In the last post, I talked about how micro-consulting can be useful for customers. While there might be advantages in using the largest firms, there are just as many disadvantages. One disadvantage is that using the larger firms can be more expensive. Here are three reasons why a micro-consulting firm is less expensive.
1. Less Slack Time Paid For From the Project Budget
Large services groups often require that their people be fully booked on a project. However, it’s difficult to plan a project that uses 100% of the resources it needs for 100% of the time. This means that there are people just sitting around doing nothing at certain points in the project. The best projects minimize this and balance the time in an efficient manner. Most projects aren’t that efficient.
Smaller firms, such as my own, tend to be more flexible with customers. If we can map out a rough schedule and develop some understanding about how to stay on top of the needs of the project, we can work out ways to provide those extra bits of work that might only require a few hours of work every week or so but would require paying for an entire resource to be paid for 40 hours a week, week-after-week if one were to use a larger firm. To finish a project, customers do have to have someone committed to being available to work out the final issues and the choices are to pay someone to sit waiting for them to finalize project milestones such as user acceptance testing -or- to find someone who can work only when there is actual work to be done.
Customer Example #1: A customer project manager with a large project called me and told me he needed 0.8 developer for 2-3 months of a project, 0.2 team lead for 3-4 months of the project (and that these two positions overlapped in the schedule), and he went on to describe the various portions of resources he needed. He explained that the software vendor (a large with with a large services group) wanted him to buy full resources for each of these resources for each portion of the project.
So, where he needed part of a developer and part of a team lead, and the time overlapped, he would need to pay two full resources, each doing their 0.8 bit of work and their 0.2 bit of work, respectively. He wanted to find out if he could find someone who could just take the 1 full resource of work, be paid as one resource, and do the work of the one resource. He went out to find someone and called me.
This was just one portion of that project. Over two-and-a-half years, he combined all types of work that would have required multiple resources to be paid at 100% per person but he, instead, had a more experienced resource (me) do all that work. Unlike the software vendor’s staffing plans, where he would have had to pull resources in ahead of time and pay them to sit around in the situations where the schedule was a bit unsettled, he had a single resource he just adjusted as he went along.
- There was less money spent on layers of people.
- There was less money spent to “hold” people he wasn’t ready for.
- There was less money spent on people who couldn’t be used at 100% capacity but were required to be paid for 100% of their time.
2. Extreme Flexibility
As I mentioned in (1), smaller firms can be more flexible for a number of reasons. The people in them tend to cover more areas of expertise or, if they cover just one area, such as regulatory, they tend to have the full knowledge needed to cover the work needed. Also, with fewer layers of people, we know our schedules and know how much flexibility we can provide. In addition, we are more willing to work with customers to be more flexible.
Let me go back for a moment. It’s true that you can’t call anyone in the industry and say, “Well, I don’t know when I’ll start my project and I don’t know how much I have to spend and I don’t know how long it will take, but can you commit to doing all the work when I need it?” and expect a positive (and meaningful) answer from anyone. But the opposite is also true, that most people have a timeframe and a general idea of what their project will be and how long it will take and, in return, could expect a general discussion of a general commitment to take place. Smaller companies can have that discussion with potential customers.
Customer Example #2: Back to the last example from point (1), there were times where the project manager had a bit too much work but still needed to get it done. He would just ask me if I could spend extra time on his project during some particular timeframe and we’d discuss it. Or, for the few times where he had too little, he would discuss this with me ahead of time. Or, if he had work that we had never discussed having me do, he would just ask me if I had the right skills for it. Even if I had no experience with the item, we would sometimes discuss whether I had the right skills to do that work, regardless. The point is that being small can allow for an extreme amount of flexibility.
- It costs money to look for more people and to get them trained to work on a project. If you have a person who can learn to do the one task you have no-one else to do, you can sometimes save money by using someone who already knows the project.
- If someone is willing and able to work a few extra hours, it saves time from going to the project’s steering committee and asking to move deadlines (because you know, for starters, you’ll have to put together a justification, a slide deck to present it, and actually setup and have the meeting). Granted, you can’t ask for so much of the person’s time that you burn them out and make them counterproductive.
- Fewer layers of people to go through means you’re paying fewer people at one time. Sometimes, the less expensive resources at a larger company look like a good deal but it takes longer to get to them. Overall, you’re paying for every layer of person you have to go through to get answers. So, instead of your money going toward getting work done on your project, it is going toward the bureaucracy.
3. Less Overhead
As already mentioned above, the smaller the firm, the less overhead it has. Sometimes, larger firms have much higher rates (although, that tends to be more the case with the software vendor’s services group) and the reason for that is to cover all the extra layers of people required to handle the project.
Other times, the larger company appears to have lower prices. While you might initially think this is due to some type of efficiency based on their size, it comes down to a few issues:
- Each layer of personnel is probably being charged as a separate item.
- Even though the rate is lower, the work will take longer. For example, if you charge $50/hour for a junior person who needs a great deal of assistance from their home office, even when you are not charged separately for that extra help, it does take longer to get the work done. Then, if you turned-down a resource at $100 who could do the work without extra assistance and who could do it in half the time, the cost would be the same but the calendar time would be half that of the junior resource. So, if you look only at the cost, they are the same. If you care about getting the work done, faster, the second resource is the better choice. But suppose that the second resource is yet even more efficient than that. Now, you are not only doing worse as far as getting things finished goes but also in the amount of work you get for your money.
- When large companies talk about all the resources they have to help each other, they are often talking about the vast support they give to their more junior resources. A more senior resource doesn’t need this extra help, regardless whether they come from a large firm or a small one. With the larger firms, what you are getting and also paying for is a great deal of training time toward untrained resources. When you select a senior resource, to begin with, you are merely paying for them to do your work. Then, someone will point-out that these junior resources need training. Yes, they do. But it doesn’t mean you should be the one to pay for that. After all, these aren’t your employees to pay for development for unless you really do plan they’ll be around for many years into the future on your projects.
One More Reason to Use GeoMetrick Enterprises
I was recently speaking with someone working to deliver a project and they were surprised at all the delivery knowledge I had and was able to impart to their project. That’s because I’ve delivered on so many projects as a project manager, business analyst, and configurer/programmer/developer. I just know these things from doing it so many times. In addition, I’ve played so many project roles I can impart information about many aspects just in one conversation.
When you call GeoMetrick Enterprises, you can get an answer on whether you can get fit into our schedule without waiting for many people to get involved. On a project, you can get assistance about project delivery without waiting for someone else to be contacted.
With that said, if you want to ask me about deliver of services from GeoMetrick Enterprises, just call or e-mail and I’ll give you a quick response, either to ask you more questions or to give you an answer. I’m always surprised when customers ask my competitors (such as the software vendors) whether my company can get involved or not because, being my competitors, they will always find a reason to insist that I can’t and some of their reasons sound plausible, even if they’re not true. So, it just takes a few minutes to shoot me an e-mail – just ask.
To make it easy, click here for all our contact information, even though it is always available through the web-site link.