The use of management consultants delivered benefits to central government in 2009 equivalent in value to £3.2bn, according to a new research report from the MCA (Management Consultancies Association).
21st Century Government: Adding value, cutting the deficit sets out the first authoritative analysis of how much central government departments spend on management consultancy and the types of work that management consultants do. It is based on detailed research with MCA member companies, representing around 70% of the industry, and contains a series of case studies.
Alan Leaman, Chief Executive of the MCA, said:
“It makes economic as well as practical sense to draw on outside expertise whenever it is cost effective to do so. The coalition government will need access to the best skills that are available outside government to achieve its ambitious objectives, particularly a step-change in public sector productivity.
“Many of the best and most radical approaches to public service provision originate in the consulting industry and have delivered benefits worth many times their cost.”
Key points from the MCA research report include:
- Total spending on management consultancy by central government in 2009 was £640m. The difference with official government figures is explained by spending outside of Whitehall, expenditure on legal, PR and other forms of consulting and the use of contractors or interim managers to cover staff vacancies.
- Around three quarters of management consulting work in central government is commissioned because required specialist skills are not available in government departments.
- 40% of spending on consultants by central government goes on programme and project management, particularly for sophisticated, complex and high-profile projects.
- Four fifths of consulting firms say that there has been a more intelligent approach to buying consulting services across government since the NAO’s 2006 report on this topic.
- But consultancies also believe that government use of consultancy should be measured on outcomes achieved and value delivered, and that government statistics should distinguish between management consulting and the work done by contractors and interim managers.
Speaking about the differences between contractors/interim managers and management consultants, Richard Goodson, Vice President of Hitachi Consulting said:
“Contactors and interim managers should be short-term solutions to resourcing problems but, unlike consultants, they can’t constructively challenge the requirements because they’re simply filling a pre-specified role. A team of consultants also brings a mix of skills and a willingness to work immensely hard whereas a single person tends to work at the rate of the people around them.”
Alan Leaman concluded:
“Greater scrutiny of consulting spending is welcome. The industry has a huge role to play in helping government to reduce costs and improve effectiveness. Our reform proposals will also help deliver further value for money for the taxpayer.”
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