July 2012

Shift in consultant use shows greater reliance on private sector

by Frank Di Giacomo, Publisher

I have been reading and hearing about a greater use of consultants and other professional firms in program management contracts. That is a generally a good sign, because it recognizes that much of the project and program expertise lies with those who do it regularly. It should not become a crutch, though, because public agencies still have the ultimate responsibilities for these projects paid for by taxpayers.

Program management a broad category
First let me define “program management.” I don’t necessarily mean program management oversight contracts, which have been around for a while and are required by federal law and regulations to make sure that projects are delivered on budget as well as meet all of the rules. What I mean is the growing use of consulting firms to help agencies directly manage their projects through planning, financing, engineering, construction, and ultimately, revenue opening.

There are many very good reasons why agencies need this expertise. First, most in the country have had their workforce decimated by budgets in recent years that were mainly responsible for delivering existing service, let alone constructing something new. In addition, many of the rules have changed substantially, with new programs created, and are likely to do so again if Congress does enact an authorization bill.

Another good reason is the increase of new technologies and whole new modes. Related to that is that the affordability and suitability of many of these new modes means that they can be deployed by smaller agencies, but many of which lack the capital project experience to manage these projects. This is particularly true when many of the smaller projects have much shorter development timelines, so that many of these projects may not be the “career makers” that some big rail projects create, especially for specific kinds of highly specialized expertise called for on some of these projects.

A final reason why more program management is being called for is risk management. Some of this is related to the shortage of technical expertise in public agencies that I mentioned, but some, frankly, is due to greater concerns of state and federal elected officials about risk. Again, it’s probably because of the budget pressures at all levels of government, but partisan politics also come into play.

Not a panacea, nor a substitute for responsibility
Concern about risk is where I get concerned, however. Can private sector professionals help with the above challenges? Absolutely! But, public agencies and their elected stakeholders are still ultimately responsible. That’s what leadership is about — and that shouldn’t be outsourced.


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