Miners – Why Have Your Own Independent Consultant?

Over the years I have worked in different consulting roles; as an independent; as a member of a large consulting team; and as owner’s representative managing consultants.   I have learned that there is an industry role for both the independent consultant and larger consulting firms.  Read on for more in this self-serving article.

Independents have a role

A previous blog (“9. Large Consulting Firms or Small Firms – Any Difference?”) discusses where I feel the large and small consultants fit into the overall picture.   Large technical teams are required where there are broader scopes of work, significant effort levels, and multiple skills sets are needed.

Independent consultants are a different option.  They are best suited for assisting the owner directly, either independently or as part of an overall advisory team.  On occasion the engineer could be part of the Board of Directors.  Non-technical management must always have access to in-house engineering capability for brainstorming or technical direction.  The question is whether the engineer should be a cheerleader or a true independent observer.

Independent consultants can differentiate themselves from large firms in several ways.

• They don’t bring a lot of extra personnel onto the job.  They focus only on what is needed and can usually draw in other expertise when needed.

• They can provide unbiased advice.  Larger firm sometimes have business development conflicts. The independent consultant does not have the motivation to win a feasibility study or EPCM contract.

• One can develop a long term working relationship with independent consultants.  Everyone gets familiar with each other’s objectives and goals.  Large engineering firms can be revolving doors.

• Independents can work efficiently at a pace of their own choosing.  This possibly results in lower costs and faster deliveries.  I know of many independent consultants that will work evenings and weekends to meet deliverable targets.

• Independents can provide long term stability since they won’t have any employee turnover.  Personally I was involved for over 15 years with a mining operating in Suriname.  The expat staff at the mine site had significant turnover.  This was partly due to them being promised personal development relocations.  I ended up being the only constant.  I knew the history, why things were done they way they were.  I even had copies of study reports they could no longer find in their files.  I knew what was done previously, thereby avoiding re-inventing the wheel each time there was a new technical manager.

Stocks options to consultants

A point of discussion is whether the independent consultants should receive stock option compensation.  I have worked under both situations.

Awarding stock options could eliminate the “independent” nature of the relationship and hence negated the ability to sign off as an independent QP.  In some circumstances, the company may not require the independent consultant to be a QP since they mainly fulfill an advisory role.

One advantage of awarding stock options is the consultant may become more beholden to the project.  They feel it is their project too, rather than simply acting as an adviser.

Conversely the company may prefer the consultant doesn’t have any direct ownership so that their advice can be viewed as being unbiased.

I feel that awarding stock options is a good way to foster long term commitment from the consultant. It can be easier for them to walk away without any such inducement.

Conclusion

The bottom line is that independent consultants have a role to play and should be part of all owner’s teams, whether be on the Board or on an Advisory Panel.   The independent consultants can be selected based on their technical specialization (i.e. exploration, resource modelling, mining, metallurgy, environmental) and provide valuable part time guidance to the company.

The caveat is to ensure that the consultant is technically capable.  I have seen instances where certain members of the advisory panel gave poor advice.  Others on the panel would see it, but not say anything out of professional courtesy.

Lastly, decide whether the engineer should be an honest advisor or a cheerleader.  Companies should want to hear the truth.  If a 3rd party due diligence teams comes in they will be looking for flaws in the project.  It would be in a company’s self interest to know what those flaws are before the due diligence teams finds them.

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