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“Rethinking
Consulting”
Lima, Peru – August, 19 and 20, 1999.
Conclusions
I. Consulting Market Assessment in
Americas.
Synthesis of the comments and conclusions of the
Work Groups about the new acting scenarios for consulting
companies based in the researches and indications carried
over in FEPAC country members to build up a diagnosis of the
Consulting market.
Subject A
“New modalities or work fronts. Role of the
Consultant as a Contractor or partner in concessions programs
and privatization and as a leader or conductor of new businesses”.
1. Diagnosis.
- The new modalities of businesses and the new contour of
the market identified through researches carried over in the
countries are potentially very interesting;
- On the other hand, they are complex and hazardous: so far,
unparalleled resources and skills in Consulting are requested;
- The development of new business ideas is an attractive
concept but should be thought with care: it might not be cost-effective;
the consulting company is not strong enough to take advantage
of the new opportunities the market is currently offering
and demanding.
2. Actual Examples.
Actual examples were brought up and other were announced
or expected to happen:
- Transport infra-structure operating and implantation concessions
(roads, airports, ports, railways);
- Concessions of basic sewage, entertainment and other public
services;
- Privatization of drinking water supplying, sewage, power
(electric, oil, gas) and other public services; in these cases,
the consulting company continues to work under the conditions
prior to the privatization or as a partner of the investing
party;
- Mining, oil, sanitary and miscellaneous facilities construction
and operation contracts.
Examples of the consulting company as a contractor (road
projects and others), as a partner (expansion and operation
of airports), business leader and conductor (i.e., the incentives
within Chile's concession regulation).
3. Opportunities.
a) It has been noticed that certain markets, as the public
works contracted by the Government, have shrunk (closing doors);
but engineering would have to be completed by the new concessionaire
(opening doors). Nevertheless, other services as the concession
operational supervision and miscellaneous (other opening doors)
start to pop up.
b) In addition, increasing opportunities appear due to the
speeding up that the concessions are favoring with new resources
(greater amount of investments in less time). These investments
add up to the standard treasury budget.
c) The outsourcing of the activities that are not included
in the core business is increasing either in the public or
private companies.
4. Difficulties.
a) It is demanded a strong initial effort from the consulting
companies during the preparation of proposals: if the proposal
is the winner, the investment is not proportional to the percent
share of consulting in the global market;
b) The engineering market share is low; one does not have
control on decisions either when the proposal is closed, when
financial issues are considered or after when the proposal
is the winner and the assignment is successful;
c) This activity may potentially divert the consulting company
from its original business target;
d) It is difficult to access the long term financing and
to the types of guarantee requested accordingly;
e) It is difficult to obtain insurance of civil and professional
responsibility that these businesses with major risks if compared
to the regular activity of the consulting company may potentially
demand;
f) In general, the consulting company has a very weak standing
to negotiate subcontracts and/or partnerships with companies
of other segments;
g) The development and leadership of new businesses is quite
attractive (improvement of the consulting standing during
negotiations) but it might waste down a significant amount
of resources;
h) The consulting company does not have enough knowledge
and experience in handling financial analysis issues, risk
assessment etc.
5. Support.
5.1. Requested:
a) Institutional (laws, rules, proper regulations);
b) Creation of a good practice culture for these new types
of businesses (FEPAC “guidelines”);
c) Match the organizational structure of the companies to
its new market demands;
d) Be able to manage project financing, risk assessment and
miscellaneous;
e) Access to professional responsibility insurance;
f) Get bank guarantees to financing.
5.2. Available or potentially available:
a) Lobbying of the National Associations with the country's
authorities for an adequate representation and participation
of the engineering companies in public or private investments;
b) FEPAC and other local or regional organizations as the
National Assemblies that may:
- Put together “guidelines” to streamline consulting
contracting in the new and traditional modalities;
- Favor the consulting “lobbying” with the World
Bank and BID (International Developing Bank), other banks,
FIDIC, etc.
- Promote finance, risks assessment and miscellaneous drilling
courses;
c) Disclosing process and means: use the professional/technical
bulletins to overcome anxiety, and express ideas, risks of
the systems, guidelines and recommendations;
d) Exchange of experiences among FEPAC multiple associates
country-members;
e) Development of an insurance market (AIC-Chile experience);
f) Elaborate guidelines about financing alternatives and
guarantees.
Subject B
“Traditional deliverables for traditional customer s”
1. Comments.
1.1. In face of the changes the consulting activity is undergoing
we decided that: we do not want to be considered as “commodities”,
and because of this we are thinking in the necessity of installing
quality-based systems.
1.2. We noticed that in general the legal frame of the countries
and the regulations of the international organizations appear
to assume the price as a highly priority selection element
and thus we recommend that the documents prepared by FEPAC
and distributed to its executives be disclosed to the Associations
for their knowledge and submittal of proposals and suggestions
so we can count with an instrument - a sort of guideline to
achieve an adequate selection and contracting system.
1.3. On the other hand, per our standards, the price does
not reflect transparency. This concern takes us to think in
recommending the presence of an inspector to guarantee the
consistency. Yet we are not thinking only in controls but
also in the Government making it public: (a) how it is assigned
and (b) divulging the final result of the assignment (the
performance of the selected).
1.4. We also recommend an Information System. FEPAC should
have access to the contracting and selection processes, requesting
through the Government a follow up by the associate companies
in each country.
1.5. Favor how to focus the new modalities of service rendering
for traditional customers. Examples:
a) Manage investment programs supported by International
Organizations.
b) Manage programs to assist customers to handle the funds,
following up the contracting of consultants, subcontractors,
suppliers, etc., that is to say, endeavoring to make everything
work well: the consultant should be contracted to manage or
to administrate the public investment programs, not only the
works.
1.6. It has been observed that what the public companies
are not able to do due to the lack of personnel as a consequence
of the Government shrinking, appear as new opportunities the
companies should take advantage of.
Subject C
“The leading role of the consulting company
as a business facilitator”.
1. Comments.
a) It can be foreseen that the average companies tend to
disappear. The quite specialized small companies have more
possibilities to move forward in the new Consulting markets.
b) Among the demands of the new markets it is possible to
highlight the capacity of reducing schedules (it is considered
a plus or an expertise) and the quality of the services provided.
c) Consulting has to be enhanced and favored: what the companies
know and are able to provide. It is a quite remarkable marketing
capacity which may be called " market-expertise”.
Selling the image of Consulting to stop being the "invisible
profession".
d) The consulting companies seek partnerships and associations
to reach a requested synergy for contracting under the new
modalities of contracts;
e) There is a remarkable effort from FEPAC to know and disclose
concepts and the experiences and modalities of quality certification
in different levels with the creation of systems managed by
the Associations as happens in Mexico (CNEC) or with the support
to the joint preparedness of the companies for ISO certification,
as occurs in Brazil (ABCE);
f) The consulting companies reject assuming risks and do
not have guarantees to offer in partnerships in business generation;
however, risks should be assumed and available insurance and
guarantees modalities should be pursued to business partnering;
there already exists in Canada and in the United States of
America consolidated system of insurance and each one of these
countries has its peculiarities to obtain trusts and guarantees;
the fact is that, nevertheless, it is not known how to establish
accessible systems for the consulting companies; there is
a clear unbalance between risks and the level of participation
of the consulting company in the businesses;
2. Conclusions.
a) It is mandatory to have a quality management systems of
the consulting company services to achieve inter-sectors partnerships;
b) It is requested a solution for the issue of the guarantees:
insurance, warranty, etc.
c) Convince the agents involved in a business
that Consulting is a necessity to optimize the investments
and be successful.
II. Proposals and Recommendations
to FEPAC
1. Prepare a Consulting Services Contracting and Selection
Guideline
- applicable either for private and public areas.
2. Strongly disclose FEPAC's Guideline directly or through
the Member Associations in order to reach public and private
customers, foment banks and national and international organizations.
3. Prepare a Guide to advise strategic partnerships, association
or consortiums Consultants-Consultants or Consultants-Consulting
Companies of other segments, consortiums of national and foreign
companies, selection of potential partners so as to define
proper conditions in the respective contracts; indication
of criteria and methodology for technology transference and
the most relevant assignments to be included in the contracts
to ensure the participation of the national Consulting company
in consortiums of national and foreign companies; models of
contracts matched to the new business modalities.
4. Promote workshops or seminars (Merida’2000) in order
to identify with greater accuracy the possibilities and characteristics
of new businesses, reviewing the weak points of the consultant
based on which he refuses to assume risks according to the
dimension of his intellectual contribution and seeking more
adequate manners to overcome said difficulties.
5. Include the institutional marketing in FEPAC Strategic
Plan, and promote the image of Consulting in Americas.
6. Disclose the methods of quality certification, document
certification, certification in pairs (ACEC/CNEC) and further
hold a specific meeting to discuss the topic based in the
contributions of the National Associations and reviews about
possible adaptations.
III. Proposals and Recommendations to the National Associations.
1. Explain and divulge a Strategic Plan of the National Association.
2. Participation/Advise of the Association with the Bidding
Commissions of the public segment to ensure the transparency
of the selection process of the consulting company.
3. Promote new modalities of service rendering for traditional
government customers, having in mind the opportunities appearing
due to the Government shrinking:
- Management of Investment Programs promoted by Multilateral
Fomenting Financing Agencies.
- Management of Government Programs to ensure the optimization
of the public funds in social and infra-structure programs.
- Maintain an Information System about the development of
selection and contracting of consulting companies.
4. Implement own Quality Systems in multiple levels (certification
of data and resumes of the companies, certification in pairs)
and promote supporting programs for consulting companies to
the certification of ISO Quality Systems.
5. Strongly reject with FEPAC express support the lower price-based
selection processes and competition of NGO or Universities
with national consulting companies.
6. Promote drilling courses for business parties on how to
manage consulting companies using new methods of business
and financial management, prepare proposals matched to the
new demands of the market, assess risks, implement management,
account and auditing systems matched to international standards;
drill business parties to review opportunities and promote
merges, acquisitions, joint ventures.
7. Enhance the marketing of national Consulting; lobbying:
convince authorities and private contracting companies about
the importance of using the adequate consulting services in
investments and projects.
8. Incentive the participation in world-wide markets, though
for specific products instead of only attempting to open up
the national market within its own range.
9. Create and keep updated an easy to access and available
Master File/Data Bank of the affiliate Consulting companies
in an Internet home-page linked to the FEPAC page. Include
all useful and available information.
10. Create a master file of national and international financial
organizations usually funding Consulting services with indications
about programs and modalities of the operations they offer.
11. Support partnerships with domestic and foreign companies
through divulging and promotion, definition of equal basic
conditions; seek available and accessible modalities of professional
insurance and guarantees to allow strategic partnerships.
12. Readiness for an internationally acknowledged professional
licensing system.
13. Enhance the disclosing and ongoing exchange of data about
the experiences and actions in each country concerning:
- New businesses, participation of consulting companies in
concessions and privatization, miscellaneous;
- Modalities of selection and contracting under the traditional
format adopted in the country;
- Certification modalities for the resume of the associated
companies to facilitate partnerships;
- Professional responsibility insurance and contracts requested
warranty conditions.
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