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University of Copenhagen spent DKK 57.6 million on consultants

Administration reform — Two experts wonder whether the University of Copenhagen has shown sufficient diligence when almost DKK 60 million has been spent on consultants prior to the administration reform. University director defends the big numbers.

DKK 57.6 million.

This is what the University of Copenhagen (UCPH) spent on consultancy services in connection with the administration reform.

It can be seen in documents that the University Post has received from the programme secretariat for the administration reform at UCPH following a Freedom of Information request.

The total amount extends from 2021 until 31 May this year.

Per Nikolaj Bukh, a professor in financial management at Aalborg University, calls the DKK 57.6 million costs for consultancy services »an unusually large amount.«

You have got to ask yourself whether they needed all these external consultants, or whether they could have solved the task themselves

Per Nikolaj Bukh, Professor of Financial Management, AAU

»All other things being equal, this is an unusually large amount. It is not unusual for consultants to be employed in the public sector, or at universities, but this is a large amount that cannot simply be ignored. It also therefore raises some questions about whether this has been necessary, and whether the people have been sufficiently thrifty in their procurement of the services,« says Per Nikolaj Bukh.

The University Post has spoken to University Director Søren Skydsgaard. He defends the use of consultancy services worth millions of kroner in connection with the administration reform which will lead to annual savings of DKK 300 million.

»It is a very big change we are carrying out at the University of Copenhagen, and it affects a lot of people in a very large organization. That is why you have to be thorough. It’s absolutely necessary, and that’s what the university expects of us. This means that the work that preceded the proposal for a new administration is itself the result of extremely thorough work,« says Søren Skydsgaard.

»In addition, the cost of consultancy services should be seen in relation to an annual DKK 300 million financial saving,« says the director.

Large expenses channelled to BCG

In the material sent to the University Post, the total costs are divided into three tables.

The first table deals with an ‘potential analysis’ that the international consultancy Boston Consulting Group (BCG) carried out for the University of Copenhagen during the start-up phase of the work on the new administration reform. According to the material that was sent to UCPH, the 63-page report which was submitted in 2022 cost DKK 5.2 million excluding VAT.

It is a very big change we are carrying out at the University of Copenhagen, and it affects a lot of people in a very large organisation. That is why you have to be thorough.

University Director Søren Skydsgaard

From 2022 to May 31, 2024, DKK 50.9 million excluding VAT was spent on what in the second table is called »subsequent consultancy services.«

BCG accounts for the largest part of these expenses, but other consultancies like Round, Ramboll Management Consulting and the IT consultancy Emagine have also helped.

According to Søren Skydsgaard, large parts of the expenses in this table cover what he calls »a thorough analysis of the university’s administration.«

»It was a very, very large data set, where both employees and students were involved in various questionnaires. We analysed both qualitative and quantitative responses, which we have used in the subsequent work. But to devise it, set it up, collect it, analyze it, and present it afterwards is a huge task,« says Søren Skydsgaard.

The last table shows expenses of almost DKK 1.5 million divided between four consultant companies. The expenses cover »consultancy services for individual design projects« and were used in the current year.

UCPH: We needed consultants

According to Per Nikolaj Bukh, the question regarding the use of external consultants is whether UCPH has taken what is known under administrative law as ‘appropriate financial consideration’. It basically covers whether everything possible and reasonable has been done to promote frugality, productivity, and efficiency.

»You have got to ask yourself whether they needed all these external consultants, or whether they could have solved the task themselves. Care must also be taken to purchase consultancy services as cheaply as possible. If you could get access to the same skills more cheaply, you are obligated to acquire them,« says Per Nikolaj Bukh.

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University Director Søren Skydsgaard guarantees that people did, actually, ask themselves these questions along the way, and avoided spending more money than necessary.

»There has been a need for external assistance in the extensive preparatory work that was the basis of the administrative reform proposal that we have put forward,« he says, and continues:

»There is, on the one hand, a limit to how many UCPH employees we can pull out of their regular work. But it is also a question of skills. How do you go about it? What are the experiences of other places? These are, after all, relatively technical matters. And the data is relatively complicated to understand and analyse. We don’t have a contingency of people at the university who can do that. That is why we have used external assistance,« says Søren Skydsgaard.

According to the university director, the task was put out to tender via the government framework agreement, and the various consultancy companies were selected because they were best able to solve the task, and cost-effectively.

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According to Per Nikolaj Bukh, Boston Consulting Group is one of the most expensive consultancies.

»They are in the management consulting category, where you see relatively high hourly rates. But no higher than that they should be competitive,« he says.

Past BCG scandals

Peter Skærbæk is a professor of financial management at Copenhagen Business School, where he does research on the use of consultants and change processes.

Like Per Nikolaj Bukh, he also reckons that DKK 57.6 million is a remarkable amount for a public university to spend on external consultants. The size of this amount requires a good explanation from the university’s rectorate.

It looks like the plan they had in the Danish tax agency which went horribly wrong

Peter Skærbæk, Professor of Financial Management, CBS

Apart from the amount, Peter Skærbæk is critical of the method used by Boston Consulting Group in its consultancy work. This concerns the so-called potential analysis, which is the basis for the new administration reform at the University of Copenhagen and the annual DKK 300 million savings.

»In my experience, these potential analyses find some very round and overall figures, which are typically produced via opaque benchmarking data. It is this kind of analysis – carried out by BCG and the consulting firm McKinsey – that was the basis of the cuts in the Danish tax agency and the Danish Defence, and which turned out to have major financial and professional consequences,« says Peter Skærbæk.

After reading BCG’s potential analysis (Needs KUnet log-in for access] for the UCPH administration, Peter Skærbæk has been further confirmed in his suspicions.

It is important to stress that an external consultancy firm did not draw up the proposal for the new administration that we are presenting

University Director Søren Skydsgaard

»In the actual report from BCG, it looks as if the solution is to centralize the administration and then digitize it,« says Peter Skærbæk and continues:

»It looks like the plan they had in the Danish taxation agency which went so horribly wrong.«

Peter Skærbæk gives little credence to the UCPH explanation that it has been necessary to obtain external assistance because they do not have the necessary resources to carry out such extensive analysis work internally.

He would have preferred to see the University of Copenhagen hiring people to carry out the work on the administration reform.

»For DKK 57 million, you can get a lot of economists and other professionals doing the necessary analyses,« says Peter Skærbæk and continues:

»This also gets around the problem of letting consultants in from outside who do not understand the university’s core tasks and administration,« he says.

With a total DKK 45.8 million, Boston Consulting Group has received almost 80 per cent of the total consulting firms’ fees.

The University Post has reached out to BCG. But the company has no comment on the matter.

Op-ed was about the future

In April, Søren Skydsgaard and Rector Henrik Wegener wrote a featured comment / op-ed for the Danish-language version of the University Post about the new administration reform in which they elaborated on the use of consultancies like Boston Consulting Group:

»BCG was, indeed, hired to help launch the reform with an initial analysis and helped in the background in the design phase. But the actual work on the reform, the interim calculations, and the proposal for the Board is driven and developed by us at UCPH.«

The investment is to be seen in relation to the ambition. And to the University of Copenhagen’s major requirement that things are done properly

University Director Søren Skydsgaard

Are the DKK 57.6 million expenses commensurate with this background work, as you yourself describe it in the featured comment?

»What they (BCG and other consultancies, ed.) have helped us a lot with is organizing, planning, gathering knowledge, and supporting us with knowledge. In this featured comment, we focussed on future solutions. They played a much smaller role in this than they did in the actual organizational process and the data collection process,« says Søren Skydsgaard.

»It is important to stress that an external consultancy firm did not draw up the proposal for the new administration that we are presenting. We’ve done this ourselves.«

But can you understand those people who may wonder why it has cost DKK 57.6 million, when you yourself say that the BCG contribution has been »to initiate the reform«, »an initial analysis« and that they have »helped in the background in the design phase«?

»I have tried to describe what this background work covers. But you also have to remember that we are a knowledge institution. So there are extremely high standards and requirements for the knowledge base that we work from,« says Søren Skydsgaard.

There may be employees at UCPH who are concerned about their jobs and critical of the DKK 57.6 million spent on consultancy in connection with the administration reform. What is your message to them?

»It is to be seen in connection with the fact that we propose to save DKK 300 million a year on administration. The positions that are be cut in this connection are a part of the DKK 300 million savings. This is not a part of the use of consultancy funds. The two things are separate. So you have to look at the amount in relation to how big a change it is, and the size of the savings that need to be made,« says Søren Skydsgaard.

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But would you understand it if people wondered why so much money has been spent on consultant assistance?

»If you don’t understand – and this is what you can do now – the actual context, then it would be perfectly fair to question the cost. But the amounts we are talking about here are large. The DKK 300 million in annual savings is also large. And that is why the investment is all the larger. The investment is to be seen in relation to the ambition. And to the University of Copenhagen’s major requirement that things are done properly.«

The administration reform proposal was on the agenda for the the Board meeting on UCPH 19 June, and was approved.

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