Paying For Management Consultancy. A short but sweet article.

There was a time when all management consultancy assignments were paid for on a time basis plus costs. It did make selling jobs difficult and for that reason it would be normal to suggest an initial short, sharp project with restricted terms of reference. This was done on the "puppy dog" principle that when you get to know us, you will love us. Once, I created a record for Price Waterhouse by doing 19 separate assignments for the same client.

Times are changing. Latest statistics show that whilst 50% of all work is still on a time-charge basis, 40% of projects are set at a fixed-price. Clearly this moves some risk to the consultancy firm. What is significant is that the remaining 10% (and growing rapidly) of jobs are charged on a risk-reward or a payment-by-results basis. Two of the most prestigious (and secretive) firms, both American, do most of their work this way. From a management standpoint, this risk basis holds much attraction.

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