This is Exactly Why I Give Up on Michissip...I Mean Michigan

[mwilbert]

As has been said, gigantic markups are the bread-and-butter of the consulting business, and this analyst is probably making 25%-30% of what is being billed at most.

What you can do if you think an underqualified person is being put into an expensive slot is ask the consulting company to reclassify the position; I have no idea what is in this contract, but, for example, you might change his slot from financial analyst to research assistant, and probably downsize the rate to $125-150/hr or so. If they refuse, you can usually insist that they use a different person, which probably they won't want to do.

But the underlying fact is that hiring name-brand consultants is expensive, and Detroit is in a position where it needs to do that.

[Eber Brock Ward]

As has been said, gigantic markups are the bread-and-butter of the consulting business, and this analyst is probably making 25%-30% of what is being billed at most.

What you can do if you think an underqualified person is being put into an expensive slot is ask the consulting company to reclassify the position; I have no idea what is in this contract, but, for example, you might change his slot from financial analyst to research assistant, and probably downsize the rate to $125-150/hr or so. If they refuse, you can usually insist that they use a different person, which probably they won't want to do.

But the underlying fact is that hiring name-brand consultants is expensive, and Detroit is in a position where it needs to do that.

Rule of thumb for large professional organizations is 1/3 to the talent, 1/3 to overhead, and 1/3 to the partnership.

If the associate is making 25-30% of that, it's not totally out of line with that.

[ghettopalmetto]

Rule of thumb for large professional organizations is 1/3 to the talent, 1/3 to overhead, and 1/3 to the partnership.

If the associate is making 25-30% of that, it's not totally out of line with that.

Yeah. Because $170,000 a year is a perfectly normal salary for someone with no experience in anything. The only reason these firms charge these fees is because they CAN--and Detroit is all-too-willing to pay them.

[corktownyuppie]

Yeah. Because $170,000 a year is a perfectly normal salary for someone with no experience in anything. The only reason these firms charge these fees is because they CAN--and Detroit is all-too-willing to pay them.

Am I misunderstanding something? I thought the hourly rate in the article was fixed across the board, regardless of level or seniority. Which means this guy bills at $275, but then so does the senior partner with a JD/MBA.

If that's true, then:

1) there is no way to conclude that this guy is making $175k per year
2) you can't look at this number independent of the senior partner number, ie [[highly overpaid young associate only occurred in conjunction with highly underpaid senior partner)

[ghettopalmetto]

Am I misunderstanding something? I thought the hourly rate in the article was fixed across the board, regardless of level or seniority. Which means this guy bills at $275, but then so does the senior partner with a JD/MBA.

If that's true, then:

1) there is no way to conclude that this guy is making $175k per year
2) you can't look at this number independent of the senior partner number, ie [[highly overpaid young associate only occurred in conjunction with highly underpaid senior partner)

Well, based on the invoice shown in the link, there is no $275/hr flat-rate. The [[presumably) senior people are billing at $425 and $495 an hour. It's kind of hard to tell what's going on, though, since the City is receiving a $280,000 invoice, and there aren't any titles/classifications or even a description of services rendered.

Ironic that an entity in bankruptcy due in part to wasteful and unaccounted spending is agreeing to accept invoices without documentation of the actual services provided. This kid who billed 90+ hours at $275/hr for the two-week period [[not to mention the other folks on the invoice): What is the City getting for that? How does anyone know they're not just milking the contract?

Looks more like a ransom note than an invoice, if you ask me.

[Eber Brock Ward]

Yeah. Because $170,000 a year is a perfectly normal salary for someone with no experience in anything. The only reason these firms charge these fees is because they CAN--and Detroit is all-too-willing to pay them.

I would guess that the analyst makes $90k-$110k a year, which isn't unreasonable for a star from a solid business program.

As far as I know, Conway is pretty good, and the analyst's alternatives were probably at bulge bracket firms, where he'd get a base around $70-75k and a bonus of around $40k, give or take $10-20k.

So in order to get the talent, Conway has to pay, and that, in turn, is passed on to the clients.

I'm just happy to see that the city finally has top-flight consultants on board. It was nice to see how Jones Day schooled everyone up in Ingham County with the bankruptcy filing, and it'll be nice to see Conway do the same here. Simply put, they need to do a good job to justify their fees on an ongoing basis, so every "i" will be dotted and "t" crossed.

Too often folks get penny-wise and pound foolish because they're too worried about optics.

[ghettopalmetto]

I'm just happy to see that the city finally has top-flight consultants on board. It was nice to see how Jones Day schooled everyone up in Ingham County with the bankruptcy filing, and it'll be nice to see Conway do the same here. Simply put, they need to do a good job to justify their fees on an ongoing basis, so every "i" will be dotted and "t" crossed.

Too often folks get penny-wise and pound foolish because they're too worried about optics.

As a professional myself, I completely understand the concept of "You get what you pay for". And I have made no commentary as to the competency of Conway.

But sending an invoice that amounts to, "Give us money" without documenting the actual work done for those hours... That is hardly dotting "i"s and crossing "t"s.

[Eber Brock Ward]

As a professional myself, I completely understand the concept of "You get what you pay for". And I have made no commentary as to the competency of Conway.

But sending an invoice that amounts to, "Give us money" without documenting the actual work done for those hours... That is hardly dotting "i"s and crossing "t"s.

Totally fair criticism. Since I've come on board where I am now, we have made it clear to our outside professionals that we will not tolerate -- or pay for -- block billing. And once received, we have folks go over the invoices with a fine-tooth comb.

But that is a separate issue from the one that has folks up in arms, that being the rates that are being paid for the services, particularly the young MSU grad's rate. Conway has to pay for the talent and get paid for having the talent. Those rates are eminently reasonable for a good consulting/professional team.