Billable hours – drip to burst!
The leaky faucet, the sieve, the bleeding of billable hours – called different things in different settings they refer to the same concept, a consulting/ contracting company or resource who piles up time and material hours. It’s also one of three dirty consulting tricks I’ve observed first hand in the last few years.
The irony is as a time and material consultant, I’m often in the position of policing other time and material resources. That’s the old “fox guarding the hen-house!”. Often, due to specialty or my own naiveté in bidding, those resources may bill at twice my rate. Here’s a quick contract review (aka Procurement in the PMBOK) . The three contract types are:
- Time and Material – used for quick resource addition, resources are paid on an hourly rate. The benefit is it’s fast. The negative is lack of control and accountability.
- Fixed Bid – used where time allows for a thorough vetting of requirements. Buyer takes more time up front. Seller assumes some risk. Benefit is accountability and certainty of end product. The negative is front loading of costs and change order cost.
- Cost Plus variants – used in situation where the seller needs to address essential costs (think road or building construction) and buyer wants to ensure incentives for delivery. Benefit is an understanding of cost structure and somewhat easier contract than Fixed to initiate. The negative is the complexity to administer once the contract is awarded.
So the contract type I’m talking about is Time and Material (T&M). The leaky faucets I’ve observed have turned into a down right flood after a contracting company was vetted and selected to deliver contracting services. The scenarios in four different instances were eerily similar:
- Crisis at client company
- Knee jerk reaction by leadership to “get bodies”
- Appropriate vetting of the initial Time and Material contractor selection
- Lack or zero oversight of whom that T&M contractor supplies or the work produced
- Chaos in terms of the number of contractors and number of hours billed
Does this sound familiar? Have you encountered something similar? What did you do?
There were three things I’ve found helpful (without getting fired :-))!
- Measure what’s produced on a daily and weekly basis. Simple, right? But in each case it seemed revolutionary. Also, coach your client to cap open-ended contracts in 60 to 90 day bursts. If nothing else you’ll help introduce external purchasing reviews before the next 90 day burst begins. Hopefully you’ll instill a sense of accountability and review to see if the contract and resources need to continue – remember the services company motivation is to stay and bill as much as possible!
- Seek and review the contract – as you do so communicate your fiduciary commitment to your client as a project or contract manager.
- Positively escalate, in person, the results of your measurement. Never address via email. You can anticipate push back from the contracting services company. In a professional, “healthy” situation, that push-back will be mild, more of “OK, so what is you need contract PM?”. In an insidious “Slitheryn” environment anticipate hostility. So as we say in the Heartland of America – get ready to “cowboy it up”!
TAPUniversity 
Posted on October 5, 2012 by Dave Kohrell
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