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Expert Advice, Use of Consultants and Training

12.1

Expert Advice
12.1.1Appraisal and evaluation often require and generally benefit from a multi-disciplinary approach, calling on the expertise of a range of specialists. It is important that the right skills and advice are sought and applied as appropriate to the case in hand.
12.1.2Departmental economists can provide general advice on economic appraisal and evaluation. DFP Supply Officers can advise on general issues concerning approval procedures. In particular cases, advice and support may be required from a variety of other experts on specific issues including, for example, statistics, procurement, finance and land and property services. The need for expert advice should be considered at an early stage in the development of appraisals and evaluations.
12.2

Use of Consultants
12.2.1Departments should apply the guidance on employment of consultants given in FD(DFP)04/09 and the accompanying guidance note. This section does not attempt to cover all the details contained in that guidance, but draws attention to some key points relevant to the use of external consultants to undertake economic appraisals, evaluations and business cases.
12.2.2

The expenditure associated with engagement of consultants is subject to delegated limits. Departments must abide by delegated limits and fulfil any attached conditions before a contract is awarded.

  1. Ministerial approval: Each department should establish the extent to which their minister wishes to be informed of consultancy expenditure. Departments should seek ministerial approval for all external consultancy assignments expected to exceed any threshold set by individual departmental ministers.
  2. DFP approval: Each department must abide by the delegated limit set out in DAO(DFP)06/05, Annex B.1, namely that each separate engagement of external consultants by departments expected to cost over £75,000 (or otherwise agreed with DFP) must have prior DFP approval. All business cases submitted to DFP must have the approval of the departmental Accounting Officer and confirmation of Ministerial approval if necessary before they will be considered. If DFP approval is not obtained, all expenditure incurred will be irregular. Only in exceptional circumstances and where it is satisfied that such approval is justified, will DFP give retrospective approval. Where a contract, including contract extension, is expected to overrun by at least 10% of the original DFP approval, a fresh DFP approval will be required.
  3. Departmental approval: Each sponsored body will have a delegated limit agreed with its sponsor department above which it must refer to its sponsor department for approval before engaging external consultants.
12.2.3External consultants should be employed only when it is necessary and will provide value for money. If a department has staff with the skills to carry out a proposed assignment (e.g. internal consultancy units, ISU/IT staff, economists, accountants, construction professionals), then it should consider carrying out the assignment using its own resources. NICS core departments and executive agencies should contact the Business Consultancy Service, within the Delivery and Innovation Division (DID) to establish whether it has the capability and capacity to undertake the assignment.
12.2.4

Engagement of external consultants may be necessary when:

  • internal capacity is unavailable to undertake a new area of work;
  • independence/objectivity is required and cannot be provided within the public sector;
  • specialist knowledge or expertise is unavailable internally;
  • there is a direction to do so from Government or by another body such as the EU.

External Consultancy Business Cases and PPEs
12.2.5Before deciding to engage external consultants, departments must be sure that the benefits of doing so will outweigh the cost and that all in-house alternatives have been fully explored and documented. A full, but proportionate, business case confirming this should be completed for all external consultancy contracts expected to cost in total £10,000 or more, and submitted to the relevant approving authority.
12.2.6

Section 5 of the guidance note attached to FD(DFP)04/09 explains the nature of the necessary business case. In brief, it should set out:

  1. The purpose of the assignment.
  2. A reasoned assessment of the alternatives to external consultancy and justification for using external consultants.
  3. The immediate and long-term outputs and benefits expected from the external consultancy service, when they are likely to accrue and how they will be measured.
  4. The proposed project management arrangements, including management of deliverables, expectations and risks.
  5. The means by which skills/expertise will be transferred to 'in-house' staff and /or internal consultants if appropriate.
  6. The proposed division of work between the external consultant and any in-house staff and/or internal consultants who will be assisting them.
  7. The expected costs of the external consultant and the in-house effort.
  8. The performance review arrangements.
  9. How the results of the consultancy will be implemented and monitored.
  10. Any other considerations specific to the assignment.
12.2.7The business case template provided at Annex 2 of the guidance note should be used in all cases to ensure that the above issues are covered in appropriate detail, with effort proportionate to the expenditure involved.
12.2.8Post-Project Evaluations (PPE) should be completed with proportionate effort for all assignments to ensure that the objectives have been met and lessons learned. The PPE template provided at Annex 3 of the attachment to FD(DFP)04/09 should be used. PPEs for all assignments that require DFP approval should be copied to the relevant DFP Supply Division. DFP will also undertake test drilling exercises for assignments within departmental delegated limits.
12.2.9All consultancy assignments, other than those of a very low value, should be procured through a Centre of Procurement Expertise (CoPE), unless otherwise approved directly by the Accounting Officer. Once a department is satisfied of the need to engage consultants, it must contact a nominated CoPE for advice and information as early as possible in the planning stages. Departments wishing to use a consultancy framework let by the Office of Government Commerce (OGC) should first consult DFP's Central Procurement Directorate (CPD) who will advise whether it is appropriate to do so or not.
12.2.10Departments should supply clear terms of reference for the job when contacting the relevant CoPE, and should factor adequate time for tender responses and evaluation into their planning.
12.2.11Terms of reference should be suitably detailed. For example, it is not generally sufficient to ask consultants broadly to 'conduct a Green Book assessment' for a proposal. This is because, although the Green Book sets out relevant general principles, the specific methodology required in individual cases can vary enormously e.g. the method required for appraising assistance to industry is very different to that required for a major capital project; and methods can also vary significantly between different types of capital project. Moreover, some of the requirements of NIGEAE are simply not covered in the Green Book, such as details of affordability assessments and project management arrangements. Therefore, the specific requirements for each key element of the business case (or other relevant assignment) should be spelt out in detail in a manner that is tailored to suit the case in view.
12.2.12Departmental economists can assist to draft the terms of reference for external economic assignments and to monitor and quality assure their implementation and completion.
12.2.13In cases involving financial assistance to the non-Government sectors, some Departments previously provided funding to project promoters to employ external consultants to undertake appraisals and business cases. However, it is now considered that a more independent assessment will be obtained if the Department or other funding body employs the consultants rather than the project promoter. This encourages greater objectivity and allows more direct control over the quality of the appraisals provided by consultants, and is now the generally recommended approach.
12.2.14Additional guidance in relation to external consultancy input to PPP projects is provided in HM Treasury Taskforce Technical Note 3 How to Appoint and Manage Advisors to PFI Projects.
12.3

Training Courses in Appraisal and Evaluation
12.3.1Departmental economists can supply general advice on training in appraisal and evaluation. They can provide informal training in appraisal and evaluation, and may undertake formal briefings, seminars and courses on demand.
12.3.2The Centre for Applied Learning (CAL) provides training courses in appraisal at two levels. The first of these levels is a 1-day course which gives an Introduction to Business Cases and Economic Appraisal. This gives an overview of the requirements of a business case (incorporating an economic appraisal) and its importance in the decision-making process. A 2-day Developing a Business Case Course using case studies and practical examples involved in developing business cases and economic appraisals is also available. During this course participants learn about the key elements involved in developing business cases and economic appraisals. Both of these courses are consistent with the guidance provided in the earlier sections if NIGEAE.
12.3.3Training in project and programme management skills is also available through CAL. For example, Practical Project Management (3 days) focuses on the processes and key roles within project work and takes participants through the components and techniques of PRINCE2. (The PRINCE2 Foundation examination is not included in this event).
12.3.4Further details on the full suite of project and programme training courses offered by CAL, can be viewed in the Training Prospectus on the CAL intranet site.