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Module II
Consulting Proposals
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Fact-Finding Leading to Solution Development and Implementation Developing Strategic and Tactical Plans And Subcontracting, Pricing of Consultancy
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Principles
The underlying principles behind the profession of consulting are: Consulting is fundamentally about change. The application of a change model that makes sense to the client as well as the consultant benefits any consultancy project. In consulting, the basic steps are common to all assignments. The scale, context and outcomes can always differ. Any consulting framework can only act as an indicative rather than a directive model. Since content and context drives a consulting project, no two will be the same. Successful consulting is about making a difference for the client and consumer. The goal is to deliver a contracted change and not a successful consultancy project.
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7 Cs
The 7 Cs framework is composed of a number of dynamic stages, each of which emphasizes a different aspect within the consultancy life cycle. Each stage depicts a particular phase that a consultancy project will follow. A set of subelements and diagnostic tools are used within each stage to ease the engagement process. Each of the stages can be undertaken independently, jointly or in parallel with each other.
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7 Cs
Client: Define the clients orientation of the world, their perception of the situation, their goals towards the final outcome and the one who has the power to influence the outcome. After this stage is concluded, you will have a clear agreement about the value to be delivered to the client and the value the client will offer in return.
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3. Create: Make use of creative techniques to develop a detailed plan that specifies what actions will be included in the change process, the appropriate resources, the stream owners and potential change problems.
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4. Change: Grasp the fundamental aspects that drive and underpin the process, such as the energy sources, change points, entry levels, emergent factors and proof of success.
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5. Confirm: Make sure that the change has taken place, taking into consideration the issues of data focus, ownership, depth, timing and design of the management process.
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7. Close: The engagement with the client has to be closed in such a manner that you emphasize the need to understand the final outcomes, the added value, new learning and the further course of action.
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Consulting Proposals
Proposals are an important part of the consulting business. Sometimes proposals serve to introduce consultants and their services to prospective clients, while other times proposals serve to finalize the arrangements between a consultant and a client.
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Proposals often serve as sales tools and project planning documents at the same time. Prospective clients may request a formal proposal in order to compare several possible consultants, make decisions related to budgets or scheduling, or simply to collect ideas about how to solve a particular problem using inhouse resources.
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Consulting proposals
Key objectives: To demonstrate a strong understanding of the client's needs Describe his or her own ability to meet those needs Detail a plan of action toward that end
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Prior to submitting a proposal, a consultant needs to gather information about the company and its problem from interviews and outside sources
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The introduction The methodology section The timing and cost section
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Used to demonstrate the consultant's understanding of the client's needs and desired outcomes
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A realistic and specific fee structure Schedule for completion of the project In addition, the consultant may wish to outline what effect, if any, the consulting process will have on the client's internal resources
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Necessary attachments: 1. A biographical sketch of the consultant, outlining academic and work experiences, membership in professional associations, books or articles published, 2. Awards or recognition received; 3. A description of the consulting firm's history and philosophy; 4. A list of current and former clients, especially those relating to the prospective client's industry or type of project; and, 5. Anything else that may help the client in the decision-making process.
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Proposals should be written in a conversational tone without excessive use of technical jargon with the prospective client's needs in mind The consultant may benefit from keeping in touch with the client while writing the proposal, as this helps avoid misunderstandings or incomplete information. If the consultant receives the assignment, the proposal then serves as the basis for a formal contract
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Although some clients may simply sign the proposal to authorize the consultant to begin work, many consultants prefer to clarify the arrangements in a separate document. At a minimum, the contract should outline the scope of the project, the consultant's fees, and the proposed time frame. There are several other issues that the consultant may wish to address, including conflicts of interest, subcontractors, insurance/liability, expenses, confidentiality, and cancellation.
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Identification and Definition of Problem This step entails a clear definition of the problem, opportunity, process or project to be addressed (measured) in this analysis, without reference to causes or solutions. During this step that data is gathered, documented, and analyzed, including the who, what, why, where, when, and the reasons for selecting this problem. It is critical by the end of this step to identify main (root) causes, particularly as seen from the perspective of all problem/project stakeholders.
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Tactical Planning
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Begin with a clear idea of what your strategic business plan seeks to accomplish by setting measurable objective. Draw up a time line to support your tactics. Establish a budget that supports or exceeds your planned tactical moves. List the resources you need to get your tactical plan up and running. Launch individual tactical efforts on schedule. Launch individual tactical efforts on schedule. Evaluate your tactical plans as soon as it's feasible. Use the experiences--good and bad--as educational tools.
Sub-Contracting
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Subcontracting is a type of work contract that seeks to outsource certain types of work to other companies. This is a step down from general contracting, which is a contract overseeing a much broader project in many cases. Subcontracting is done when the general contractor does not have the time or skills to perform certain tasks.
Advantages of Subcontracting
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Subcontracting offers a number of advantages. First, it allows work on more than one phase of the project to be done at once, often leading to a quicker completion. Second, because subcontractors already have the expertise and equipment to provide the service, it is often much cheaper for them to do the work than a general contractor who may not have that special expertise. Finally, the subcontractor is usually able to work with a general contractor on more than one project, thus creating a savings for both in the long run as a relationship is formed.
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Pricing of Consultancy
Output based Milestone payments Time and materials Blended rate Bonus payment Reducing price Gain/pain share Guaranteed minimum income
Output Based
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In an ideal world a buyer would pay a fair fixed price for the delivery of an agreed final outcome. This method proposes a payment on delivery of agreed outputs related to the project client satisfaction with performance; quality of deliverables; timely achievement of milestones. However, this arrangement places some risk on the consultancy which may attempt to build some contingency into the pricing.
Milestone payments
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A pre-agreed price is paid after agreed key milestones have been reached, or a deliverable has been presented. Consideration should be given to a right to recover payments if one or more future milestone(s) or deliverable(s) is not reached, particularly if it removes the value associated with previous milestones and deliverables.
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As noted previously, this is a very popular mechanism, placing the majority of the delivery risk with the buyer the longer the engagement takes the more it will cost. This mechanism is most suited to short-term assignments or where deliverables are difficult to define.
Blended rate
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In this scenario a rate is proposed by the supplier which takes into account a variety of factors grades of the consultants, specific expertise, training days, holidays, length of assignment, size of commission etc. This rate could be viewed as the average of the team.
Bonus payment
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An agreed bonus payment is included which is released after successful delivery to time and specification. In recognition of this the supplier should propose a reduced fee for the project. The bonus would normally be linked to the extra value received by the buyer for receiving the benefit on time as opposed to, say, six months late.
Reducing price
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A reducing price over time, so that the supplier is incentivised to deliver to the target date, prior to the reduction taking effect.
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Benefits sharing, or gain share / pain share, where additional savings or losses made are shared between the client and consultancy. This method is more clearly linked to actual value received / not received by the buyer,(as stated in the business case and contract). Care should be taken to ensure that any additional benefits add real value and are not just gold plating.
The consultancy is guaranteed a minimum financial volume of work over a fixed period; for example a contract is awarded to provide all services within a functional service area which the buyer will have a regular need for, over the course of one year, with guaranteed utilization for the supplier. This, in turn, enables the supplier to offer reduced prices based on known utilization.
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This is the single most common question that prospective consultants ask, and one of the hardest to answer. The short answer is a mix of "whatever the market will bear" and "how busy you wish to be".Some consultants operate on a strictly hourly basis, others on a retainer, and yet others on fixed-bid contracts none is inherently superior to any other (though some are more suited for some kind of arrangements than others).