Monday, September 6, 2010

Why I Don't Like Time & Materials Gigs (T&M).

Before I became a consultant I had no idea what the hell T&M was. Why should I - I'd never worked contract before? Even when I hired consultants it was always fixed price engagements with clearly defined scopes (well - as clear as they could be!). Now I know what it is and I have to say, I am not a fan.

Now I'm not as militant as some of my peers on this issue. I am sure there are times when there are legitimate needs for T&M staff. However, I am opposed to T&M for consultants.

Normally when a T&M gig is sold, whoever is responsible for the pre-sales, qualifying the opportunity, the scoping, etc, they determine what the client's problem is. This affects the service that is delivered or sold. Now what winds up actually being sold can really vary. It's up to the client to clearly articulate the problem. But more importantly, its up to whoever is doing the pre-sales on the consulting side to really listen to the client and try to truly determine their needs and provide the best service to meet that need. Sometimes that aligns to a pre-defined service offering, meaning its a nice checkbox deal for the consulting company (yay!). Other times, the client has an unusual problem or dilemma which often means that the individual doing the pre-sales needs to go off the beaten track.

Now this is where things go a bit pear shaped.

What SHOULD happen is that if a consultant is required, the person doing the pre-sales should pin the client down on their exact problem, define the problem, what is the solution the consultancy will provide and the expected deliverable the client will get at the end of the engagement. As part of this, a timeframe should be provided when the deliverable can be expected. The consultant responsible for the proposal needs to allow sufficient timeframe for the consultant to provide the deliverable. Now all this is as dependent on the skill of the consultant to negotiate and listen as it is for the client to articulate their needs (so a lot can go wrong on both sides of the fence here - if you follow me).

What OFTEN happens is a T&M engagement is sold.

There are a number of reasons why a T&M gig gets sold (and don't get me wrong, it isn't difficult to see why they happen - but that doesn't mean I excuse it):
  • The client can be difficult articulating their needs,
  • The consultant can't be bothered with the pre-sales/scoping,
  • The consultant honestly can't tell what the client wants,
  • Either the client and/or the consultant aren't sure how long the engagement will go for,
  • The client has an immediate staffing shortage and knows there is some urgent work required but not sure how much (e.g. when staff leave and there is no hand over, aka. bodyshopping),
  • The client has problems with the finance/billing angle for fixed price gigs (e.g. budget oversight/lack of authority),
The last example was a real opener for me - and I'm not just talking because they didn't have purchase authority. I have witnessed instances where the client was supposed to have already completed the work but didn't - and because they couldn't get purchase authority for a statement of work (where the deliverable would be in print that it was for work that should have been completed) a T&M gig was sold. Very dodgy indeed - but I digress.

My main reasons for not liking T&M however are for these reasons:
  • A consultant may not possess the right skills for the job (they might be ABLE to, but they might not be the best FIT),
  • A client can change the scope on the consultant (because there is no scope - at least nothing concrete),
  • There is no duration (which means the gig can potentially go on indefinitely),
  • The deliverable is not clear (so the client may not be happy with the output, likewise the consultant isn't sure of what to provide),
  • It just reeks of lazy scoping or justification (like the above example),
  • There is no protection for the client, consultancy or especially the consultant on-site.
But the bottom line is this:

I have yet to see a T&M job for a consultant yet that couldn't be defined as a fixed price gig. Not one.

To make this all worse, a consultancy may have no interest in ending a T&M gig, because usually the consultant will be pimped out a good daily rate and even if the rate is discounted, so long as the opportunity cost is not extreme, then its all good as they can maintain their utilisation. Likewise, a client may not want to end a T&M gig either, especially if they're using the consultant as backfill or in lieu of hiring a full time employee or contractor. Should this scenario occur, then it is the consultant is might be left to struggle to meet the client's need (should the scope change, expectations change, duration change, etc).

Compounding this again, if the scope changes and the consultant struggles to meet the client's needs, the client can build the perception that the consultant is squandering their time, twiddling their thumbs. While the consultant could be (in some cases, if they're crap) but lets assume he/she isn't crap. They might be stuck there because they're having problems with moving goal posts, staff not handing them the information they need, multiple distractions because the scope has widened, etc. This can leave the client with a very bad impression of the consultancy and their ability to deliver. If this should happen, this can jeopardise the consultancy's reputation!

Now when I am on-site, I am there as Jarrod Loidl. I might be working for Dimension Data but at the end of the day, it is me there doing the work. So if the client winds up with a bad perception of my work and its because I don't understand what I am expected to do, or the goal posts change, then that affects my professional reputation as much as it does Dimension Data's. This is a small world and even smaller industry and local market where everyone knows everyone. You burn a bridge today - intentionally or not - and you never know how it may come back and bite you. More than that, however, I actually take pride in my work. I would hate for a client to ever think that of me. So the best way I know how to assure the client a high level of service is to tell them what they will get, when they will get it and how I will go about delivering it. Ergo - a fixed price engagement.

In short, in order for a consultant to provide the best service to the client, the scope must be defined, the duration clearly stated, the work to be performed understood and the deliverable clearly articulated. This ensures that the client receives the highest quality of work from the most qualified resource available for the best price. It protects the client. It also protects the consultancy.

To summarise:
  • If you're a client in need of a consultant, don't settle for T&M. Don't ask for it. Don't accept it.
  • If you're a consultant, DON'T SELL IT! Define the problem, solution, deliverable and duration. Do the hard yakka upfront.

- J.

EDIT: I should postscript this...
Firstly if you decide to do T&M, that's your decision. But at least call a spade a spade and acknowledge that the practise is bodyshopping.
Secondly, this is something I just found today and I think everyone should read this "No One Nos: Learning to Say No to Bad Ideas", This is something everyone should do more in the workplace IMHO.

1 comment:

Anonymous said...

Welcome in the real world... you're learning that's ok :)