Value for Money in Tyrants

Updated: Aug 6, 2018

I recently wrote a piece as a qualified defence of development experts as a response to Bill Easterly’s book which rails against their employment. This has been a hotly debated topic recently and has provided some interesting food for thought. This combined with recent experience has motivated me to clarify my views on ‘experts’.

Professional services are in a minority of professional fields where the labour resource is paid on a piece rate for time. In a factory job where a piece rate is paid, a worker is paid for each item of the requisite quality produced. In jobs which are paid for time, there is a clear and reasonable expectation of what will be produced within a given timeframe. In consultancy however, understanding among clients of what a ‘day’ constitutes in terms of productivity is generally poor. The reasons for this fall almost entirely on the consultant. There is huge variation in what consultants can produce in a day in terms of both quality and quantity. Yet contracts specify a number of days and proposals are rated according to fees rates in conjunction with past experience. So if a consultant that has provided similar services before and has a competitive day rate, they will be selected to provide a given number of days of input to provide a service. That does not really access productivity, which is the true measure of value for money.

While lower than many fields of professional services, rates for development experts can seem high. People rarely appreciate the economics of transaction costs and administration associated with providing these services but, nevertheless, fees are substantial. Experts are paid to be just that, expert. Consultants have a responsibility to provide 7-12 hours for a chargeable day during which they should be entirely focused on the task at hand. A client isn’t paying for time to check emails, to do your internal office admin, or to write bids and think about your next job. Your obligation to the client, but more importantly to development, is to deliver high quality services which improve programme delivery and development outcomes. As such, two experts should deliver more than twice the value of one, and three, more than one third in additional value than two. There should not be gaggles of consultants traipsing round holding hands if they don’t deliver any additional value.

In an ideal world, donors would have a better picture of exactly what they want and what it’s worth. That would allow productivity to emerge from internal economics rather than impacting on the client. That is to say a client gets what they pay for while, whether it’s an independent consultant or a firm, the expert can take the time necessary to produce the quality and quantity of products possible.

Why isn’t it happening? Well, to some extent it is but it is at a level so abstract as to be unmanageable. Milestone contracts between large firms and clients vary hugely in nature but the idea is just that described here, payment for a service of a given quality. Unfortunately, given the information asymmetries – or indeed complete absences of information – these milestone contracts are not effective. Milestones are either so lofty as to be impossible to link to quality – how do we aggregate the inputs of a group of individual consultants to the award of an A in an annual review, or so micro as to be all consuming with some programmes having over 100 milestones in a single year.

There remains a clear information asymmetry between clients and consultants and a lack of a practical way to deal with it. It’s very difficult for a client to know how long it will take to produce a product of the requisite quality.

* this article was originally posted on the Springfield Centre website

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