7 dirty consultant tricks (and how to avoid them)

Scope change, empty suits, kickbacks -- beware IT consultants looking to turn your IT project into their cash cow

Call it the third-oldest profession. Consultants have been with us since the days of cave paintings, and over that time they've learned a few tricks to extract money from their clients.

IT consultants are among the most slippery of the bunch. Among their favorite tricks: Using "scope change" to line their pockets, claiming expertise they do not actually possess, promising you their superstars and then sending in the rookies, purposely delaying decisions and sowing confusion as they rack up billable hours, and collecting kickbacks from other service providers. The worst ones may even hold your company's intellectual property or systems hostage until you pay up.

[ Also on InfoWorld.com: Learn how to avoid IT's biggest money wasters -- and how to assemble your crackerjack A-Team for IT special ops. | Get sage advice on IT careers and management from Bob Lewis in InfoWorld's Advice Line newsletter. ]

Not all consultants are like this, of course. We talked to several upstanding members of the profession about the worst tricks their ethically challenged colleagues try to pull and how IT can avoid becoming snared by them.

Of course, the client side often shares the blame, says Steven A. Lowe, CEO of Innovator LLC, a consulting and custom software development firm. Most consultant-client conflict stems from a lack of honest communication.

"The client expects the consultant to magically solve all of their problems without further input beyond the initial consultation session," Lowe says. "The consultant expects the client to tell them everything relevant, and fails to ask the appropriate and serious/hard questions. I call this the 'fairy godmother' problem, as each side expects the other to magically know when and how to rescue the other."

Here some of some of the worst tricks to watch out for. Don't say you haven't been warned.

Dirty consultant trick No. 1: Bidding low, billing high

This trick is as old as the hills. Consulting firms deliberately underbid to win your business, hoping to make it up via additional fees due to scope change and "customization." By the time the real bill surfaces, you'll be so invested in the project and/or the firm that it will seem cheaper to simply pay it and move on.

One reason is that if a service provider offers a realistic cost estimate, it will likely lose out to other firms that lowball it, says Steve Bogner, managing partner for Insight Consulting Partners.

"Most consulting firms know at the time they place their bid that the scope is too small for the results the clients want," he says. "But if they put in a bid to cover an expanded scope, they will lose."

Even if the consulting firm's bid hits all the key parts of your RFP (request for proposal), there's still plenty of flexibility when they drill down to how your requirements will be implemented, says Mike Meikle, CEO of the Hawkthorne Group, a boutique management and technology consulting firm.

"Since these requirements are all at a high level and subject to drastic change, firms use this knowledge as leverage for far higher fees -- usually $200 an hour or more," he adds.

The fix: Build some flexibility into your RFP, says Meikle.

"There should be an amount of leeway in the requirements/scope to avoid the 'out of scope' clause being used and additional charges from being incurred," he says. "How flexible the vendor is with this process should factor heavily in whether you select them to do the work."

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