Every time private-sector organisations cut back on their use of consultants, the amount of talk about risk-reward or other types of performance-related payment increases. However, history suggests that the talk far exceeds the walk. The recent recession has been no exception, with many organisations announcing their intention to make greater use of this approach, only to baulk at it in practice. Our quarterly survey of buying trends shows that, at 12%, the proportion of payment-by-results is scarcely higher than it was three years ago.
There are four primary problems associated with risk-reward projects: