Are consultants paid for abandoning project?

Question

I'm a PhD student and I'm new to Management StackExchange. I'm researching on the kind of contracts that are designed for consultants, and I had a few generic questions about them.

1. Since there is a distinct discovery phase in most projects, the purpose of which is to determine whether the project is to be abandoned or taken forward, do consultants get paid for recommending that projects be abandoned?
2. Do employers set deadlines for discovery phase?

Any help, references, data would be great.

Thanks

Answer 1

TL;DR

1. Since there is a distinct discovery phase in most projects, the purpose of which is to determine whether the project is to be abandoned or taken forward, do consultants get paid for recommending that projects be abandoned?
2. Do employers set deadlines for discovery phase?

The deliverable for a discovery phase is usually a document, report, or professional opinion. The contract would typically specify the nature or format of the deliverable itself, rather than define an expected outcome.

The contract will also typically define one or more performance periods, as agreed between the consultant and the client. This is often carefully negotiated to set expectations, rather than simply dictated by one side or the other. However, contracts and contract law are complicated, so your mileage may vary.

What’s Been Agreed Between the Parties?

A contract is an agreement between two or more parties. In this case, the parties are typically the client and the consultant. They can essentially agree to anything they like, within the constraints of the law. Details like payment terms, deadlines, notice periods, and deliverables are negotiable, and should be spelled out in the contract and agreed to by all signatories.

Consultants are not generally paid to “abandon” a project, or even to make a final determination on the viability of a project. As a rule of thumb, a consultant has an advisory role, rather than a role of delegated authority. However, see the earlier proviso about contracts allowing any sort of agreement the parties mutually arrive at. Some consulting arrangements are for advisory work, while others are performance-based agreements.

Since a consultant is often retained for their professional opinion, that opinion often carries weight. If the opinion is that a project can’t be done within the organization’s timeline or constraints, then it’s up to the client’s management team to decide how to deal with that information. However, a savvy consultant would never sign a contract that puts the consultant on the hook for deliverables over which the consultant has no control.

In short, the answer is “it depends.” But unless the contract is fixed price, fixed scope, and has no sane escape clauses for either side, a discovery phase is just a means for the consultant and client to collaborate on the scope and deliverables for potential follow-on activities.

Answer 2

The consultant is paid pursuant to the contract. If the project itself is a research / investigation type project, the most appropriate type of contract would be T&M. Therefore, the consultant would have earned and be paid no matter how the contract terminated, unless there was some type of dispute. Assuming the consultant did nothing wrong, then (s)he would be paid up to when the project was abandoned.

Answer 3

As I very-carefully spell out on our website, sundialservices.com, the first step in any engagement is what we refer to as "present-state analysis." (We are ordinarily engaged concerning existing software projects that are in some sort of trouble.) This analysis is always-the-first, paid-for step in the engagement, tasked to determine what (if anything) should be done next, and whether-or-not any viable next-step actually exists.

This sort of analysis must not be performed "by a salesman," because "a salesman" is often the sort of person who got the project into hot-water in the first place.

It must be done thoroughly and objectively, "as an end unto itself," by a consultant who has only the client's best interests in mind. It very-specifically must be unclouded by any thoughts of whether there is any future business, and whether the consultant's company will have any part in that business should it come. (Sometimes, we help to produce and then to evaluate RFP's that we are specifically excluded from bidding on.)