January/February 2020

Communities: Government
Clients Are From Venus, Consultants From Mars

 How public works agencies can better understand and manage consultants

BY MICHAEL ELLEGOOD, P.E.

Following the 2008 recession, many public agencies laid off senior staff, and have not replaced them. Subsequently, a high percentage of design work for public projects is now done by consultants, while continuing to be overseen and managed by public agency engineers. These two groups have much in common: Both are subject to the same laws of physics, use the same codes, subscribe to the same best practices, and often attended the same engineering schools. But there is a major difference: Consultants are in the business of engineering, while public agency engineers are in the service of the public.

While public sector challenges include being good stewards of the public trust and delivering projects in an often highly politicized environment (while trying to stay out of the press), our consultant colleagues must adhere to a simple three-step business model:

• Step 1: Find work
• Step 2: Do work
• Step 3: Get paid

Let’s take these in sequence.

Find Work

Nearly all of us in the public sector use some form of qualifications-based selection, in which the consultant responds to a request for proposals. In most cases, the price to do the work is not included. How then is a public agency to evaluate these proposals? I suggest using the “3 C” method: competence, capacity, and cost.

Competence: Does the consultant demonstrate that the firm and the individuals proposed for the project offer the requisite experience on projects of similar size and complexity?

Capacity: Can the consultant demonstrate sufficient capacity to deliver the work on schedule? Are the staff proposed for the project available for the duration of the work?

Cost: (Not the cost to do the work!) Can the consultant show construction cost savings on previous projects because of exceptional skills, innovative solutions, or outstanding management?

On the subject of cost, we, as stewards of the public trust, need to consider the total cost of the project—not just design. Excluding right-of-way, permitting, and other ancillary costs, construction costs are driven by four factors: design, materials, labor, and contractor overhead. Of those four, design is usually the lowest cost but has the most significant impact on the remaining costs.

Do Work

This is what most consultants do best. It is why they and their staff went to engineering school. But those of us on the client side need to keep a couple of points in mind.

First, although we have hired a consultant that can be held accountable for the work, we still are ultimately responsible for it. If the consultant makes an error, the public will hold us accountable.

Second, we must insist that the consultant provides us with work that has been reviewed internally. A best practice is to insist that the designated project principal provide a letter of transmittal attesting that the submittal has been checked and review documentation is on file.

Get Paid

Of the three elements of the consultant business model, getting paid for completed work is often the most challenging. The consulting engineering business is not at all lucrative. Margins are low, clients are demanding, and competition is fierce. In addition, a consulting engineer must make a sizeable investment in staff salaries and overhead before he or she can even submit an invoice.

To add insult to injury, if the consultant needs to borrow money to make payroll or pay bills, the interest paid is a nonallowable overhead expense. Thus, the already small profit margin is further eroded by nonallowable costs and slowly paid invoices. The key point: Insist on an invoice on every project every month and pay your consultants promptly, within 30 days.

We in the public sector have a close, interwoven relationship with our consultant community. They are not vendors selling products; they are colleagues in the business of engineering, and we are codependent. They need to be treated as trusted advisors and project partners. But we, the agency, still remain responsible for the project’s successful delivery.

Michael Ellegood, P.E., was public works director and county engineer for Maricopa County, Arizona, and also worked as a consulting engineer. He currently co-owns e+e LLC, a consulting company specializing in helping public agencies deliver capital projects. Ellegood is also a past president of the Arizona Society of Professional Engineers. He can be reached at [email protected].

This article is adapted from Ellegood’s webinar “Clients Are From Venus, Consultants From Mars: A Guide to Effective Management of Consultants.”