How and When
to Use Technical Consultants

by Computer Graphics Systems Development Corporation,
Consultants in Real Time Graphics, Virtual Reality, and Networked Simulation.

The management style emerging today features smaller, more closely knit permanent staffs, and greater reliance on teaming partners and consultants. This style is emerging in response to competitive pressures and is expected to gain momentum into the next century. To be competitive, organizations need high levels of expertise in many different complex technical specialties. Yet most organizations find it impractical to keep permanent staff for each specialty through times of dramatically fluctuating business conditions. There are often equally dramatic shifts in the needs for skills from project to project. The trend to supplementing a core staff is reinforced by the need for specialists with ever-deepening skills in ever-narrowing subject areas.

Modern executives are becoming less akin to factory managers and more akin to movie producers. A core organization (the "studio" in the movie analogy) provides business and organizational skills, financing, and needed continuity, but there is flexibility in assembling the "talent" for a specific project. Far from the entertainment field, the logic of assembling teams of specialists has had a strong impact on projects building military systems. Recent defense procurements have strongly favored collaborative efforts at the organization level with the objective of getting the skills of the most qualified specialists for each project.

Team efforts provide customers with finely tuned products on tight schedules. The team managers benefit from reduced project risk, and from reduced investment in staff training and equipment. Team managers can thereby reap higher profits from their investments.

What are the differences among services offered in categories like consultants, contract engineers, job shoppers, subcontractors, and temporary help?

The terminology does not offer rigid distinctions. Roughly speaking, consultants, job shoppers, and temporary help are distinguished by how much supervision the hiring organization expects to supply. In our view, the term consultant is best reserved for top talent expected to work collaboratively with a client on a high level, receiving instructions mainly about the objectives to be achieved and seeking inputs only on key decisions. Contract engineers are skilled individuals who are integrated into the management hiring structure of the organization, and are given about the same amount of day-to-day supervision as engineers on the permanent staff, although they are generally expected to be in the top half of the performance range. Job shopper is a broad, and somewhat dated, term for people with skills ranging from drafting through engineering hired from a firm that pools talent. Temporary help is sometimes used to refer to administrative rather than technical personnel, usually hired from an agency.

With some large companies using the word "consultants" in a purchase order triggers an avalanche of requirements for special authorizations. These requirements come from past big-name scandals in which money was funneled to individuals for unspecified services. Avoid this by always including a statement of work that specifies the nature of the services to be provided. Use "technical services" or "engineering support" rather than "consultant" when describing the relationship.

With no standard terminology, there is no reason why you cannot think of Henry Kissinger as temporary help, and no reason why a janitor cannot bill himself as a consulting sanitation specialist.

The distinctions that count are: How much expertise do you require? How much supervision do you expect to provide? Do you want a consulting organization with its own equipment and resources? There are no "right answers" or even "conventional answers" to these questions, so just make sure there is a clear understanding in each arrangement.

One may obtain consulting services directly from an individual, through a consulting company, or through an agency. Individuals often operate with the least overhead. A consulting company provides a range of professional skills, equipment, support staff, and takes responsibility for the work of its staff. An agency provides marketing services for individuals, but no technical support. The federal government and most states have rules about the distinctions between employees and consultants aimed at requirements for tax withholding, disability insurance and the like. Hiring through a corporation minimizes these problems, at a cost.

What about the category of consultants who just give advice?

Few technical consultants just give advice, although giving advice is one aspect of many jobs. One potential client replied to an offer of consulting services with a resounding, "We don't need advice, we need someone to work!" In the technical world, most consulting service requires hard work writing, designing, and building. Clients expect useful end products. There are occasions when a relatively short answer to a specific question can be supplied by a consultant, who has paid the dues of long experience, but these occasions are the exception to the rule. However, if you have a job which pays well and demands little specialized knowledge for a client who only wants to receive broad criticisms, be sure to let us know!

What jobs are best suited to consultants?

Consultants are best suited to providing specialized skills not available from permanent staff. Sometimes the skills are in the organization, but just cannot be made available. A classic case is acquiring new business when top people are busy with critical ongoing work. Key people in the organization cannot be spared, but without submitting good proposals they will have far too much time to spare in the future.

Consultants are also well suited to doing nasty jobs that have to be done right. Writing the overview sections for proposals is an example. Also, porting software to new platforms, writing test suites, microcoding embedded software, writing device driver software are some examples that come to mind. What makes such jobs nasty is that most professionals would rather do something else instead.

What jobs are not well-suited to consultants

If you expect to need the skill for many years, the skill you need is obtainable in the regular job market, you have time to hire and train someone, and you expect to have challenging work that will keep the person sharp and happy, then you ought to hire a permanent employee to fill the job. It is especially unlikely that you will want a line management position filled by a consultant for more than a very short time. Line managers should be comfortable having a continuing relationship with the organization.

How much should consultants be paid

Like every service in a free market, talent ought to be paid what is reasonable in relation to the competitive alternatives. Start by finding the burdened labor rates (i.e., what your organization charges its customers) for comparably skilled individuals in your organization. If you are providing the consultant with office space, equipment, and management supervision, then it is fair to adjust the consultant's overhead downward, but keep in mind that the consultant has marketing and administrative expenses just like any other business. Also, be fair in comparing skill levels - a good consultant may be as skilled as your Director of Engineering.

If the consultant's skills are virtually unique, then you should compare the lost opportunity cost to the consultants fee. If only one diamond cutter can cut your diamond, then you should compare the cutter's fee against the value of having a cut rather than uncut diamond. One prospective client discovered that a particular consulting organization was uniquely qualified to do a market evaluation of a new product, but thought the fee for the evaluation was too high. The fee should be assessed relative to the increased risk in making the product investment.

Finally, consider a fixed-price arrangement for consulting work, if the job is reasonably well defined. For various reasons, including reduced paperwork, consultants often like fixed-price arrangements. Clients like the reduced risk.

Taking into account how long it takes to get the job done, you should expect to pay about one-third less for a consultant to do the job than to do it with in-house resources. The savings arise from the efficiency of increased expertise, and also in compensation for the effort it takes to make the consulting arrangement. You may realize a savings of one-third or more of the cost of a task.

What are the most common objections to using consultants?

The objections are, "We shouldn't give away work to outsiders," and "There is no money in the budget for consultants." If there is a job to be done, the real question should be to find the best way to do it. If the organization consistently chooses inefficient ways of working, competitive pressures will present even harder and more unpleasant decisions.

Our experience has been that there is actually little resentment from the regular technical staff to having consultants. The technical staff doesn't resent high quality work, and they are pleased to get the job done successfully.

An unspoken concern of a few managers is that use of consultants is a sign of weakness in the organization. Perhaps more to the point, adding a consultant is feared by a few managers as not enhancing the domain of the manager as would adding permanent staff. No doubt these fears persist, but nowadays there are countervailing fears of having excess staff and of not being competitive.

What are the biggest advantages and disadvantages of using consultants?

The biggest advantage is getting the very highest level of talent quickly. That translates into best value for your money. Some would say that the best part of using consultants is that they easily come and go as you need them.

In many organizations, the biggest disadvantage is the paperwork required to purchase any type of goods or services. We'd like to say that taming internal bureaucracy is an opportunity every manager should relish . . . but then you wouldn't believe anything else we had to say either.

How do I find the right consultant?

There are at least three avenues. First, seek recommendations. Perhaps calling a direct competitor wouldn't get you the best recommendation, but many businesses have third party suppliers who can help. A consultant in one specialty can often refer you to one in another area. A second avenue is to look for consultants speaking at conferences or writing in journals or trade publications. A third avenue is to call an association such as the Professional and Technical Consultants Association (PATCA) for a referral. PATCA phone: (510) 284-8703, Fax: (510) 283-6258.

What level of service should you expect from a consultant?

If the job requires it, consultants are generally willing to work very long hours, work many days without a break, and to travel where required. Airfare and hotels expenses should be according to rules applicable to the comparable level of regular employees. Reports and documentation should be written to high standards. Consultants have limited rights to complain about poor working conditions, within the bounds of health and safety. However, if extreme situations are expected, it is common sense to make a clear understanding at the outset. Like everyone else, consultants must meet a variety of obligations.

You should not expect to pay for training a consultant in any basic professional skill. However, you should also not expect consultants to work unpaid overtime or to travel on uncompensated time.

Suppose your organization "just doesn't use consultants"?

Times change. There are also some companies that "just do not use computers," but as times change they are a vanishing breed. Early experiences with computers were sometimes disappointing, but sticking to a hard and fast rule against using them ultimately proved untenable for most organizations.

Note the main reason for using consultants is to provide a needed skill, that in many cases the organization does not wish to permanently acquire. If the organization tried using consulting services once, and it didn't work out - well, lots of life's good things start off on the wrong foot. Not every choice of permanent staff is successful either.

And is it really true that the organization never uses consultants? Does it use proposal consultants? Does it do its own payroll? Does it do its own advertising and printing? As we said, it is not so clear what the bounds are on what one calls "consulting."

The opinions expressed here . . .

. . . are those of CGSD Corporation, based on our experience. Overall, we believe this brief guide accurately introduces the world of technical consulting. Please contact us at:

CGSD Corporation
2483 Old Middlefield Way #140
Mountain View, CA 94043-2330

phone: 650-903-4920
fax: 650-967-5252