Olympic prediction
I wouldn't be surprised in the next 7 years or so if the government gets some management consultants in (for very silly money) to spout their penny's worth about the 2012 Olympics. If that doesn't put the Olympic building schedule back even further and/or even more costly I don't know what will, if past and current experience here of management consultants with public sector projects is any guide.
Natural born billers
The sharply dressed men with blue-sky thinking have invaded all corners of government. At our expense
Nick Cohen, Sunday June 19, 2005, The Observer
After 20 years working for large and small management consultancies, David Craig thought he had seen every variety of human greed. The most striking was the director of an international consulting firm who boasted about how much time he spent in brothels at his clients' expense. The man wasn't entirely without principle and would finish by saying: 'Good sex means inflicting pain and you wouldn't want to do that to someone you loved.' I'm sure his wife is grateful for that.
A few years ago, Craig helped sell a project to a health authority that involved bringing over two consultants from America, even though there were plenty of people in Britain who would have done just as well. In addition to fees, the NHS agreed to pay £300 a week for hotel rooms, £50 a day for food, the rent on flats for their families in Hampstead and Kensington, fees for their children's private schools, taxis to take the wives to and from teas at the Ritz and shopping trips to the West End and train fares to take the husbands to and from the wives at the weekends.
It was only when the project manager hired a private plane to bring him back from holiday that the NHS found the nerve to object.
Whether the receipts they submitted were as straightforward as they appeared was another matter. As large buyers of flights and hotel rooms, consultancies can arrange with travel agencies to deliver covertly discounts of about 40 per cent. Last year, PricewaterhouseCoopers paid $54.5 million to settle a case brought by American retailers which said that rebates from travel and credit card companies weren't passed on to them. PWC said if it hadn't taken the money, its bills would have been higher.
Maybe they would, maybe they wouldn't, but what is undeniable is that the practice didn't stop with them. When Craig was working for another firm, he received a memo from a helpful colleague which read: 'Here's how we do it every time. We bill them for your air-travel expense. Then we get a kickback on your air ticket. But we don't give the client the kickback.'
Over-billing - fraud, to put it crudely - was everywhere. Craig worked in the London office of an international firm where clients were charged for the equivalent of 300 support staff, when in reality a mere 50 were in the building. The money was taken and 'dedicated to the noble cause of further enriching consultancy directors'. Enrichment also came from charging to clients time spent looking for new business elsewhere or time spent on the consultancy's business or time spent on the golf course.
And very rich they have become. The management consultancy game is worth £60 billion. Craig began consulting straight out of university with expert knowledge of nothing apart from Romantic poetry. A graduate who did the same today costs the client £7,000 a week. Directors are multimillionaires who don't open their eyes in the morning for less than £25k.
I can say all this because he has adopted the pseudonym David Craig and spilled the bean-counters' beans in Rip-Off! For once, the usually overheated marketing pitch that this is a book they didn't want you to read is true. Although Craig was a fluent writer who could back up every line, business book publishers wouldn't touch him for fear of offending the industry. So Craig set up his own publishers. Rip-Off! is in the shops and can be read online at www.consulting-moneymachine.com. He once wrote satirical novels and there is a gruesome relish in his descriptions of how consultants get their claws into companies. The question which baffles employees and shareholders alike is why managers let them do it. Craig replies by examining the insecurities of two types of executive: over-promoted plodders and corporate fashion victims. They're most likely to enjoy what Eileen Shapiro, a former consultant, called fad-surfing: 'The practice of riding the crest of the latest management wave and then paddling out again just in time to ride the next one.'
Many of the scams he saw didn't bother him. When a big company threw money at consultants, who was hurt? It was bit of a joke, he told me, part of the game. He changed his mind only when he returned home to launch his book and saw what had happened to British government. For the first time in years, the cynical Mr Craig was shocked.
He accepts that managers can get good work from consultants if they bring them in to run a tightly defined project. And of course not all consultants are greedy charlatans. But in general, the old rule applies: a manager who hires a management consultant shouldn't be a manager.
The last days of Tony Blair are seeing management consultants run riot. David Bennett, a former McKinsey partner, has been put in charge of the Downing Street policy unit, where he works alongside the astonishing John Birt. The former director general of the BBC gave tens of millions to management consultants to create an efficient internal market.
Predictably, administration costs ballooned - up by £140m - while staff numbers were cut. Birt moved on to McKinsey, which had received many a plump cheque from him, and as a sideline provides 'blue-skies thinking' for Tony Blair.
I remember well the young and radical Alan Milburn lashing the Tories for allowing management consultants to 'cash in'. In 1994, when he delivered his fiery polemics, the Conservatives were giving consultants £500m a year. In 2004, New Labour handed over £1.9bn. I think I know why Blair is doing it. In his first term, the battle to 'reform' public services left 'scars on his back'. His second was dominated by al-Qaeda and Saddam Hussein. Time is now short and he is turning to the consultants to deliver quick fixes.
If you have any feelings of sympathy for the Prime Minister, I would beg you to murder them at once. His impatience is understandable but he ought to know better. Every politically aware person has had ample time to learn that consultants have been a disaster for the Civil Service. The reason patients couldn't book appointments with GPs in advance is that the target culture is a consultants' culture ('Everything can be measured, and what gets measured gets managed,' is a typically bossy McKinsey slogan).
Time and again, consultants have advised spending billions on new IT systems for the Immigration and Nationality Department, Passport Office and Probation Service which came in late and over-budget, if, that is, they came in at all. The Benefit Card payment system was scrapped after about £700m had been wasted, the Child Support Agency (CSA) used £450m on a system that doesn't work and a £200m system for doctors to book hospital appointments for their patients managed to make 63 appointments in 2004 against a target of 205,000.
Current estimates suggest that NHS computerisation may cost £30bn, five times its original projected cost. Meanwhile, the oncoming car crash of the national ID card data bank promises to see £6bn or £10bn or £15bn pounds lost in the wreckage.
Craig is fascinating on why the public has lost so much money. Civil servants are used to dealing with each other and generally assume that people they meet have the country's best interests at heart. They aren't prepared for negotiations with consultants whose guiding principle is often how to hit the client for as much money as possible. They don't understand a world where the acronym Afab - 'anything for a buck' - is thrown around with sniggering nonchalance. Even those who have learned the score after hard-won experience can't use their knowledge because the line from Downing Street is that they're hopeless while the consultants are absolutely fabulous.
Afab explains the computer scandals. The government could and should have rented proven technology from other governments or companies which had tried it out and dealt with the teething problems. But there was far more work for the consultants if Whitehall reinvented the wheel every time a system was needed.
When the immigration computers failed, asylum seekers were left to rot in penury and racial tension rose. If the NHS IT project fails, patients will die. As Craig says, this isn't a game any more. If I were Sir Gus O'Donnell or Gordon Brown or, indeed, Tony Blair, I would read this book and then invite Craig into Whitehall to reveal the many and ingenious ways in which the taxpayers have been compelled to provide welfare for the wealthy.
Natural born billers
The sharply dressed men with blue-sky thinking have invaded all corners of government. At our expense
Nick Cohen, Sunday June 19, 2005, The Observer
After 20 years working for large and small management consultancies, David Craig thought he had seen every variety of human greed. The most striking was the director of an international consulting firm who boasted about how much time he spent in brothels at his clients' expense. The man wasn't entirely without principle and would finish by saying: 'Good sex means inflicting pain and you wouldn't want to do that to someone you loved.' I'm sure his wife is grateful for that.
A few years ago, Craig helped sell a project to a health authority that involved bringing over two consultants from America, even though there were plenty of people in Britain who would have done just as well. In addition to fees, the NHS agreed to pay £300 a week for hotel rooms, £50 a day for food, the rent on flats for their families in Hampstead and Kensington, fees for their children's private schools, taxis to take the wives to and from teas at the Ritz and shopping trips to the West End and train fares to take the husbands to and from the wives at the weekends.
It was only when the project manager hired a private plane to bring him back from holiday that the NHS found the nerve to object.
Whether the receipts they submitted were as straightforward as they appeared was another matter. As large buyers of flights and hotel rooms, consultancies can arrange with travel agencies to deliver covertly discounts of about 40 per cent. Last year, PricewaterhouseCoopers paid $54.5 million to settle a case brought by American retailers which said that rebates from travel and credit card companies weren't passed on to them. PWC said if it hadn't taken the money, its bills would have been higher.
Maybe they would, maybe they wouldn't, but what is undeniable is that the practice didn't stop with them. When Craig was working for another firm, he received a memo from a helpful colleague which read: 'Here's how we do it every time. We bill them for your air-travel expense. Then we get a kickback on your air ticket. But we don't give the client the kickback.'
Over-billing - fraud, to put it crudely - was everywhere. Craig worked in the London office of an international firm where clients were charged for the equivalent of 300 support staff, when in reality a mere 50 were in the building. The money was taken and 'dedicated to the noble cause of further enriching consultancy directors'. Enrichment also came from charging to clients time spent looking for new business elsewhere or time spent on the consultancy's business or time spent on the golf course.
And very rich they have become. The management consultancy game is worth £60 billion. Craig began consulting straight out of university with expert knowledge of nothing apart from Romantic poetry. A graduate who did the same today costs the client £7,000 a week. Directors are multimillionaires who don't open their eyes in the morning for less than £25k.
I can say all this because he has adopted the pseudonym David Craig and spilled the bean-counters' beans in Rip-Off! For once, the usually overheated marketing pitch that this is a book they didn't want you to read is true. Although Craig was a fluent writer who could back up every line, business book publishers wouldn't touch him for fear of offending the industry. So Craig set up his own publishers. Rip-Off! is in the shops and can be read online at www.consulting-moneymachine.com. He once wrote satirical novels and there is a gruesome relish in his descriptions of how consultants get their claws into companies. The question which baffles employees and shareholders alike is why managers let them do it. Craig replies by examining the insecurities of two types of executive: over-promoted plodders and corporate fashion victims. They're most likely to enjoy what Eileen Shapiro, a former consultant, called fad-surfing: 'The practice of riding the crest of the latest management wave and then paddling out again just in time to ride the next one.'
Many of the scams he saw didn't bother him. When a big company threw money at consultants, who was hurt? It was bit of a joke, he told me, part of the game. He changed his mind only when he returned home to launch his book and saw what had happened to British government. For the first time in years, the cynical Mr Craig was shocked.
He accepts that managers can get good work from consultants if they bring them in to run a tightly defined project. And of course not all consultants are greedy charlatans. But in general, the old rule applies: a manager who hires a management consultant shouldn't be a manager.
The last days of Tony Blair are seeing management consultants run riot. David Bennett, a former McKinsey partner, has been put in charge of the Downing Street policy unit, where he works alongside the astonishing John Birt. The former director general of the BBC gave tens of millions to management consultants to create an efficient internal market.
Predictably, administration costs ballooned - up by £140m - while staff numbers were cut. Birt moved on to McKinsey, which had received many a plump cheque from him, and as a sideline provides 'blue-skies thinking' for Tony Blair.
I remember well the young and radical Alan Milburn lashing the Tories for allowing management consultants to 'cash in'. In 1994, when he delivered his fiery polemics, the Conservatives were giving consultants £500m a year. In 2004, New Labour handed over £1.9bn. I think I know why Blair is doing it. In his first term, the battle to 'reform' public services left 'scars on his back'. His second was dominated by al-Qaeda and Saddam Hussein. Time is now short and he is turning to the consultants to deliver quick fixes.
If you have any feelings of sympathy for the Prime Minister, I would beg you to murder them at once. His impatience is understandable but he ought to know better. Every politically aware person has had ample time to learn that consultants have been a disaster for the Civil Service. The reason patients couldn't book appointments with GPs in advance is that the target culture is a consultants' culture ('Everything can be measured, and what gets measured gets managed,' is a typically bossy McKinsey slogan).
Time and again, consultants have advised spending billions on new IT systems for the Immigration and Nationality Department, Passport Office and Probation Service which came in late and over-budget, if, that is, they came in at all. The Benefit Card payment system was scrapped after about £700m had been wasted, the Child Support Agency (CSA) used £450m on a system that doesn't work and a £200m system for doctors to book hospital appointments for their patients managed to make 63 appointments in 2004 against a target of 205,000.
Current estimates suggest that NHS computerisation may cost £30bn, five times its original projected cost. Meanwhile, the oncoming car crash of the national ID card data bank promises to see £6bn or £10bn or £15bn pounds lost in the wreckage.
Craig is fascinating on why the public has lost so much money. Civil servants are used to dealing with each other and generally assume that people they meet have the country's best interests at heart. They aren't prepared for negotiations with consultants whose guiding principle is often how to hit the client for as much money as possible. They don't understand a world where the acronym Afab - 'anything for a buck' - is thrown around with sniggering nonchalance. Even those who have learned the score after hard-won experience can't use their knowledge because the line from Downing Street is that they're hopeless while the consultants are absolutely fabulous.
Afab explains the computer scandals. The government could and should have rented proven technology from other governments or companies which had tried it out and dealt with the teething problems. But there was far more work for the consultants if Whitehall reinvented the wheel every time a system was needed.
When the immigration computers failed, asylum seekers were left to rot in penury and racial tension rose. If the NHS IT project fails, patients will die. As Craig says, this isn't a game any more. If I were Sir Gus O'Donnell or Gordon Brown or, indeed, Tony Blair, I would read this book and then invite Craig into Whitehall to reveal the many and ingenious ways in which the taxpayers have been compelled to provide welfare for the wealthy.
posted by Anglonoel | 2:15 pm
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