of interest when the project is being managed by the client.

What to do if the client insists on managing the project themselves?

Be honest about the conflict of interest that may arise. Remember you do not have to staff a full time project manager on every project. Smaller engagements can be have a project manager staffed at 50%.

9.    Cut project time estimates or staffing levels without cutting project scope: There is always a pressure to deliver projects faster utilizing less resources. Resist the temptation to deliver the same amount of work with fewer resources just because the client asked you to do so. Every project has three angles to it: Resources, time, and work. If you increase work, you will have to increase either time or resources to support the additional work.

10.    Over staffing a project so no one is sitting on the bench: resist the temptation to over staff a project  just to make sure that your resources are billable.  This can be tempting, especially when the client is too trusting and doesn’t does not have the know-how or the domain expertise that your team possesses.  In the long run, clients will discover who is fully allocated on the project and who is not. They will discover that they are paying for resources without getting a nothing in return. This will cause future relationships with this your client to turn sour and it will impact the project negatively.

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21 Responses to “ 10 Most expensive mistakes in consulting”

 
jett Says -- March 20th, 2008 at 11:12 am

Regarding items 2 and 5 above. Nice try but if you don’t give the customer what they want they will find someone who will.

You can give customers’ fixed bids and include away change orders to highly creative and fluxy jobs even though it goes against conventional thinking. I have done this before and expect it from the creatives I outsource to.

The secret is in knowing the details of your creative and work processes. You gain this insight by observing and understanding the process then collect the data.

I had this same problem. After losing customers to cost overruns I had to find a better way; I found one. At the time we developed a workflow management system that captured among other things, time and material information about every job. We did about 500 jobs a year ranging from simple $1K jobs to complex jobs that exceed $100K all for NASDAQ100 companies. Each job was distinctly different and involved creating and engineering new products. What I found totally surprised me. After looking at bid and cost data for each job in aggregate I found that, even after massive customer changes, all our jobs could be categorized into four price groups. I was taken back by the fact that within each category projects varied by only a few hundred dollars.

In the end I was able to give quick accurate quotes in a very short time. The result was that our prices were a little higher, but they did not change throughout the process. Our customers’ loved it because they didn’t have to go back to their managers for more cash and time consuming change orders. Further, we captured more design wins because our quotes where so quick. Often we would be half way done with a project while our competition was still biding the work.

 
Music.Podfire.org Says -- March 20th, 2008 at 12:14 pm

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

 
Nascar Says -- March 20th, 2008 at 12:48 pm

this blog is filled with great tips. I particularly appreciate the tip regarding transparency with a client. This sets up a foundation of trust, and brings future business. Furthermore it makes for great word of mouth, which is the best form of PR.

 
InjuryProne Says -- March 20th, 2008 at 2:18 pm

Yes, regarding your statement, “I think you should let the client know about anything that might have an impact on the project time or budget.” It is always best to just tell them what’s going on with their work. That way you can offer your reasons in a calmer manner than if you waited until they attack you for the delay.

 
crown listings Says -- March 20th, 2008 at 5:13 pm

Do you think consultants should always charge by the hour? It always made more sense to me for them to charge by the project.

 
Sal Says -- March 23rd, 2008 at 12:49 am

Charging by the hour is pretty common for consulting firms but I’ve also seen that prepaid blocks of hours typically have discounts built-in. Great read.

 
Make Money Online Says -- March 23rd, 2008 at 1:56 pm

Pretty cool but wow charging by the hour way tooo expensive

 
khalid Says -- March 23rd, 2008 at 11:50 pm

@Jett, I start with the assumption that we must qualify prospects before we engage them in any work. I want to make sure we are actually delivering value to clients. Knowing the project scope before the start helps me give a solid fixed bid that I can stand behind.

Just recently, a client asked for a proposal for large contract later this year. After the initial discussions, we discover that the work can range anywhere from couple of months to 14 months. Can I fix bid such a project? We did not. Although there are times where clients and prospects walk away but I can say we have not had any regrets.

 
khalid Says -- March 23rd, 2008 at 11:55 pm

@crown listings, you always charge the client by the hour, even when you are charging by the project. You calculate the number of hours per project, multiply by the hourly rate and arrive at the project cost.

 
Akhmad Guntar Says -- March 26th, 2008 at 4:51 am

Nice post. At the beginning stages of a consulting engagement, there are ample opportunities to make mistakes. Some of them are: 1. Accepting without question the accuracy of the business partner’s stated objective or description of the problem.
2. Failing to check for alignment of state objectives with departmental or corporate goals.

 
Peter Andrews Says -- March 26th, 2008 at 4:54 am

I’d like to add: Not challenging what is being avoided e.g. the facts, the risks, accountability, and defined results.Not asserting what’s needed to be successful. Fear. “I’m not good enough.” Overconfidence. “Been there, done that.” And lastly, not tuning in to the potential value-drivers that can help to build the value proposition for the inevitable costs of the project.

 
meachel Says -- March 27th, 2008 at 3:39 pm

You are quite right on almost all the points especially with the point that there shouldnt be any transparency between you and the client.

 
Lisa- Add Your Site to DoFollow Directory Says -- March 30th, 2008 at 11:23 am

Charging by the hour vs. by the project. Do both.
I have an hourly rate and then give client a ballpark figure of what it will cost- I will TRY and come below and over deliver :)
Giving an hourly rate give you recourse if things go awry or if client becomes demanding and makes a lot of changes , etc.

 
Sara Says -- April 3rd, 2008 at 3:07 pm

“Careless management of project scope: I am a firm believer that the scope must be actively managed on a project. Too many consultants are willing to go out of their way to please their client. That is great attitude to have. But too many clients abuse that attitude. As result, your team members will get exhausted, and you will end up doing a lot of free work.”

This is an excellent post. Being both on the client and vendor side, here’s another tip I feel is important. As a client, get a second, even third opinion from peers, colleagues, etc. on your project specs BEFORE handing them off to your vendor or consultant. So often the scope changes simply because things that you “thought” were a given/obvious were not, and you end up paying far more than you anticipated.

 
Dave Robinson Says -- April 5th, 2008 at 9:06 am

A great post with some solid tips and information. Having made most of the mistakes - most annoyingly providing fixed estimates for variable work scopes when we were young and foolish - I think it’s very common for consultancies to underestimate projects.

By using simple PM tools we now have detailed information on almost all common tasks and can base future quotes on this. Therefore I would strongly advise new consultancies to start measuring accurately asap.

d

 
Barry Welford Says -- April 5th, 2008 at 10:16 am

Ten great tips. I always like the phrase, “Good fences make good neighbours”, and it sums up many of the most important ones here.

 
Los 10 errores más caros en consultoría « D e j a m e S e r Says -- April 5th, 2008 at 7:35 pm

[...] InvespBlog encontré un excelente post que contiene los 10 errores más caros en la consultoría, los cuales [...]

 
Malte Says -- April 8th, 2008 at 2:23 am

I agree with most of your point but as well with Jetts comment. Sometimes a client is not understanding and will look for another agency when you can deliver what he wants and in the way he wants ist.

 
Jason Rogers Says -- April 9th, 2008 at 1:24 pm

I know that first one all to well. Great advice to all consultants.

 
Gus Says -- April 10th, 2008 at 11:41 am

“Let the client manage the project”: Amen to this statement. All of my classes in college, and real world experiences constantly prove this fact to me. This can also lead to the client thinking they can handle the project themselves.

 
100 Posts That Are Lists - Left The Box.com Says -- May 5th, 2008 at 9:06 am

[...] 81: 10 Most Expensive Mistakes in Consulting [...]

 

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