Table of Contents
No failsafe methodology or perfect ‘cookbook’ approach exists for managing consultants, any more than it does for managing other human relationships. The key is to establish a sound, open working relationship. A written contract that includes clauses on termination, arbitration, and graduated incentives and penalties, is an essential foundation for the relationship. Consultants need to be managed, but not supervised or controlled. If you have chosen competent consultants, let them get on with the job. That is why you have employed them. But in managing them:
In other words, treat a consultant as you would a member of staff who is a self-starter, professionally competent and highly motivated. Good consultants also seek regular feedback from clients to ensure that there are ‘no surprises’ at the end of the project. Their desire for repeat business from you makes them receptive to suggestions, but positively expressed feedback is always the most effective.
Subcontractors employed by consultants should be managed directly by them, not by you. The consultant should also be held fully responsible for the quality of their subcontractors’ outputs. In the case of complex projects, it may be worth contracting another consultant separately to act as project manager. Where there is any variation in the scope of the work, it is in both parties’ interests to exchange a written record of the change, as a formal contract variation.
Terminating a contract can turn the tables
The Amann Aviation case is an example where termination of a contract backfired.
In March 1987, Amann Aviation won the contract to provide coastal surveillance services in northern Australia. Although it did not at the time have the scale of operations or the expertise or equipment to meet the contract, it was to acquire resources before commencement of the contract in September. Its tender had indicated that acquisition of resources was feasible, but, in practice, it was apparent that the company was not in a position to begin operations by the start-up date. The Commonwealth therefore terminated the contract. In a subsequent court case, damages of over $5m were awarded against the Commonwealth.
(Based on Senate Finance and Public Administration References Committee 1998, p. 13)
Using the Amann case as an example, Seddon (2004, 1.18) highlights the legal risks involved in terminating a contract. Wrongfully terminating a contract is itself a serious breach of a contract ‘which then provides the other party with the right to terminate and seek damages’. Seddon points out that:
‘In the Amann Aviation case the mistake made by the Commonwealth was to by-pass the show cause procedure that was written into the contract. The Commonwealth proceeded straight to termination without giving the contractor an opportunity to show cause [why the contract should not be terminated for breach of contract by Amann].’
(Seddon 2004, p. 31, footnote 115)
Seddon (2004, p. 12) also draws attention to judicial authority supporting the principle that ‘the government is required to adhere to higher standards of conduct than is expected of private sector entities [Government as a “moral exemplar”]'. The principle may be interpreted in particular cases as posing a dilemma for government (Seddon, p. 15) because it must act both in the interests of the beneficiary (the people it represents), as well as the contractor (a citizen, or a business that could be destroyed if the full force of a contractual remedy were exercised).