[Why do we need] a private-sector consultant from Alberta in the first place? We're a rather populous province with a good number of post-secondary institutions - why isn't the necessary expertise available in Ontario? Why doesn't the Ontario public service have the expertise to implement government policies? Does this happen often? Should we perhaps be working on developing the expertise in-province?
Ontario Auditor General Jim McCarter just a few days ago:
While external consulting expertise is clearly required on a project of this size and complexity, we found in some cases a near-total reliance on consultants, especially at the ministry. We noted instances where consultants were influential in hiring other consultants, sometimes from their own firms and sometimes at rates much higher than we considered appropriate; and some remained on extended contracts for years at a time.
From an operational perspective, relying too heavily on consultants can be costly. Consultants are generally a lot more expensive than employees, and when they finish a project, they leave, often taking with them the expertise needed to maintain and operate the system they helped develop.
4 comments:
As a consultant, I have to agree with you.
I take very seriously the fact that I am paid a lot more than any of the non-consultants I work with. I am probably paid about what the highest-earning person on the floor I work on, and he's probably got 20 years' seniority on me. Plus they actually pay more than that for me, but my firm gets about a quarter of the money.
So I make sure that I deliver more and better stuff than anyone else on the project, and show my worth every day as a worker and as a member of the team. I'm also very good at what I do, which helps reinforce why I'm a consultant and they're not.
However, I've known other consultants who have been, shall we say, less effective. For whatever reason, they don't respect the client and they think they're entitled to a high rate without really exerting themselves.
Then you get into the real dirty business, which is mentioned to some extent in your quote: consultants will hire other consultants. (They should never be allowed to do this.) What that quote doesn't mention is that often consultants will be rewarded for bringing other consultants on.
Let's say a firm gets $100 per hour for a programmer on board. (That's not an unusual figure for an intermediate-level programmer.) Typically $70-75 of that will go directly to the programmer. What the firm will do is pay $5 or even $10 per hour to the consultant who got the programmer placed -- their influence basically bought the position, and the firm will pay well for that.
If you're a really senior consultant, and you start bringing more and more people on, it becomes very, very lucrative. Imagine if you were in charge of a team of 10 consultants -- you'd almost double your rate for the length of the project!
I think the right approach is a mix of consultants -- who have skills that are needed during the limited length of the project, but whose value isn't really there beyond the end of the project -- and full-time employees, who oversee the project and know and work with the systems in the long-term and understand the policies and procedures and legislation that are involved.
Anyhow, just wanted to give you a bit of an "inside" perspective. But you're absolutely right. Those eHealth projects were a complete boondoggle. I understand how that happened -- I won't go on about that but I know how that kind of situation develops and I'm happy to say I've never been part of anything like that.
If you as a consultant are more expensive than regular employees, and if that's typical, I wonder where the idea came from that a way to save money is to fire all the employees and outsource all the work?
In almost all my career as a consultant, I've worked in the public sector. I'm not really in the jobs that get outsourced. Once software projects for major government initiatives got more complex than a couple of in-house programmers could handle, a market developed for the type of work I do.
The situation you're talking about arises when an employer realises that with contractors, they only have to pay the working rate, no benefits or health tax or anything. anything. But usually they'll fire all the employees and hire only low-level contractors at rates only slightly higher than the original wages. When times are tough, people will take whatever they can get, and these employers prey on this.
However, in recent years, CRA has worked very hard to close this loophole. In Canada it's very difficult to have a non-employee contractor on a long term basis without attracting the attention of CRA -- and if they decide you're actually using them as an employee, they'll ding both the company and the employee/contractor for all sorts of back taxes. It makes things really difficult for small organizations, like one I'm involved with, just to get some short-term help around the office!
I'm glad to see CRA is trying to close that loophole. As someone who hopes to avoid contract hell, I've been thinking we need tax incentives for steady employment/tax disincentives for contract hell, (insofar as tax incentives can actually change behaviour, which I have my doubts about but conventional wisdom is that it works) but I didn't think anyone would actually do anything about it.
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