Parliamentary questions on McKinsey in Luxemburg

07 April 2014

In Luxembourg political uproar has emerged because of the hiring of McKinsey & Company by the Ministry of Finance. Critics are angry because the global strategy consulting organization was hired without the use of a public tendering process. Instead it was hired for a fee of almost 450,000 ton for 6 weeks of work. During a parliamentary debate the Luxembourg government has struck back hard, highlighting that the award of the contract followed all legal guidelines. In addition, the costs paid to McKinsey fade into nothingness compared to the mega savings  the public reformations want to realize (€1,5 billion), according to the Minister of Finance.

In preparation for the 2015 budgets the government of Luxembourg early this year decided to hire McKinsey & Company to support the process. Cause: the Ministry of Finance has reformed the way it budgets across the state ministries and administrations. As a result, it decided to bring external expertise on board.  Under Pierre Gramegna, the minister of finance, the renowned McKinsey was chosen, and even though a public procedure was not erected, the government’s tender commission approved hiring this organization.

Mckinsey Luxemburg

Over a period of 6 weeks, McKinsey thoroughly inspected the 2015 budgeting proces which has to realize €1,5 billion in savings compared to the year 2014. The most important assignment:  improve the way in which budgets are allocated, assigned and monitored. In addition, changes to the ministry’s approach meant that new definitions and processes needed to be developed. In this area McKinsey provided benchmarks and detailed lessons learned from other countries.

Parliamentary questions

After opposing parties found out that the consultants were paid €441.600 for their advice, several parliamentary questions were asked. First of all, some members of parliament pointed out that there may have been a conflict of interest, arguably because the daughter of finance minister Gramegna was an employee at McKinsey. She was employed at McKinsey when it was hired by the government. Gramegna rebuffed the accusation, stating that she had worked there between January 2012 and January 2014. Yet not during the time when the assignment was executed.

Xavier Bettel - Pierre Gramegna

Secondly, debate arose about the fact that McKinsey was hired without the use of public tendering process, which is a standard procedure for such large projects. “We have used the services of McKinsey before for various studies” said Gramegna, hinting at the fact that they were satisfied and did not need to look further. “Above all, the government kept itself to all regulations and the tender has been approved by the tender commission”. For the next two phases of the project – the initiatives and implementation phases – the ministry will organize a public bidding, he added.

To the question if  4,5 hundred thousands euro’s for six weeks of work – what comes down to €75.000 a week – is not a little bit to much, the minister answered the following: ''McKinsey delivered in line with our expectations and under a very tight schedule''. Above all, Gramegna emphasized that the costs paid to McKinsey fade into nothingness compared to the mega savings the public reform is trying to realize (€1,5 billion). After Luxembourg's Prime Minister Xavier Bettel defended Gramegna in the matter, the case was closed.

Expensive consultants

Uproar about expensive consultants is common recurring  phenomenon in media and politics. As for recently there was a major uproar in Ireland (see ‘Irish are grouching over gigantic consultancy expenses’) and in the United Kingdom (see ‘ICT consultant earns £55.000 a month extra at the defense’.

Uproar about expensive consultants is common recurring  phenomenon in media and politics. As for recently there was a major uproar in Ireland (see ‘Irish are grouching over gigantic consultancy expenses’) and in the United Kingdom (see ‘ICT consultant earns £55.000 a month extra at the defense’.


How data insights helped Network Rail improve the South-East route

11 April 2019

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.