Part 1. Deciding to Hire a Consultant

Why hire a consultant? There are many reasons.

1. To supplement staff time.
Hiring a consultant is particularly appropriate when the project is a nonrecurring one (e.g., a new comp plan or zoning ordinance). If the project will carry over many years or is a continuous one, expanding staff is a better option.

2. To supplement staff expertise.
Some tasks, because they occur so infrequently, call for special skills that cannot be learned quickly or easily by staff (e.g., rewriting a zoning ordinance, preparing site studies for waste disposal sites).

3. To ensure objectivity.
Projects like department reorganizations or complex redevelopment plans that will displace residents can be very controversial, emotional, and political. A consultant may be able to find a "win-win" solution and can often be accepted by various parties as an objective mediator in any local disputes.

4. To ensure credibility.
The local planning director or staff may know the solution to a local problem but selling that solution to the public, council, or planning commission may be difficult without the blessing of an "expert" to verify that solution.

5. To obtain a variety of skills.
A small community with limited budget and planning staff (or, for that matter, no planning staff) can hire a consulting firm with access to a number of people with different skills. It would be difficult or impossible to hire enough part-time staff to find that variety of skills or find one individual who was that multitalented.

6. To deal with legal requirements.
If a local government puts a freeze on hiring or is unwilling to commit to any long-term employment, an agency may only be able to hire a consultant to deal with an impossible work load or project.

If, after reviewing this list, the agency or government decides to hire a consultant, it must answer some key questions:

• What do we want the consultant to do?
• What skills, expertise, and experience must the consultant have to carry out the project?
• How will we relate to the consultant? That is, will we simply given the problem to the consultant and expect a completed report? Or will we provide staff support, citizen participation, review, or other input to the project?
• What working style, organizational, and locational considerations will affect the ability of the consultant to facilitate the relationship with us?

How to Find Consultants

If an agency decides to hire a consultant, it must develop a list of consultants from which to choose one. This list can result from searching a number of sources: personal referrals; professional directories; award winners identified through professional organizations; news items in newsletters, newspapers, and magazines; consultant calling cards; brochures mailed by the consulting firms; and, as a last resort, the telephone directory.

Some agencies use a more formal procedure for establishing the list of available consultants. These agencies maintain and periodically update a list of consultants developed from procedures involving responses to requests for qualifications (RFQs). Consultants who want to be placed on the list may apply for consideration. If there are special projects that must be done for which only a few qualified consultants are listed, the agency can add to the list by using the techniques outlined below. Maintaining a formal pool is particularly useful for a large community or for any other agency that may use consultants relatively frequently. In order to make this preselected list of consultants most useful, it can be divided into specialty groups. Many consulting firms have expertise in a number of fields. Consequently, an agency that lists consultants under functional categories should cross-tabulate these consultants in all the categories in which they have expertise, a process easily accomplished with a database program. The following type of information could be solicited and kept for each firm:

1. Name, address, and telephone number of the firm
2. Types of services for which the firm is qualified
3. Year the firm was established, as well as former firm names
4. Names of principals and key personnel of the firm and their experience and qualifications
5. Size of staff
6. An illustrative list of recent projects completed for purposes of referral

Organizing for Selection

Defining the Task
Perhaps the most important step an agency must take before initiating the consultant selection process is defining the problem, task, or project requiring consulting services. There are, of course, circumstances in which the agency has difficulty in defining the problem, in which case it should consider retaining a consultant for that purpose. In defining the task, factors to be considered include:

• The precise goals of the project
• Its technical, political, and administrative parameters
• The division of labor between agency personnel and consultant
• The product desired
• The timetable for completion
• The total project budget
• Expected problems and constraints

Developing a good definition of the task is difficult. If the task definition is too specific, it may limit the creativity of the consultant. If the definition is too general, it may result in the consultant producing something that constitutes satisfactory professional work but that does not resolve the problem. If the hiring agency is uncertain how to define the task, it can provide a background description of the problem or issue as a context for the RFQ or Request for Proposal (RFP) process. That can help make clear why the community is hiring a consultant.

Defining the respective roles of consultants and staff is also important. In many cases, the community already has much of the data that will be necessary to complete a project. In other cases, little or no reliable data exists. Gathering data is expensive. Thus, a clear definition of what data the planning agency can provide from its own files or from other local departments and entities is very important in helping the consultant define the tasks. It is also important to define the level of support and review that local staff will provide for the project.

Budgeting for Consultants

If an agency intends to hire a consultant, it should have an established budget for the project and a source of funds from which to pay for the contract. If an agency is only "window-shopping" to see how much money it might cost to carry out a project, it should be very honest about that fact in any solicitation of proposals. Unfortunately for such a planning agency, an unfunded project is unlikely to attract many reliable proposals. Thus, if a planning agency really has no idea how much a proposed project might cost, it should consider hiring a consultant for a short and (usually) inexpensive "feasibility study."

It is also possible to determine the probable cost of proposed services by some careful investigation. The agency itself may have used consulting services recently enough to have a general idea of the probable cost. Phone calls to other planning agencies to identify qualified consultants should also be used to obtain data on the costs of similar projects in those communities. Consulting firms are sometimes willing to tell prospective clients what similar communities have spent on similar projects. Asking a consulting firm to develop a detailed cost estimate before the proposal stage is unreasonable, but asking what it has charged on other, similar work, is not — particularly because contracts with local governments are almost always public information and thus available to anyone who knows where to look.

It is difficult for a public agency to develop a component cost schedule by projecting the probable services needed and the costs of each item of service. However, it is important for a public agency that is budgeting to hire consultants to understand something about the economics of a consulting firm. Consulting firms are businesses offering professional services. As such, they must cover such expenses as office space, salaries, equipment, and supplies; like other businesses, they try to make a profit, which represents the ability of the firm to continue to exist.

The daily salary of a public planner cannot reasonably be compared to the daily billing rate of a consultant because it does not include overhead, fringe benefits, taxes, support staff, and, in general, the total cost of government. As a general rule, the billing rate of consultants will be between two and three times the salary that such an individual might earn in a salaried job. That multiple accounts not only for fringe benefits and overhead costs, but also for the fact that no one does "productive" work 100 percent of the time — consulting firms that compete for an agency's project will have nonbillable time preparing the proposal, attending interviews, and negotiating a contract. If a firm succeeds in obtaining a contract, there will undoubtedly be nonbillable time spent on travel or administration of the project.

Choosing the Selection Team

Who should select the consultant? The people who will work with and depend on the consultant should select the consultant (e.g., a zoning ordinance update would involve the municipal attorney). The head of the agency that will pay the consultant should be involved in selecting the consultant. If the consultant will work with community groups, it will be useful to have those groups represented in the selection process.

Broad representation in the selection process is important for several reasons. First, a variety of perspectives should be represented in the selection process. If a major constituency group thinks that greenbelts represent an important solution to the community's problems and the selection team hires a consultant who knows nothing about greenbelts, the project will not go well. Furthermore, if the selection team represents the diversity that the consultant will encounter in the course of the project, the team members can observe how the consultant's representatives interact with each of them. It is also important to give the consultant a chance to get a sense of the community. Sometimes a consulting firm may decide that it is not well suited to a particular project. Such a decision helps the community as well as the consultant, but a consultant can reach such a conclusion only after reasonable exposure to diverse elements of the community.

Who participates in the selection process and who makes the final selection are somewhat separate issues. The recommendations in this section address primarily the issue of participation. The issue of final selection is one that will depend on local politics and practice. Final selection may rest with the selection committee, with the head of the budgeting department, with the city manager or other CEO of the local government, or with the governing body.

The selection process is the first step in the partnership that the community should form with a consultant. It is an opportunity to evaluate consultants but also to recruit them to the community's project. As the first stage in the relationship, it is in the best interest of both parties for it to go well, but it is also in the best interest of both parties that the interaction be representative of future interaction. The agency can help to make that happen by ensuring that the selection team fairly represents the team of public officials, staff, and interested citizens who will work with the consultant in the implementation of the project.

Some Component Costs of a Consultant's Billing Rate

1. Salaries of professional staff, secretaries, drafters, and technical aids
2. Sick leave, vacation, and holiday pay
3. Office and drafting supplies
4. Printing and copying
5. Travel (auto and other)
6. Postage, freight, overnight delivery services
7. Telephone and telegraph
8. Equipment purchase and/or rental
9. Office rent
10. Building and property maintenance
11. Utilities
12. Legal services
13. Accounting services
14. Technical publications
15. Newspaper and magazine subscriptions
16. Professional dues
17. Attendance at seminars and conferences
18. Group insurance
19. Insurance (unemployment, workmen's compensation, liability, fire, theft, etc.)
20. Pension expenses
21. Taxes and licenses
22. Business promotion
23. Subcontractors

This material is a revised and edited excerpt from Selecting and Retaining a Planning Consultant: RFPs, RFQs, Contracts, and Project Management by Eric Damian Kelly, AICP. It is Planning Advisory Service Report No. 443, published by the American Planning Association, February 1993.