Saving McKinsey

Where's the savings?

McKinsey is costing the government US$ 9.1 million. That works out to about Nu 432 million. That’s a lot of money. The government knows it. And that’s probably why the government makes it a point to tell us that the McKinsey project will bring about “savings” in excess of the US$ 9.1 million being charged by them.

About two years ago, when McKinsey’s “accelerating Bhutan’s socio-economic development” project was first announced, we were told that, “The savings the government makes through this project will more than make up for the consultancy cost.”

A year later, amid increasing public concern about the usefulness of McKinsey’s recommendations in the tourism and construction sectors, we were told that the project had identified, “A preliminary saving potential of Nu 500M over the 10th Plan period for government has been identified.”

A few months after that, when the PM was asked why McKinsey were hired when our own civil servants could have done whatever the consultants were doing, we were told that, “through the project, a saving potential of Nu 500M in the health and constructions sectors has been identified, while additional savings are also being identified in the ICT and agriculture sectors.”

But can McKinsey really bring about savings to offset their huge fees? And, more importantly, will the savings bought about by McKinsey be real?

McKinsey have almost completed their project. So it’s time to evaluate their work. And it’s time to count our “savings”.

Fist, McKinsey says that we can save Nu 13 million by “having a long-term contract with one supplier, and bringing in supplies directly from the wholesaler” when buying medical supplies.

Okay … but is this really something that we didn’t already know? And aren’t there reasons – to prevent corruption, for example – why our financial rules purposely discourage long-term contracts with any one particular supplier or buy directly from wholesalers?

If purchasing medical supplies directly from the source is a good idea, why stop there? Why not purchase paper directly? And vehicles? And fuel?

Second, McKinsey says that using higher-grade steel – Fe500 instead of Fe415 – in government constructions would bring about savings. Higher-grade steel means higher costs, but “theoretically, upgrading to better quality of steel would mean the quantity required will be reduced.”

That’s probably correct – Fe500, a relatively new product in India, is being marketed aggressively and is already becoming popular. So McKinsey or not, wouldn’t construction in Bhutan – yes, including government construction – have naturally migrated to Fe500?

Third, McKinsey says that importing bitumen packed in polybags instead of barrels will result in savings. But it appears that polybag bitumen is not yet available in India. And anyway even if it was available in India, and even it was cheaper, wouldn’t we have the common sense to buy bitumen packaged in polybags over the more expensive barrels?

Fourth, McKinsey says that the government should buy cement directly from the cement factories, and claim for a rebate on the cement it purchases. That rebate, it turns out, is actually the commission cement manufacturers give their agents. So yes, the government will save money by going directly to the source. But in doing so, they’ll be functioning as cement agents. And they’ll drive all the current cement agents out of business.

It’s good that McKinsey is identifying savings for the government. But the savings must be real. The ones they’ve identified so far won’t do.

 

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  1. sameer jain says:

    I could have made these recommendations for ‘just’ $1 million! Then Government could have saved $10.1 million

  2. be realistic sameer jain…bhutan is a free country, you could have recommended it before McKinsey did…
    and yeah, you have the right to speech and so do I…

  3. I am a Bhutanese. I could have given those recomendations FOR FRRREEEEE!!!

    And if I am the prime minister, I wouldn’t give half-a-billion ngultrums to some foreign consultants to TELL ME THIS BULLSHIT!!

  4. Yes, bale Bhutan is a free country, on paper at least. Yes we could have given the recommendations, but the oldies in our government system does not want to listen to new ideas proposed by young Bhutanese officials, it is too much for their ego to take. That is why they hire a foreign company to tell them such simplistic ideas, that we have studied in class 9 economics.

  5. That is very much true. Our government is used to hiring International Consultants just for a small business. We don’t trust and have faith in our own people when this kind of business could be done by us. It’s time now that old people place trust, believe in young officials and dig up their feedbacks to save million dollars.

  6. I will go with comment given by TRUTH. i really appreciate your idea and i feel the same. our old age people dont want to listen to the new ideas given by the young learneded ones though its equivalent or greater than the what is given by internationally reputed consultants.

    our goverment is fan of consultants and they go for the consultant even for the small thing and they dont want our own people to be developed or get such experience. why govt. dont give equal weightage to the ideas and recommendations given by the our own people who know what is happening in the system than some one from outside.Its high time to think on all those issues and we can save from this areas too.
    “Problems do not go away. They must be worked through or else they remain, forever a barrier to the growth and development of the spirit.”

  7. YPenjor says:

    Dear OL, I requested you sometime back to take up this McKinsey case with the govt over and above the vehicle tax and the tobacco issue. Yes, the tax revision not having routed through parliament has a legal issue and the tobacco Act is making a bit of social (ignorant people) disturbances. The McKinsey employment has been practically day robbery of the Bhutanese exchequer.

    I feel, it is not late and you as the trusted OL of the Bhutanese people has your chance of proving your worthiness.

    If one ever visits the RCSC/MoAF Canteen for a lunch break, you will see who all are there working as McKinsey Experts in Bhutan. It is only the brand of the Company…not really the workers that expose highly qualified and experienced hands. The result outcome as it is obvious…no surprise!

  8. tylinpo says:

    hi guys, u need not have to recommend anything…first, just clear the papers in front of ur papers and will do great to the country and people….forget about coming out any recommendation, most of us don’t even bother to do our day to day office works…we are either busy visiting hospital or cremation grd or bank or…..works are given to consultant not coz we are incapable but we r too lazy and we hardly use our potentials we waste our time for useless personal stuffs….whatever we do, we r looking for some sort of reward like training, promotion etc….we hardly work with our soul and heart…

  9. I knew from the day one how this McKinsey is robbing us.

    As a consultant, they know no tools for good governance. Our civil servants are better off than these bunch of people who kept changing off and on. With the backing they got from the highest body, any of our civil servants could have exlored more than them.

    Very sad but not surprised.

  10. Thinlay says:

    In the final analysis, no consultancy firm of whatever reputation (be it Mckinsey or others) can solve our problem. We must change our attitude and dedicate our heart and soul into whatever we do; sadly, judging from current happenings, criticisms, accusation and counter accusation at all levels, i tend to become more pessimist about our future. Our educated lot, especially science and technology and teaching professionals, always look for greener pastures and ivory tower’s, comfortable office jobs, rather than solving, innovating and helping helpless in our society.

    I think, for a change, we reflect on our shortcomings and stop blaming others for our own incompetence and lack of trust and sincerity at all levels.

  11. I begin with admitting that i know very little about this complete Mckinsey episode. I am curious to know the initial terms and conditions of the agreement between the government and Mckinsey. I am sure there would have been some checks and systems in place to overview and review the agreement.

    Can someone please educate us of the Terms and Conditions… If the consultancy service has not given us for what they were hired and paid then why not revoke the agreement and black list the company and effort to be made to recover the money (I am sure some provisions must be made, afterall, Govt cannot be fool??? Is it???).

    Regards

  12. Yak Consultant and McKinsey !!!! Can a neutral agency devise a good set of tools for measuring the proclaimed savings made by this government. What savings? I cannot understand. It is just assumption and can never be measured. This is just face saving tactics and nothing else.

    I am sure we will be debating this for some years until people gets fed up and forget finally like GNH which is also gradually being forgotten.

  13. Lampenda Chuup says:

    Right on the money! Isn’t this what we had expected all along? Where are those transformative changes stemming from McKinsey recommendations? Nu.500 million savings, seriously? Don’t feed crap to the people anymore. We are not dimwits willing to swallow anything the powers that be shove down our throats. Do not undermine the collective intelligence of the masses. Who are we kidding, really?

    Such ‘savings’ are virtual, and could have been estimated even without paying 9.1 million USD in the first place. BUT go on, go on! Disregard the brightest of Bhutanese recommendations and bring in yet another horde of foreign consultants. Let us see what twenty-something graduates have by way of advice for a country. We are all ears.

    I have a better idea – Why not present the whole country on a platter? Let the Swiss and Austrians dig our historic sites for us, let BBC ‘discover’ our wildlife, let the Dutch tell us about our languages, and let young Indian graduates tell us how to run a country. Where is the capacity building? Where are the Bhutanese leading the show? I badly miss our fourth king who once wisely said, ‘If it cannot be done by a Bhutanese we can wait.’ Leaders these days seem ready to let foreigners run the show.

    But, why are we in this rut? We have this very fallacious and arrogant notion that another Bhutanese will not know any better than me. We can trust a foreigner’s advice, but not our own peoples.’ This, I think, is our strongest weakness!

    I guess with that kind of savings, all Bhutan needs to do is bring in another co-hort of these fine consultants? There were some savings from the last round, so USD 15 million this time? This might save us even more.

  14. Motor Mouth says:

    losing ngultrums to save chetrums. given McKinsey’s tracks records with companies such as Enron and Swiss Air, i wonder how the government hired them.

    this is exactly why i have lost faith in this government.

  15. Karma 1 says:

    We all worry and are concerned about many important donors ending aid to Bhutan. Sometimes, I wonder if their decision is, in some part, influenced by the way we are wasting our money:

    1. McKinsey
    2. CDG
    3. Repeated pay raise
    4. etc..

    Just a thought and sincere concern.

  16. If people like tshering tobgay can become opposition leader in Bhutan, we need even more expensive consultants to solve our problems.

  17. And if a lot of idiots can become MPs and fill the NA hall and pass controversial laws, we will need even more expensive consultants to solve the problems created by our so called “parliamentarians”. The DPT MP’s cannot compare to the OL in any way, in terms of intelligence or hard work.

  18. I think there is lot about McKinsey on wikipedia. We only need to enable our people to work, and I am sure they can deliver.

    The way it is, McKinsey hires fresh graduates with the sole purpose to make them deliver. I am sure that if our top management gives such support to our young ones, we can deliver too.

    I am disappointed that our leaders do not see it that way. All they think is that outsiders are always better than us. Probably during their analysis they don’t think about our younger generation, but compare themselves to outsiders. This shows their competence or incompetence at the jobs they are required to deliver.

    So much have been lost ($$$), hope the country profits from the next government.

  19. One thing I realize is that much of McKinsey’s new initiatives are already under implementation elsewhere and are available widely (google search). We are paying them to copy, and then ask our guys in the field to implement (that requires lots of adaptation). Some aren’t at all relevant in the field, and some end up being a duplication of activities already under implementation.

    One needs to be McKinsey to be able to copy documents from the internet and sell at $$$$$$$$$$$$$$$, and it needs to be a Bhutanese to be such a dumb.

    I am not sure if our leaders use internet just to find out that people are replacing “Bhutan” in projects implemented elsewhere to impress our leaders as initiatives that were never seen in Bhutan. I think lots of people up there at the top needs to wake up.

  20. While I read about McKinsey & Co. topic I am reminded of Shakespeare’s play Merchant of Venice, where Portia, a character in the play says that she would rather give twenty advices than taking one. We have hired experts to advice people how to do their job. At the end of the day we land up doing the actual work while the experts take all the money as well as steal the show. Any failure, however, is dumped upon the those people who were supposed to follow the advice.

    Foreign voices know everything! Our people know nothing. The belief that resides deep rooted in every policy maker’s mind must be erased. We have to grow up in our mentality to think that we are equally capable of what others are capable of. Starting from our policies (as you have already highlighted in Financial Services Bill), Bhutanese Individuals and companies are always disadvantaged by the policies.

    These uneven policies range from the unequal amount of pay for our consultants to putting our own companies in a disadvantaged positions in the market arena. For example, we can pay thousands of Dollars to a Foreigner to do a simple task. However, if we have an equally competent National candidate, we either ignore him or if we ever recruit him, the pay package gets reduced to one-tenth.

    This discourages our countrymen to work for our own country. I will not be surprised if the little human resources we have will look for greener pastures in future (many are already doing so) while we have to recruit foreigners paying him ten folds just because we can’t stand our own countrymen earn what he/she is capable of. After all, How can we allow him to make so much money? Isn’t it?

  21. Karma 1 says:

    Dear Kota,

    It is sad, but you are right.

    It’s a shame that we don’t trust our own people and give our own people the opportunity to make use of their potential. Is it the “Ego” of our older leaders or do they feel “insecure” — afraid that people may come to know that their subordinates and young officials are smarter then them? What is it really???

    SELF RELIANCE is our most important national goal but in reality we want to keep depending on others—even if our own people are capable of doing it.

    What an IRONY!

  22. Does any one here know where the reports of the Mickensy is….

    can we download it from any website….

    Who are they directly dealing with and who reviews and approves their reports and the so called advices… The money paid to them is public fund and we have a right to know … Dear OL please let this GOVT release the reports of the consultants

  23. @Lampenda Chuup

    As far as your frustration is concerned its the same with every educated citizen of each and every nation but let me ask you one thing where we are independent and have complete total control, have been successful in that field, answer would be no, Lets for example take a small provisional store, are Bhutanese shopkeepers successful answer would be no, they are busy watching TV while customer waits for them to finish up with their entertainment issue and sell him what he wants , and is a shopkeeper from marwari community ot be it any other community from India success, yes because he is present physically and mentally to deliver to your needs, Hence we have to change our selfs if we want to improve our status in society and not blame others or infact the government, these things come from within.

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