Similarly, no way should a consulting company be contractually able to take hostages, accept kickbacks, or fall victim to double dipping. A standard master service agreement should protect the buyer. And no way should a contract be finalized without knowledge and approval of the top consultants to be assigned to the project, thus minimizing the B-team risk. Finally, I've seen plenty of experienced customer project managers effectively manage consultant attempts at stalling.
In fact, when I classify the tricks, I see the first, bidding low and billing high, as a greater risk than all others combined -- and not just because of shady consulting practices. Requirements known at bid time can be very different than those implemented in design and build, even when both parties act in good faith. Bid and bill may diverge for reasons other than dirty trickster consultants.
In response to the article, let me propose a turnabout that reframes "bid low, bill high" and notes six "unwise practices" that cause conflict between customers and consultants -- plus one experience-based recommendation for consulting colleagues.
Unwise practice No. 1: Inflexible contractual terms
Prospects often think they can minimize consulting risk by negotiating a fixed-bid contract with their chosen services provider. In theory, they'd know their costs upfront and the consultancy would be on the hook to deliver to the specifications. But fixed-bid projects often play out differently than expected, with problems that go beyond bidding low and billing high.
It's generally a fallacy for consumers to assume consulting firms are loathe to sign fixed-bid contracts. Indeed, with a solid understanding of requirements and contractual terms that address risk on both sides, savvy consultancies welcome the opportunity. Given a carefully crafted statement of work with a payment premium for risk, the fixed-bid contract should be more lucrative to consultancies than time and materials -- if executed properly. In fact, with BI (business intelligence) projects, I generally find that customers rather than consultancies tend to hesitate on fixed bid.
Unlike with transaction apps, BI requirements tend to grow as customers begin to understand the possibilities. Success with BI is often manifested with reactions like "Aha, I see what you've given me. Great stuff! Can you now give me this, that, and the other"? But this, that, and the other are generally not part of initial requirements, hence a change order -- or, perhaps, a phase two. A next phase is almost always welcome by the consultancy and is generally a sign that the customer is appreciating the value of and growing in its deployment of business intelligence.
Two years ago, OpenBI engaged with a prospect who sought a fixed bid for development of a BI reporting and dashboard application. The firm presented us with a document that purportedly contained all application requirements. With little information outside this document, we put together a statement of work for a 15-week fixed-bid effort that included the following provisos to minimize our exposure to the unknowns not addressed in the known scope: