Assignment management

income, but also in the operating consultants’ efforts to apply new approaches and improve the quality of the service.

Not all technical problems can or should be referred to top management for advice or decision. Many consulting firms therefore use procedures whereby higher management would be consulted, or requested to approve the report to the client, on any assignment that exceeds a certain size (e.g. cost over $200,000), proposes an unusual solution (e.g. merging companies from different sectors), has major political and social implications (e.g. could provoke a strike), or would substantially deviate from routine practice in some other way.

Quality management, a key dimension of any assignment management and control in consulting, is discussed in Chapter 32.

31.4 Controlling costs and budgets

Both the client and the consultant are concerned about the financial side of assignment execution. The client is certainly pleased to see that the job is making progress, but since he or she is also paying the consultant’s bills, it is normal to compare the progress achieved with the money that has been spent.

The consulting firm has a similar concern. If the contract stipulated a lumpsum payment, both the operating consultants and the supervisor involved must monitor carefully whether the progress made is commensurate with the time and other resources spent. It does happen that, through lack of focus and discipline, too much time is spent on fact-finding and diagnosis, and the consultants then have to complete the assignment under extreme pressure, or cannot finish it within the agreed time and budget.

However, even if a per diem fee rate is applied and no maximum budget was agreed upon, the consultant’s responsibility to the client requires strict control of cumulative costs and their comparison with the progress made in the assignment. If this relationship is ignored and the client is expected to pay the fees anyhow, this can lead to a major conflict. The assignment may be phased out in an unpleasant atmosphere, or the consultant could spoil the chances of getting other work from this client.

The consulting firm needs to control assignment budgets for one more reason. It needs to know which assignments are profitable and which are not, in order to adjust its service portfolio, assignment design, work organization, staff structure and personnel management, including partner and consultant compensation. Therefore many consulting firms budget and control the complete cost and the profit made for every assignment (see also section 33.2).

31.5 Assignment records and reports

In a decentralized organizational setting, where a number of assignments are executed simultaneously and many operating decisions are taken far from the

717

Management consulting

headquarters, an accurate and reliable system of records and reports is indispensable for effective assignment management, for charging clients properly, and for paying consultants their salaries and reimbursing their expenses. There are many information technology applications for professional service firms that have made this relatively easy even for smaller companies.

Notification of assignment

At the beginning of every assignment the supervisor or the team leader should prepare an assignment notification, which is intended to inform many sections within the consulting organization. It initiates or supplements a client file for the commercial aspects of the firm’s work with that client. The notification records information as indicated in figure 31.1. If staffing is modified during the course of an assignment, a supplementary notification should be made. Rather than recording and transmitting these data manually, many consultants input them to their computerized internal control systems.

Consultants’ time records

Time records, or time sheets, are the source of data for invoicing clients and for much of the control information needed by management. If recording is manual, one standard form will suffice for operating and senior consultants. It should be returned to the office either weekly or monthly depending on the requirements for invoicing and control, and should contain the following information:

●consultant’s name;

●dates of period covered;

●client names (for up to, say, five assignments, surveys or visits);

●fee rates for paid work;

●number of fee-earning days per client;

●number of non-fee-earning days per consultant divided into:

–attending public and professional events,

–giving training,

–leave,

–preliminary survey,

–promotional activity,

–receiving training,

–sickness,

–supervision,

–unassigned,

–unpaid operating.

718

719

Management consulting

Operating consultants would normally enter the name of their current client, the fee-earning days to be charged and the non-chargeable days. Other consultants (supervisors, marketers, survey consultants, etc.) would enter the names of all clients dealt with personally during the period, the days spent on non-chargeable work, the days of chargeable work, fee rates, and the use made of all non-fee-earning time.

The same data can be generated and processed using a computerized timesheet scheme. Most consultants use their personal computers, but it is important that they record the data correctly, on a daily basis, to avoid omissions and misallocations of time.

Consultants’ expenses

The firm may have a standard scale of expense allowances, and rules for its application which cover an assumed normal set of conditions. This can be surprisingly difficult to draw up and administer: the “every situation is different” character of operating assignments often extends to the consultants’ expenses. As a rule, consulting organizations will need to be prepared to consider any case of higher than standard expenses, at the consultant’s request.

The main sources of expense are:

●accommodation and meals while away from home;

●travel;

●communication (faxes, telephone calls, etc.);

●use of special services (computing, printing, translation, information);

●entertainment of client and other business contacts.

Whether other out-of-pocket expenses are reimbursed by the client will depend on the terms of the contract. The expenses claim form should cater for any items that are to be recharged to the client.

Receipts for various expenses

Orderly administration and bookkeeping require clear rules as regards receipts for various expenses incurred both by individual consultants and by the consulting firm. The consultants must know that certain categories of expenses will be reimbursed to them only if they submit a receipt. The firm should keep receipts for all expenses that will be charged to clients for reimbursement. If an expense item is large, it may be good practice to provide the client with a copy of the receipt and add an explanation. Finally, certain receipts may be required when claiming deductions for tax purposes, or should be kept available for possible tax inspection.

If an expense item cannot be documented by a receipt, it may be necessary to establish an internal check or other document to prove that the expense was incurred and authorized, and to make sure that it is properly recorded in the books.

720