choosing_right_consultant

Environmental Health and Safety (EHS) Assessment and Management Services
Choosing the Right Consultant
Environmental Health and Safety Consulting firms operate similar to legal firms with varying rates, billing mechanisms, overhead costs, and specialization. Both large and small firms offer advantages and disadvantages as described below:
Small Firms:
  • Cost– Lower overhead costs translate to lower hourly rates for more experienced personnel. Overhead activities like accounting and payroll are typically outsourced and treated as an expense to a firm versus a fixed cost.
  • Services Offered– Limited to the expertise of a few staff but often develop relationships with other small firms to enhance their product offerings for clients.
  • Customer Service– Smaller firms value all of their clients projects, regardless of the size of the project, the budget, or the nature of the work. Every project is valuable.
Large Firms:
  • Cost– Higher overhead and retention of specialists, support staff, sales and marketing staff results in higher hourly rates. Often add fees such as computer fees, CADD fees, telephone fees, etc. to projects and invoices to cover some overhead costs and to keep hourly rates competitive.
  • Services Offered– Broad and can pull resources from other offices with different specialization. Often have offices overseas but these offices may be independently run and the quality of the service can vary between offices.
  • Customer Service– Large firms often value only larger clients or clients with the potential for larger projects and budgets. These clients are capable of supporting entire offices for periods of time. When smaller, less profitable projects are accepted, these firms often assign them to less experienced staff to keep costs competitive. Senior staff simply review the final product in many cases. Clients with large, complex projects like environmental remediation projects or projects with compressed schedules can often benefit from using large consulting firms as resources can be allocated from multiple locations and these projects are a priority to larger firms. Clients with smaller, one-time projects like audits, EHS program development, due diligence activities can benefit from using a smaller firm who will prioritize this type of work and who will ultimately charge less for more experienced staff then a larger firm.
Common terms used in Consulting:
  • Utilization- Term used to measure the billed percentage of a consultants time. Most larger firms set utilization goals for office staff based on their position and salary. Higher paid staff usually have lower utilization goals and higher sales goals. They bill at higher rates. Entry level staff have higher utilization goals and lower sales goals. Promotion to higher paying jobs usually is determined by the employee’s ability to develop a client base which forces all consulting employees to “sell”. Overhead employees (like accountants, HR, IT, etc. typically do not have utilization goals and are covered by the employees who do the consulting via higher hourly rates. Smaller firms typically look at overall sales dollars for the firm and do not push staff utilization. Principals in smaller firms typically are highly utilized. Overhead activities are often outsourced and show up as expenses to the firm. Hourly rates charged cover these expenses and are typically lower then rates that have to cover fixed labor costs.
  • Lump Sum (Fixed Price) Project- Used by consultants to cost projects when the scope of work is well defined and the project cost can be estimated well. However, this type of billing can also be used by a consultant to increase profitability on a project by utilizing less expensive staff then the staff originally proposed to complete the work. Clients should take care to ensure that they know what staff will work on a lump sum project.The benefit to the client of having a Fixed Price project is that the final cost is known (provided that the scope of the project does not change). The financial risk lies with the consultant and the firm will try to be as efficient as possible to maximize profit.
  • Time and Materials Project- Used for projects where the scope is ill-defined or will change as the project progresses. The cost risk lies with the client as a final cost will not be known until the project is actually completed. Billing occurs utilizing time spent by each person on the project, hourly rates, expenses, markup on expenses (used to cover the cost of paying expenses prior to being compensated by the client), and sometimes, other fees such as company car use charges, phone charges, computer charges, postage, etc.It is important for clients to review billing on time and material invoices to ensure that all employees charging time are working on the project and that worked performed is within a well-defined scope provided by the Consultant. In some larger firms, senior level staff like office managers will charge a nominal amount of hours to each project as an overhead charge.
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