US consultants see fewer projects. Foreign development work is going to joint ventures

By , Special to The Christian Science Monitor

Whether it's a dam in Thailand or a highway in Trinidad, American consultants have helped put their stamp on a developing -- and interdependent -- world. But big changes are ahead at the international finance institutions that propel these consulting contracts, and the impact on the consulting firms, based mostly in the Washington area, promises to be great.

Last year, an estimated $800 million in consulting contracts came from the World Bank, Inter-American Development Bank, and Asian Development Bank. This trio helped fund a multibillion-dollar consulting industry.

But in one big shift: Joint ventures between consultants in the United States and in the target countries are becoming mandatory. Most consulting projects, moreover, must incorporate the training of nationals within the third-world countries they serve.

Recommended: Could you pass a US citizenship test?

``It will probably put some of us out of business,'' grumbles a veteran of African irrigation work.

As it is, there may be fewer ``Made in USA'' labels on global infrastructure projects. The entry of foreign competitors is at last being felt, with both North American and European firms losing a slice of the pie.

``Our guys have a roster of dozens at the World Bank,'' says Richard Dowe, chairman of the Heavy Equipment Manufacturers Association in Canberra. ``The Japanese have a half dozen or so. It's just easier for someone from Asia or the Middle East to go over a short list and decide who gets the contact award.''

Other new entrants to the consulting industry -- such as the South Koreans -- are providing prospective clients with long-term ``soft'' loans as an incen- tive. And since consultants generate hundreds of millions of dollars of equipment and service purchases annually, some governments will back up their consultants by providing in-depth intelligence by commercial attach'es on new opportunities.

In a dramatic shift, even developing countries themselves are getting into the act. ``Foreign governments are prepared to subsidize their own consultants,'' says Frank Frazier, secretary of the American Society of Agricultural Consultants in McLean, Va. ``We estimate that every dollar in consulting can trigger $20 or $25 in trade that follows.''

While the US share of contracts (in dollar value) remains a healthy 20 percent at the World Bank, opportunities appear unlikely to grow at rates seen during boom years. This is true for other international financial institutions as well. Maurice Dickerson, in charge of consulting services at the World Bank, terms the situation today ``fiercely competitive.''

An age of austerity has set in, with priorities at the titan lending institutions undergoing subtle shifts. Massive infrastructure projects are being deemphasized. In their place is emphasis on ``institution building'' -- that is, the creation of viable small business sectors -- in the third world. As a result, a new set of consulting talents is required.

Zoltan Pazmany, who is in charge of international projects at Coopers & Lybrand, the accounting firm, considers the ``once-dreary profession'' to be ``full of excitement.'' He and others see growth in consulting oriented toward investors searching for specific information on business climates within third-world countries.

``Privatization by many of these countries is receiving serious attention now,'' Mr. Pazmany says. As in urban development, housing, or sewage treatment, privatization will require the ubiquitous consultant.

But international financial institutions, stung by cost overruns and blunders, including ones traced to prestige consulting firms, have begun a period of ``self-examination,'' says an insider at the Asian Development Bank. This is happening at a time when bidding procedures are more complex than ever. In consulting, the proposal stage is crucial. And even though computers and other tools are used, some critics see quality dropping.

A source at the Inter-American Development Bank feels that ``the pipeline for bankable projects is running dry'' in some sectors -- meaning that there is indeed money for projects, but that too many economically unfeasible ventures are proposed. Long delays in bidding are occurring.

``In a perfect world,'' says Dr. Szabolcs Szekeres of Information for Investment Decisions, a consulting firm, ``the right people would go for specific projects. There would be a natural flow of talent and expertise toward specific areas. This isn't what's happening. The information is not always centralized.''

``The American consultant must adapt,'' insists Richard Staley, a specialist in international transportation issues. ``Subcontracting with Europeans or even Canadians is catching on. The world is different, and it'll take time for many in my profession to adjust. That means learning more about international business and culture -- while keeping up with all the technical nuances of your profession.''

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...