What can the private business sector learn from what some would say is our government’s over-reliance on consultants from the big end of town?

Government procurement was worth $47.4 billion in 2016-17 [i]. One of the things a figure such as that buys you in the public sector, is an audit. In a rare case of bipartisanship, both Labor and Coalition MPs support an inquiry by the Joint Committee of Public Accounts and Audit into government procurement contracts.

Is anyone here a full-time employee of this company? 

I have been in many project meetings where the outsourced workers have outnumbered the company’s own staff. I’ve been in one or two where the whole project team was outsourced specialists and contractors. This is often the result of adventures in downsizing and “reshaping our workforce” to make the business more competitive and, frankly, to reduce spending. All too often, the organisation is forced to outsource workers to cover skills gaps. The government’s own Human Services Department reportedly more than doubled its spending on outsourced labour after making redundant nearly 2000 public servants.

Spending for “on-hire” labour is especially found in the IT sphere. Many departments turn to short-term help for temporary projects where specialised skills are needed and they are faced with a hiring freeze. That’s great and we’re here to help, but it should be done strategically and there are risks to be mitigated. If short-term IT projects aren’t carefully planned and managed with your broader business objectives and the health of your business in mind, the scope, cost and timelines will easily blow-out. If you throw a lot of budget at a project to just get people in and get it done, you may risk spending more than you need to on more consultants than you need. Perhaps you’re overlooking skills you could have found in-house – risking disgruntled or disengaged staff. Another potential issue is the loss of capabilities once the contractors are dismissed; a costly missed opportunity to grow the capacity of your organisation.

Measure Twice, Cut Once

When strategically planning any IT transformative project, one of the first steps must be to determine in-house capabilities and competencies. The best person to do this is an expert Project Manager which is most likely found outside your company. That’s right, the best way not to blow your budget on unnecessary consultants is to hire a professional consultant. This key outsider is not tethered to your corporate culture with its biases, dogma and personal preferences. This is the expert who will provide an honest and independent assessment of your performance, processes, objectives and capabilities.

Assessment from an independent Project Manager in the initial planning stage will control scope creep and unnecessary spending later in the project. They have the dedicated time and unbiased point of view to get it right. This assessment must include:

• Gap analysis – looks at current performance and skills in light of objectives, to identify the skills or functions that need to be developed or acquired.
• SWOT analysis – looks at the business against its competitors.
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
• Capacity review – examines the workload of current employees, including their productivity and challenges
• Risk assessment – identifies risk and recommends controls needed for project success

 Rediscovering In-House Expertise

There are many reasons why an organisation may lack a deep understanding of employees’ skillsets, from rigorous hierarchies to disenfranchised departments to fallout from a recent spate of redundancies. It may be a related or separate issue, but many organisations are not developing competencies, which forces them to hire outside and ultimately lowers profitability.

A good external Project Manager will have the objectivity to harness the skills of the organisation’s current workforce as appropriate, then recommend where hired guns are required to complete the project’s skillset and/or provide mentoring. Or perhaps it would be best to move skilled business-as-usual IT staff with key business knowledge to the project team, and back-fill with technical contractors. (Read more about that approach in our whitepaper about dealing with IT skills shortages.)

It is commonly said that most projects are either understaffed or overstaffed. It can be difficult to find the right balance between staff and outsourced workers. Get it right and successful projects will follow. Get it wrong and the project challenges, budgets and staff complement could multiply. This is an area of rapid growth in government spending resulting in the pending audit, and is a problem best avoided by taking the time for assessment and planning, and with strategic use of the right external partners and consultants.

The time has come to see if Australians are getting value for money.

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[i] Department of Finance, Australian Federal Government, 2018