The Consultant Crisis
April 29, 2019 10:41 AM Subscribe
“We listened to their estimates,” said Quentin Kopp, who was chairman of the rail board in 2008 but has since become an ardent critic. “They were clearly wrong.” How California’s faltering high-speed rail project was ‘captured’ by costly consultants (LA Times)
"Menten, a self-avowed fiscal conservative, performed her own analysis of the last Denver Transit Partners proposal. She said it showed that the private contractor’s costs would be tens of millions of dollars less than if RTD self-operated." After High-Profile A Line Troubles, RTD Plans To Operate N Line Itself (Colerado Public Radio) "Rep. Travis Clardy, an East Texas Republican, said the state's public education funding system is "unrecognizable from where it started." A four part series by the Houston Chronicle shows how the Texas Permanent School Fund, designed to channel profits from state-owned real estate and gas, has been gutted by money managers, consultants, and private equity. Broken Trust. Part 2 3 4. "The firm has played a role in privatizing government assets in Latin and Central America, Eastern Europe, and Asia. In some of these cases, privatization was inevitable, but in many, McKinsey made it more likely. Inexperienced leaders looking to make a mark turn to McKinsey for ideas, and they are all too eager to recommend privatization." An anonymous account from inside McKinsey, the consultant firm powerhouse behind privatization in the 20th century. (Current Affairs)
"Menten, a self-avowed fiscal conservative, performed her own analysis of the last Denver Transit Partners proposal. She said it showed that the private contractor’s costs would be tens of millions of dollars less than if RTD self-operated." After High-Profile A Line Troubles, RTD Plans To Operate N Line Itself (Colerado Public Radio) "Rep. Travis Clardy, an East Texas Republican, said the state's public education funding system is "unrecognizable from where it started." A four part series by the Houston Chronicle shows how the Texas Permanent School Fund, designed to channel profits from state-owned real estate and gas, has been gutted by money managers, consultants, and private equity. Broken Trust. Part 2 3 4. "The firm has played a role in privatizing government assets in Latin and Central America, Eastern Europe, and Asia. In some of these cases, privatization was inevitable, but in many, McKinsey made it more likely. Inexperienced leaders looking to make a mark turn to McKinsey for ideas, and they are all too eager to recommend privatization." An anonymous account from inside McKinsey, the consultant firm powerhouse behind privatization in the 20th century. (Current Affairs)
Wow. It's nice to have a name and address to put to the first people to get sent to the new guillotines.
posted by mephron at 11:02 AM on April 29, 2019 [13 favorites]
posted by mephron at 11:02 AM on April 29, 2019 [13 favorites]
I'm sorry but that first article is terrible. They are using 'consultant' lazily when they generally mean 'sub-contractor'. Sub-contractors (I'm sorry consultants) also mow the grass in the parks in nearly every California city. Is that also rampant with fraud? Anaheim CA resolutions for various city projects for week of 4-16 Nearly everything in government is done through sub-contractors. It's what they do. I get that is seems weird, but then again it seems like if they want to in-source some contracts they should maybe start with some easy and permanent ones like lawn mowing and street repair and then move to the difficult ones that cross jurisdictions like rail line construction. It's also not weird that subcontractors report to other subcontractors. They do that in private business too.
They also have tons of half-completed thoughts and insinuations, and employ that 'conservative government run like a business canard' in that cost & time projections are treated as the most important, which for government projects that is fundamentally wrong. Government projects cannot cut to control costs because they aren't built with 'fat' to begin with. I'm sorry that building in California is expensive, but if everyone is suffering under the expensive restrictions, then maybe a better use of the governor's and legislature's time would be to review the costs of complying with state regulations rather than throw rocks at a rail project, which just makes them more noticeable due to it's consolidated (and therefore higher) cost.
posted by The_Vegetables at 11:28 AM on April 29, 2019 [8 favorites]
They also have tons of half-completed thoughts and insinuations, and employ that 'conservative government run like a business canard' in that cost & time projections are treated as the most important, which for government projects that is fundamentally wrong. Government projects cannot cut to control costs because they aren't built with 'fat' to begin with. I'm sorry that building in California is expensive, but if everyone is suffering under the expensive restrictions, then maybe a better use of the governor's and legislature's time would be to review the costs of complying with state regulations rather than throw rocks at a rail project, which just makes them more noticeable due to it's consolidated (and therefore higher) cost.
posted by The_Vegetables at 11:28 AM on April 29, 2019 [8 favorites]
Li Yuan
I tell my Chinese friends the best way to impress Americans these days is to take them on a high speed train ride. Of course China is able to build a national network so fast partly because it can tear down houses. But it’s still sad that Americans have to live with Amtrak...posted by chappell, ambrose at 11:29 AM on April 29, 2019 [2 favorites]Steve InskeepShortly after leaving the station, the sign says this Chinese train is moving 336km/hour, about 200mph. Every seat has that handle for you to grab as you walk the aisle, but the ride is so smooth you rarely need them. Amtrak trains do not have these handles but you do need them.
I'm sorry but that first article is terrible.
I guessed the writer before I clicked on the link: Ralph Vartabedian has been writing terrible articles against California HSR for years and years now, dense with half-truths and misleading implications. If HSR had been staffed primarily within government rather than with contractors, I assure you that he would conclude that to be the problem.
posted by Homeboy Trouble at 11:43 AM on April 29, 2019 [8 favorites]
I guessed the writer before I clicked on the link: Ralph Vartabedian has been writing terrible articles against California HSR for years and years now, dense with half-truths and misleading implications. If HSR had been staffed primarily within government rather than with contractors, I assure you that he would conclude that to be the problem.
posted by Homeboy Trouble at 11:43 AM on April 29, 2019 [8 favorites]
To move more toward the title of this post, and that last article, there is plenty to be said about the larger issue of how Strategy Consultancies are causing enormous harm. Just recently the NYT ran an in-depth piece on "One Man vs. McKinsey: A Billionaire Says the Consultancy Has Rigged the Bankruptcy System." And the firm's efforts in Puerto Rico are getting sharp scrutiny.
But we shouldn't pick on McKinsey alone. Back in the day, the recent MBA's t-shirts at Accenture said "How have you added value today?" which SOUNDS positive. But for all of these firms, whose efforts have to reflect the past decades' trends in global capitalism/financial markets, the only "value" they care about is the net revenue/stock price of their clients.
I sat in on a new-consultant training session at one of the major firms, and was appalled when the not-much-older "Manager" who was teaching that session verbally swaggered about how "sometimes you just have to come in with Uzis and clear things out." Of course the guy had never shot a gun in his life and didn't care a bit that he was talking about firing masses of real people, with about as much empathy as a charging rhino.
posted by PhineasGage at 12:00 PM on April 29, 2019 [15 favorites]
But we shouldn't pick on McKinsey alone. Back in the day, the recent MBA's t-shirts at Accenture said "How have you added value today?" which SOUNDS positive. But for all of these firms, whose efforts have to reflect the past decades' trends in global capitalism/financial markets, the only "value" they care about is the net revenue/stock price of their clients.
I sat in on a new-consultant training session at one of the major firms, and was appalled when the not-much-older "Manager" who was teaching that session verbally swaggered about how "sometimes you just have to come in with Uzis and clear things out." Of course the guy had never shot a gun in his life and didn't care a bit that he was talking about firing masses of real people, with about as much empathy as a charging rhino.
posted by PhineasGage at 12:00 PM on April 29, 2019 [15 favorites]
The mess made in South Africa deserves its own FPP
posted by hugbucket at 1:05 PM on April 29, 2019 [1 favorite]
posted by hugbucket at 1:05 PM on April 29, 2019 [1 favorite]
But we shouldn't pick on McKinsey alone.
posted by hugbucket at 1:10 PM on April 29, 2019 [3 favorites]
posted by hugbucket at 1:10 PM on April 29, 2019 [3 favorites]
When I was in grad school, I interviewed with McKinsey and Accenture and a few other consulting firms, more for the practice than any desire to spend four nights a week way from home.
I hit it off with one of the first-round interviewers, who was also a former military person who was bemused at her fresh-out-of-college coworkers and the scads of money that were involved in her job. She told me that she knew damn well that most of her job was providing cover for the executives of the company that had hired her. Those executives wanted to fire a bunch of people to goose the stock price, but no one wanted to be the face of the firing, so they paid the consultants to spend a couple of weeks acting like a Very Serious Neutral Party, and then the executives woefully accepted the sad findings that a bunch of people had to be fired for the sake of efficiency, none of whom ever seemed to be the people who hired the consultants.
I asked her why she did it, and she shrugged.
"They're gonna get fired anyway."
posted by Etrigan at 1:31 PM on April 29, 2019 [12 favorites]
I hit it off with one of the first-round interviewers, who was also a former military person who was bemused at her fresh-out-of-college coworkers and the scads of money that were involved in her job. She told me that she knew damn well that most of her job was providing cover for the executives of the company that had hired her. Those executives wanted to fire a bunch of people to goose the stock price, but no one wanted to be the face of the firing, so they paid the consultants to spend a couple of weeks acting like a Very Serious Neutral Party, and then the executives woefully accepted the sad findings that a bunch of people had to be fired for the sake of efficiency, none of whom ever seemed to be the people who hired the consultants.
I asked her why she did it, and she shrugged.
"They're gonna get fired anyway."
posted by Etrigan at 1:31 PM on April 29, 2019 [12 favorites]
When you think about it, it is totally wild that so many enterprises have decided that the solution to their problems is to get a team of twentysomethings with no particular expertise or training in their subject area to make Powerpoints about it, and assume that will work out because they went to Harvard and have MBAs so clearly they must be good at figuring stuff out. It's like we're trying to re-create the era of the British Empire where they sent young men to their colonial outposts to govern based on their impeccable translations of Epictetus and ability to recount the Battle of Agincourt.
posted by Copronymus at 1:31 PM on April 29, 2019 [55 favorites]
posted by Copronymus at 1:31 PM on April 29, 2019 [55 favorites]
lol so immediately before the British Empire became no longer a going concern. sounds about right.
posted by 3urypteris at 1:47 PM on April 29, 2019 [2 favorites]
posted by 3urypteris at 1:47 PM on April 29, 2019 [2 favorites]
When you think about it, it is totally wild that so many enterprises have decided that the solution to their problems is to get a team of twentysomethings with no particular expertise or training in their subject area to make Powerpoints about it
Since it seems like the companies hiring these consultancy firms mostly just want a rubber stamp on whatever they were going to do anyway (presumably so they can defend themselves to the board if something goes wrong), I figure that having people with expertise -- and therefore opinions -- would almost defeat the purpose.
posted by tobascodagama at 1:49 PM on April 29, 2019 [7 favorites]
Since it seems like the companies hiring these consultancy firms mostly just want a rubber stamp on whatever they were going to do anyway (presumably so they can defend themselves to the board if something goes wrong), I figure that having people with expertise -- and therefore opinions -- would almost defeat the purpose.
posted by tobascodagama at 1:49 PM on April 29, 2019 [7 favorites]
Wow. It's nice to have a name and address to put to the first people to get sent to the new guillotines.
So what happens when we vote one of them in as President?
posted by JoeZydeco at 2:26 PM on April 29, 2019 [3 favorites]
So what happens when we vote one of them in as President?
posted by JoeZydeco at 2:26 PM on April 29, 2019 [3 favorites]
But we shouldn't pick on McKinsey alone. Back in the day, the recent MBA's t-shirts at Accenture said "How have you added value today?" which SOUNDS positive. But for all of these firms, whose efforts have to reflect the past decades' trends in global capitalism/financial markets, the only "value" they care about is the net revenue/stock price of their clients.
Only half right. The first "value" these consultants care about is how much of their client's money they can transfer to their own pockets. They care about their clients value only secondarily.
posted by JackFlash at 3:36 PM on April 29, 2019
Only half right. The first "value" these consultants care about is how much of their client's money they can transfer to their own pockets. They care about their clients value only secondarily.
posted by JackFlash at 3:36 PM on April 29, 2019
I really enjoyed the self-portrait of a McKinsey consultant. It's the story of how you convince the "insecure overachievers" of the world that they can make the world a better place while burning up the most passionate and driven years of their lives on propping up existing power structures.
posted by clawsoon at 3:59 PM on April 29, 2019 [8 favorites]
posted by clawsoon at 3:59 PM on April 29, 2019 [8 favorites]
Yep, I lost my job as a result of McKinsey's work. I never waste the opportunity to give them the finger when I walk by their Charles Street bunker in Toronto.
The location itself is an disgrace. Victoria University had a lovely soccer field that was trisected to make space for McKinsey, who I'm sure would never had advised tuition cuts or consummate compensation for the disturbance.
posted by Jessica Savitch's Coke Spoon at 5:27 PM on April 29, 2019 [2 favorites]
The location itself is an disgrace. Victoria University had a lovely soccer field that was trisected to make space for McKinsey, who I'm sure would never had advised tuition cuts or consummate compensation for the disturbance.
posted by Jessica Savitch's Coke Spoon at 5:27 PM on April 29, 2019 [2 favorites]
It's not just that CA HSR has been run by consultants -- it's been run by the wrong consultants.
The original sin of CA HSR is that the French SNCF was willing to build the whole thing for the original cost of under $40 billion. Supposedly even had private investors lined up. But that plan was killed by political pressure, including making sure American consultants like WSP (formerly Parsons Brinckerhoff) got paid.
Admittedly, the French wanted a different routing running along the I-5 straight from SF to LA, no direct Central Valley stops. Though you'll hear a lot of people talk about the benefits of linking the Central Valley cities (even though they don't want it), I think time has shown that the current routing has proven a failure.
posted by crazy with stars at 6:50 PM on April 29, 2019 [3 favorites]
The original sin of CA HSR is that the French SNCF was willing to build the whole thing for the original cost of under $40 billion. Supposedly even had private investors lined up. But that plan was killed by political pressure, including making sure American consultants like WSP (formerly Parsons Brinckerhoff) got paid.
Admittedly, the French wanted a different routing running along the I-5 straight from SF to LA, no direct Central Valley stops. Though you'll hear a lot of people talk about the benefits of linking the Central Valley cities (even though they don't want it), I think time has shown that the current routing has proven a failure.
posted by crazy with stars at 6:50 PM on April 29, 2019 [3 favorites]
My job interview with McKinsey still ranks as a monumental stuffup in a long line of interview stuffups. "Here is the case study we would like you to review in the interview. Our report was 250 pages to the client."
"But isn't your case a standard Economic Order Quantity question which you can solve using Inventory Modelling, and as you have provided me with the values of the relevant variables, you just take the square root of the equation and there is your answer."
"OUR report was 250 pages."
So I never did work for McKinsey
posted by Barbara Spitzer at 7:14 PM on April 29, 2019 [12 favorites]
"But isn't your case a standard Economic Order Quantity question which you can solve using Inventory Modelling, and as you have provided me with the values of the relevant variables, you just take the square root of the equation and there is your answer."
"OUR report was 250 pages."
So I never did work for McKinsey
posted by Barbara Spitzer at 7:14 PM on April 29, 2019 [12 favorites]
I tell my Chinese friends the best way to impress Americans these days is to take them on a high speed train ride. Of course China is able to build a national network so fast partly because it can tear down houses. But it’s still sad that Americans have to live with Amtrak...
Totalitarianism: is there anything it cannot do?
posted by acb at 4:01 AM on April 30, 2019 [2 favorites]
Totalitarianism: is there anything it cannot do?
posted by acb at 4:01 AM on April 30, 2019 [2 favorites]
acb: Totalitarianism: is there anything it cannot do?
The French, Germans, Japanese, and Spanish all have high-speed rail, too, and all of them were developed after the nations in question had dumped fascism.
It's stuff like this:
posted by clawsoon at 5:39 AM on April 30, 2019 [4 favorites]
The French, Germans, Japanese, and Spanish all have high-speed rail, too, and all of them were developed after the nations in question had dumped fascism.
It's stuff like this:
Several rail authority employees said in interviews that the audit correctly identified the confused relationship between state employees and consultants. In some cases, they said, state employees report to consultants, rather than the other way around....that make me worry for single-payer healthcare if it ever comes to the USA. It's like those fungi that take over ant brains.
posted by clawsoon at 5:39 AM on April 30, 2019 [4 favorites]
It's the same story over and over again when it comes to consultants fucking over cities while riding the taxpayer-$$$ gravy train. When I moved to SF in the mid-90s, it was that, at the behest of consultants hired to solve the Muni meltdown, new Muni cars replaced the old ones -- but the new cars didn't fit the existing Muni stations, causing ridiculous cost overruns for retrofitting.
posted by Lyme Drop at 9:49 AM on May 20, 2019 [1 favorite]
posted by Lyme Drop at 9:49 AM on May 20, 2019 [1 favorite]
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posted by The Whelk at 10:46 AM on April 29, 2019 [8 favorites]