I wrote a blog post awhile back on how to choose a consultant. You can read that here: https://bit.ly/3DJJxK9 . But that article does not address the precursor question of whether you need a consultant or the post selection question of how to use them effectively.
There are a couple of things to consider when thinking about managing a project internally vs externally. First, is the experience level and availability of the internal resource. While that person is going to be more familiar with the culture, politics, process etc. of your company, the downside is they already have a full-time job, and they can be biased by internal culture, and politics. Whether the internal resource has the right experience to do the project should also be considered. Someone who has managed projects to bring a new product through clinical trials may have some of the skills and experience to manage a construction project, but they will certainly lack some skills as well. An outside consultant can be chosen for a particular expertise (e.g. construction) and interviewed to ensure that they have the requisite experience.
A consultant experienced in the projects they manage can more than pay for the financial cost of hiring and in headache reduction. Since you are paying them to manage the project, that will be their focus. They should not get sidetracked by another task or get bogged down in unnecessary detail. They will know when a problem needs a little attention, or a lot of attention based on experience. For example, suppose the contractor comes to the project manager and says that the resinous flooring lead time is 2 weeks longer than expected. An inexperienced project manager might think “no big deal, we’ll just put more people on the installation” and thus not react to that news, while a PM with experience may know that resinous flooring is a process not dictated by manpower, but by cure times, so adding people is not the correct solution. He will look at other areas of the project where time can be gained and then rearrange the schedule. Another danger in using an internal resource who is not experienced in the type of work they are assigned is that people tend to drift toward their comfort zones. An internal PM might get overly involved in color selection because they have an art background or are just more comfortable with interior design tasks.
Another factor that should not be overlooked when looking at project management is the influence of the organization on the PM. An experienced outside consultant will know what questions to ask of the organization to get to the desired endpoint. They will be well versed in dealing with internal politics of their clients and can help avoid the pitfalls that can bring. An internal project manager has their own constituencies to satisfy and may compromise project quality or cost based on the wishes of that constituency rather than the overall good of the project. For example, the maintenance supervisor assigned to manage a project may be too quick to purchase equipment based on ease of maintenance rather than lead time, operating costs, or ease of installation. The external PM’s goal will be the overall good of the project, and not any one user.
Many, if not most companies use consultants at some point. Some use consultants efficiently, but all too many companies are wasting their money. What I am about to tell you will probably not be popular with many consultants and they may disagree vehemently because I am going to tell you how to use a consultant efficiently from the client’s point of view which is where I have spent much of my career. If you follow my advice, you will spend less money on consultants while getting more and hence some consultants will make less money.
Many people who hire consultants recognize that they need help, but sometimes do not know what that help looks like. So, the first step is to figure out what EXACTLY it is that your own organization lacks. Do you lack knowledge, or a specific skill set, or just resources? Consultants can provide all these things, but where the efficiency comes in is in hiring the right consultant to fill the hole in your organization.
Once you have a consultant in house, it is not a good idea to just turn them loose to work independently unless you are hiring them just to have more hands doing the work and do not need to learn anything from them. The goal for most consulting jobs should be to put them to work doing things that no-one else in your organization can do and then LEARN from the experience so that the next time, you can do those things for yourself. Leverage the experience, education, and expertise of that consultant so that the hours you purchase pay for themselves over and over from the education your organization gains.
Beware of scope creep. Define the scope upfront, ensure the consultant you hire is qualified to do that work and ensure that they do what you hired them for, no more, no less. Of course over the duration of the project, you may want the consultant to do more than you originally hired them for and that is OK. As long as the decision is made consciously, and the new scope is well defined and considered in your budget.
Finally, pay for the work required, not for the consultant’s potential. Pay market rates for what the consultant does, and not for the consultant’s resume’. As an example, I have done considerable project management in my over 30 years of work, so if you need a Project Manager to keep track of scope, schedule and budget, I can do that. But you should not have to pay for the additional experience I have in Engineering, Construction, Manufacturing, Supply Chain, or Laboratories as well. You are paying for a PM and the consultant should be charging PM rates, not Subject Matter Expert (SME) rates. It may be prudent to pay for an SME AND a PM, but make sure you are paying market rates for each.
As usual... well done, Joe. Spot on for the rates vs. tasks performed/ing.