The challenge

There is a paradox in supply and compensation for per unit of time consulting services. Where a consulting company is compensated by the hour, there is little motivation to minimize the hours expended. Timesheets are the document of record and often these are too vague or cryptic to give a clear indication of the quality of services provided. Supply chain management may want to go into fixed price or lump sum approach where the consultant is compensated upon successful completion of milestones. While this removes the need for timesheet management, it does not fully address quality assurance. Not to mention the challenge of how the interaction between client and consultant becomes one of preparing, reviewing and approving or rejecting project change notices on fixed price projects.

The solution

Shared benefit compensation removes all the barriers. This approach allows both the client and the consultant to share in the risk and rewards of efficient project execution. For example, if a project is intended to reduce electrical consumption by thirty percent or for a savings of $90K per year using current rates and predicted future electrical consumption. The consultant and the and client enter into an agreement where, as an example, the consultant received an annual payment of twenty percent of the actual savings for the first three years after implementation. This would result, using project estimates, in $54K paid to the consultant over three years while the client enjoys $216K in savings during the same period. Both parties have a financial share in the incentive for high quality, low cost of project execution.

This is not how we anticipate doing business with you out of the gate. We need to know you and you need to know us before there can be a mutual agreement and trust in this type of compensation. Contact us to learn more.