Are Successful Consulting Projects an Illusion?

Based on the “Qualifications” listed in any consulting firm’s proposal, one would believe that the banking world is awash with successful projects. But is this simply an illusion?

The managers that hire consultants, and the consultants themselves, have a vested interest in hyping up the success of their projects--glossing over any underachievement relative to original expectations. It is obvious that consultants involved in underperforming projects would prefer them to be quietly swept under the rug by the client. But that their banking client would be prepared to do this is confounding although, at the same time, somewhat understandable. The careers of all those involved in the project--the executive team that approves the budget for the project, the executive who sponsors the project, the selection team that hires the consultant, the project manager responsible for the project, and the company employees assigned to it--are all dependent on being associated with successful projects. Therefore they have an interest in declaring every project a success. So underperforming consulting projects are rarely subject to the scrutiny they should be.

As well, companies seldom assess the business results of a completed project compared to the original business case that was approved.  If they did, more often than not, they would find that even for supposedly successful projects, the benefits realized are far less than those planned while the costs have exceeded the budget.

What about those projects that are clearly outright failures? Typically, all participants hasten to distance themselves from the problem project at the first sign of failure to avoid being implicated or being held responsible for the outcome. When the dust settles, perhaps a scapegoat is made of an unsuspecting manager. However, the consulting firm usually works out an arrangement to discretely withdraw--because, once again, individuals from both parties have personal incentives to avoid highlighting failure-- and then the matter is closed.

However, within the public sector, scandalous stories of high expenditures on consultants with little value delivered are regularly reported. Is it simply that the public sector is less capable of selecting or managing consultants? Or is it that there is greater transparency into governments’ use of consultants? See The Economist’s discussion of the UK government’s use of consultants http://www.economist.com/businessfinance/displaystory.cfm?story_id=15328933 or the CBC News report on the Ontario eHealth scandal, http://www.cbc.ca/canada/toronto/story/2009/10/07/ehealth-auditor.html. If similar audits were conducted in private sector companies, would they yield similar findings? We suspect so.

Banking organizations do themselves a disservice by hastening to quietly close the chapter on projects that have failed (whether an outright failure or one that is falsely reported as successful) to deliver promised benefits. Without a proper understanding of what has gone right and what could be done better when using consultants on projects, banking organizations will keep making the same mistakes over and over again.

The most effective way to properly assess a banking organization’s performance when it comes to managing consultants is to have a central function to oversee the selection and use of consultants. Although some companies rely on an internal audit function to monitor projects they usually focus their attention to completeness of ‘paperwork’ and compliance with procedures rather than whether delivered results meet original expectations. This is not the same as a consultant review board which should be tasked with reviewing each and every consultant engagement, both before and after, and to systematically analyze reasons for successful and unsuccessful (or underperforming) consulting engagements so that the lessons can be applied across the organization for subsequent consulting engagements. In the case of unsuccessful or underperforming consulting engagements, without embarking on a witch-hunt, the consultant review board should identify the collective weaknesses or breakdowns that prevented the appropriate selection and effective management of consultants. Their involvement from the selection phase to the end of each project will facilitate the application of lessons from previous projects and the avoidance of mistakes that result in dissatisfaction with the consultants as well as under realization of needed business outcomes.

In this current economic client, where risk-management and value for money are demanded by all stakeholders, banking organizations need to get better at selecting and managing consultants. They will only do so if they are prepared to acknowledge underperformance or even failures so that they can learn from their mistakes. By doing so, managers will be able to extract more value from consultants.