"CONSULTANCY

CALLING IN THEADVICE SQUAD

Consultancy is often seen as expensive, with uncertain and unquantifiableresults, yet it is more and more an option for companies who want to get ahead of

the game. Here, Dr Barry Holmes and Roger Collins of consultancyWS Atkins, advise on how to get the most out of your consultant and mark out

some of the areas in which you can gain.

L The occasional imprecisionsof consultancy advice,particularly in the businessplanning field, can be worryingfor the engineer who is used tofacts and figures j

Increasingly, companies looking for improvedprofitability are seeking to define their corebusiness more closely with a view toeliminating those non-production or support

functions which can be 'contracted out' tospecialist companies. This can be more costeffective because the specialist support compan-ies, often consultancies, are only employed whenthey are needed. Additionally the consultanciescan become increasingly professional by special-ising in a range of selected tasks.

Services which are contracted out fall broadlyinto two categories. In the first are on-goingservices, typical examples of which might be officecleaning; overall laundering in food or pharma-ceutical manufacture; maintenance of plant orvehicles; warehousing and distribution and so on.

In the second category come one-off projectassignments such as feasibility studies, capitalproject implementation and the like. Project typeassignments have a limited life and, as such,require specialist skills and management frompeople who are accustomed, through experience,to co-ordinating a large number of related activitiesin order to bring the project to a satisfactoryconclusion within a limited budget and time span.This article is concerned with engineering andmanagement consultancy and looks at some of thekey issues affecting this particular type of service.

There have been many instances whereengineering development departments from manu-facturing or process companies have becomefree-standing consultancies and now serve a widerange of industries. Other consultancies servingmanufacturing have grown out of traditional civiland structural consultancies, and yet others havesprung from accountancy practices. There is thena very wide range of choice for clients, andselecting an appropriate consultant to assist withtheir particular problem requires care.

The associated activities in the consultancygive it a particular culture and this may be the firstcriterion of selection a client may use. Qualifiedfirms can vary from a loose association of a fewspecialised individuals to large multi-disciplinedfirms employing many thousands. In most casesthe most important criterion of selection will be thetrack record of the corporate body and of theindividuals used in the team.

Matching client and consultantThere can be very formalised systems for

assessing the value of the consultants' offer to theclient, which allocate by a weighted points systemmarks for the corporate experience, the experienceof the staff, the project managers' experience andthe proposed methodology, and these will be madeknown to the consultant at the time of the enquiry.These systems are usually favoured by theInternational Funding Agencies such as the WorldBank and the Asian Development Bank, whilstprivate industry tends to be less formal. Perhaps itwould be helpful to industrialists to formalise theirprocedures in a similar way. A typical formula usedrecently is shown in Figure 1.

This formula is more complicated than some,but has the usual emphasis on the importance ofthe consultants' team. Clients should beware of'switch-selling' by consultants from the senior staffwho present themselves at the sales stage, to morejunior staff who actually undertake the work.

Apart from the team, reputation can often be themost important criterion for selection, particularlyif subjective judgements are to be given in supportof feasibility studies; clients will then need thestrength in depth back up of larger firms, morethan the specialist expertise sometimes found insmaller firms which confine themselves to specialtypes of assignment. These are always factors inchoosing the right consultant.

MANUFACTURING ENGINEER JULY/AUGUST 1990

CONSULTANCY

£ There must be an in-depth agreement between the client ajid theconsultant about the principles upon which they are to work

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It is of interest to know how consultants obtainthe initial enquiry from their clients when it hastraditionally been the policy that consultantsshould not advertise. Some associations such asthe Association of Management Consultants andthe Royal Institute of British Architects do nowpermit advertising, but it is still not widespread.Typically in any year, 50% of new work into aconsultancy practice comes from extensions toexisting jobs and at least 50% of the remainder ofnew business comes from the existing client base.Probably therefore only 20% or so of new businesscomes from new clients. Most of these orders arereferrals from other satisfied clients and somecontacts come through enquiries to the variousassociations, such as the two mentioned above,and the Association of Consulting Engineers andthe British Consultants Bureau, which latter largelyrepresents British consultants in overseasmarkets.

Little work is obtained by direct soliciting ofbusiness, although this does go on. It should benoted that most of the Funding Agencies keep listsof approved consultants and it is quite proper toapply and to prequalify for these lists.

What you getThe services which may be obtained from

consulting engineers are very wide and will vary inscope from a few days of expert opinion through tohundreds of man-years of design and managementeffort. Large consultancies, perhaps surprisingly,will take very small commissions and give themthe same care and serious attention as they woulda large commission.

In order to understand what a client may obtainfrom a consultant, we have presented below asynopsis of the main services known to the authorsand then broken them down in detail. Key serviceproviders of interest to the manufacturing engineerare management consultancies and engineeringconsultancies, and this article looks at four keyareas of Consulting activity, namely:

(i) capital project implementation(ii) manufacturing operations

(iii) business planning(iv) special technology advice.

Clearly these are not exhaustive and there is notintended to be any implied ranking by frequency,volume or importance in the listing.

Having considered the broad spectrum ofservices that consultants can offer clients, it isinteresting to consider some examples of recentwork done by British consultants. Take iirst acapital project with a deep involvement inmanufacturing operations, an area welt understoodby the manufacturing engineer.

In the middle 1980s, a client in Tunisia wishedto build a facility for the manufacture of high speeddiesel engines. A British consultant was commis-sioned to complete a study starting with marketresearch and continuing to the full definition of theproduct and the manufacturing facility. Detailedmarket research in that country in joint venturewith a local partner led to the definition of a seriesof engines with ideal specifications to suit themarket place. These engines were to be madeunder licence from a European manufacturer andwork was then performed to prequalify possiblemanufacturers and to locate the closest technicalspecifications available from them to suit therequirements of the market place.

Having established an ideal solution andestablished the qualifications of possible manufac-turers, the consultant then called for tenders for thesetting up of a manufacturing facility, including thespecification of machining and assembly lines andthe supply of CKD kits during the early years oflocal manufacture. Detailed tenders were receivedand evaluated via a computer model which wasbuilt to compare tenders with a wide variety ofmanufacturing options; with different rates of buildup of local components, different amounts ofsub-contracted components and with a variety ofultimate replacement ratios of the CKD kits bycomponents manufactured in the local factory.

Experience of local economy and environmentExperience of type of work in questionGeneral experience in industrial fieldProposed method and work planExperience of team leaderExperience of the rest of the team

51515252020

100

Figure 1: Marks out of ahundred show how aconsultant shapes up torequirements

The consultant then assisted with commercialnegotiations with four selected manufacturers tocome to a final recommendation for the engines tobe made locally. Because the factory was to bebuilt in a remote location where only agriculturallabour was available, he had to advise on theestablishing of training programmes for youngstaff at the local technical institute, and to set outthe requirements for all staff in the factory suchthat local education could be provided to givesatisfactory staffing in the long term. The factorybuildings were later built to the detailed design andsupervision of a local consultant.

Take now a recent project, more in the area ofbusiness planning. Since this is perhaps lessfamiliar to the manufacturing engineer, it is firstworth explaining this area of consultancy.Business planning can be considered under twoheadings - strategic and operational. Theboundaries are not hard and fast, but in general theservices listed under 'Corporate and BusinessStrategy', involve medium-term strategic advicesuch as the company mission and objectives,location of plant and offices and product planning,while those under 'Company Performance' areshort-term operational issues such as accountingpractice, distribution and maintenance. The latterare aimed at cost reduction, performance(throughput) improvements, better product qualityetc - in effect at immediate results which willimprove the bottom line this year or next year. Thestrategic issues are more related to future lines ofdevelopment for the company - where tomanufacture, what to manufacture, whether togrow the business from within or to buy in productlines and manufacturing capacity. The real test of aconsultant is when he is asked to undertake bothtypes of assignment at the same time!

Human Resource consultancy services arehard to fit into this two-way category - they allhave strategic implications with long-term effects,but at the same time, are likely to involveimmediate costs at a level likely to impact uponcurrent profits. Performance related pay schemes,major training programmes and industrial relationsimprovements, all come expensive, while changesin the management structure can have very shortterm effects as well as their impact on the futurecompany performance. This perhaps explains whyHuman Resources has recently been such afast-growing area of management consultancy.

With the coming of perestroika, Hungary hasbeen keen to restructure, rehabilitate and privatisemajor industries and to make them efficient andcompetitive by international standards. Britishconsultants helped to achieve these objectives inTungsram, a Hungarian state enterprise with20 000 employees in 14 factories. Tungsram is amajor producer of light bulbs and fluorescenttubes, supplying some 5% of the world market. Ithas integrated backwards into light bulb makingmachinery, and diversified sideways into sometypes of electronic capital equipment.

The consultants found an over-centralised

MANUFACTURING ENGINEER JULY/AUGUST 1990

CONSULTANCYstructure, with each factory reporting directly to thechairman, and high central overheads. Theyproposed a more rational organisational structure,with market oriented divisions responsible for theirown profitability, and minimum central overheads.The consultants then recommended managementsystems which allocated performance responsibi-lity for each function within the divisions.

The management information needs of theCompany were appraised, and a devolved ITsystem recommended which built upon theexisting computerisation programme. A substan-tial training programme was specified to help theCompany implement these major changes,including techniques for identifying and eliminat-ing redundant overhead costs.

General Electric of USA has since acquired acontrolling interest in the Company.

A further example based around some specialtechnology advice was a recent assignment inwhich the maintenance requirements of a largemetallurgical plant were determined. Tribology insuch plants has a unique role since lubricationfriction and mechanical wear is the mostsignificant cause of equipment deterioration. Thisenabled the consultant to devise a model formaintenance needs based upon the activities of theprocess departments. A survey of supportingindustries allowed their contribution to mainte-nance to be subtracted from overall needs,resulting in a statement of the maintenancefacilities which were required within the plant itself.

Through many years experience the consultantwas able to establish design criteria; analyse therelationships between the many maintenanceestablishments; examine the relationshipsbetween the establishments and the processplants they maintain, and consider the relationshipwith the outside world.

With these considerations the consultant,employing well tried working methods, producedplans for a central maintenance workshopcomplex.

Forging a relationshipThe mechanics of this relationship can be very

varied and, at its simplest level, the client canmerely take the consultant's seconded staff intohis own organisation. In addition to this approach,the consultant can do stand-off work from hishome base or he can create integrated teams withthe client's and consultant's staff. Alternatively, theconsultant can do independent audit or designwork with a team inside the client's organisation.In all of these circumstances, other thansecondments, it should be noted that theconsultant will be in an advisory role and will neverbe in the client's line management. This advisoryrole can extend to large volumes of design work,which may have to be done so that instructions canbe given to a contractor in the form of a designpackage, but the consultant will still remain in anadvisory role. Where the consultant becomes theclient's representative in a construction situation,

£ It is difficult sometimes/or the client to accept that the consultantis on his side. . . in effect no different to a hospital consultant advising apatient over his health J

sometimes called the engineer's representative, hewill still have no legal control over the client'scontractors who will always be contracted directlyto the client. All of the above leads us tounderstand that there must be an in-depthagreement between the client and the consultantabout the principles upon which they are to work.The situation between the two must never beadversarial and, should this ever come to pass,then the work for the client will sufferimmeasurably. The consultant therefore must seekall ways to employ staff of the very highest qualityand those staff must not only carry out their dutiescompetently but they must seek to engender afeeling of confidence within the client, otherwisethe project will suffer. It is difficult sometimes for aclient to accept the fact that the consultant is on hisside and is his adviser, and is in effect no differentto a hospital consultant advising a patient over hishealth.

Measuring successGiven the relationship set out above, there are

things which one should seek to achieve in orderto make the best use of the consultant. It isimportant to set clear targets and to define thescope of work in as much detail as possible. Fromthe client's side, he should demand in return astated methodology of how the work is to becarried out, he should seek to understand thatmethodology in detail and he must insist onmilestone reporting as it proceeds. If reports are tobe produced then they should be approved instages and not left to the point that the client isdisappointed with the final product. In order toincrease the dialogue and control which the clientshould have over the consultant, the creation of acounterpart team or individual liaison staff withinthe client organisation is advisable. There shouldbe no hidden agenda in the arrangements betweenthe parties, and the client's long-term objectivesshould be clearly understood by the consultant.

All this is to say that the client must rememberthat most business planning consultancy is highlyqualitative, some engineering consultancy no lessso. Some assignments involve target savings in,for example, production costs, but most businessplanning, perhaps all strategic consultancy (bydefinition) shows results months, often years, inthe future. If the results are good, how much can beattributed to the consultant and how much to theclient company's use of the advice? Theconsultants' role is to advise, not to run the clientcompany. The client must ensure that the

consultant provides clear advice in a form that hecan use to decide on what action he should take.

Thus the success of the consultant cannot oftenbe measured, as the end product is usuallyintangible. If the work is of a technical nature, if forexample loss audits or energy audits are beingperformed, then the end product is easilyquantifiable and a monetary return can be expectedwhich will often repay the consultant's fees manytimes over. If the objective is a more generaltechnical audit, then the result is likely to be a reportwhich should sustain the client's position in hismarket place and without which he may well fallbehind his competitors. The value of this is virtuallyimpossible to evaluate. For example, marketresearch will give the company information onwhich to make decisions, but no quantifiablemeasure of success will be possible - the successof the research depends on the company actingeffectively upon the results of the research.

In terms of simple volume of consultancyservices, probably the largest sphere of action iswhere the consultant undertakes design andconstruction work for the client. A successfulcontract is one where the client will obtain goodvalue for money, his budgets will be respected andthe planned timescale of the project will beachieved, but again there will be no quantifiablefactor by which the consultant can be said to haveobtained his objective.

ConclusionLet not this emphasis on unquantifiable results,

and other caveats in this paper on the use ofconsultants, dissuade manufacturers from employ-ing them. It is true that the occasional imprecisionsof consultancy advice, particularly in the businessplanning field, can be worrying for the engineerwho is accustomed to facts and figures. However,consultancy used well can pay large dividends inimproved performance; better designed andinstalled new plant; cost reductions, and manage-ment efficiency. The secret is to keep the goldenrules:• set clear and achievable objectives• set realistic budgets for the work in hand• take care in the selection of consultants• stay close to their team throughout the

assignment• debrief fully at the end of the assignment.

Given this, and a reasonable project in the firstplace, clients should expect to recover much morethan the consultancy costs. HFor more information circle ME 45

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