How an External Consultancy Can Help Local Government Overcome the Impact of Budget Constraints

Executive Summary

Many local governments struggle to meet their objectives due to budget constraints, and when they can’t meet their objectives, the welfare of their constituents suffer. Yet while many focus on trying to increase their budgets, this approach can be time-consuming and even ineffective. An alternative solution is to hire an external consultancy to apply lean and agile methodologies to help streamline processes and reduce waste. External consultants bring expertise and a wealth of experience to the challenges, which means that they can help establish lean, sustainable processes that free up existing labor and financial resources so organizations can “do more with less.”


Balancing budget and operations can be a challenge for any organization. Yet while a for-profit company has multiple strategies at its disposal in the events funds aren’t sufficient, local governments have to meet their responsibilities to their constituents while having fewer avenues to increase the amount of available funds.

In this white paper, we posit that budget constraints can have an adverse effect on local governments’ operations and explain how an external consultancy can help them overcome the impact of these constraints by creating lean, agile processes.

Local Governments Face Budget Challenges

Many local government agencies struggle with budget constraints that make it challenging for them to achieve their objectives. These budget constraints can be caused by a variety of reasons ranging from regional economic downturns to catastrophic weather events like floods, hurricanes and tornadoes. In addition, federal subsidies play an important role in overall budget health. In the coming years, for example, due to tax reform, both states and local governments can potentially lose a significant amount of revenue due to slashed federal funding and higher taxpayer deductions.[1]

Yet since states and local governments are directly responsible for the welfare of their constituents, it’s critical that they effectively continue operations. Without sufficient funding, this can be challenging, and in some cases even near impossible. Everything from public education to law enforcement to infrastructure can be affected by insufficient funding, ultimately resulting in an adverse impact on the lives of constituents.

Bringing in an External Consultancy Firm to Create Lean, Agile Processes

While it is logical to first and foremost focus on finding ways to increase budgets, this solution is highly time consuming. Recovering from economic downturns and catastrophic events takes years. Note that even a severe storm or a bad winter with heavy snowfall can unexpectedly eat deep into a city’s coffers. For example, in Boston during the winter of 2014-2015, snow removal already exceeded $35 million by mid-February, although the allotted amount for the entire winter was only $18.5 million.[2]

In addition, applying for federal subsidies can take time — and it doesn’t come with a guarantee that those subsidies will be granted. Finally, any increases to local taxation, though theoretically a way to increase available funds, involves a multi-year process that comes under strict review before the increases are rejected or accepted.

It’s important to understand that emphasizing the need to increase budgets as the only way to increase available funds can be limited in perspective. While receiving more money might seem like the route of least resistance, there’s also an alternative solution: Bringing in an external consultancy firm to advise on the creation of lean, agile processes.

Lean and agile are two distinct methodologies that are designed to make organizations more efficient. Lean originated in Toyota’s factories in Japan after World War II and, at its most basic, aims to eliminate waste by the continuous optimization of operations by means of a five-step thought process.[3] This methodology removes unnecessary steps and tightens the sequence of value-creating steps in order to streamline processes. Agile is a methodology, founded in a set of principles and values, that enables rapid and easy adjustment to changing circumstances and needs in order to foster innovation. With agile methodology, effective response to change is more important than adhering to a set plan or process. [4]

In many instances, local government has heavily bureaucratic processes that are both extensive and time-consuming. When lean and agile methodologies are applied to these existing processes, new, far more streamlined ones can emerge that are just as — if not more — efficient, yet far less costly in terms of labor and other resources. And by freeing up existing resources, it becomes possible to do more with the same amount of funds.

While it is certainly possible to streamline processes in this manner if the knowledge to do this exists in-house, there are several reasons for hiring an external consultancy firm for this purpose.

First, consultants have an outsider’s perspective of the organization and bring a fresh view to the challenges. They might pinpoint inefficiencies that people who work there every day don’t notice or don’t recognize. Moreover, for employees who are assimilated into a company culture, it’s often too large or intimidating a step to challenge existing processes even if they do notice them, because the truth is that questioning “the way we do things” is not always appreciated.

Second, external consultants have a much broader frame of reference than in-house employees because it’s their daily job to optimize processes. They bring a vast amount of experience to the table because they’ve seen so many challenges in other organizations — and have created effective solutions accordingly.

Third, in best-case scenarios, the creative synergy between the consultancy firm and the client’s employees can lead to more innovative solutions to process inefficiencies. Consultants need to understand the how and the why in order to optimize processes. To do this, they need to interact closely with the employees of the local government. This kind of collaboration can spark much-needed creativity.

Business Benefits

Bringing in an external consultancy firm to help establish lean, agile processes offers several benefits. It prevents local governments from having to divert much-needed internal labor resources from their main responsibilities, given that the bulk of the initial GAP assessment and the development of the strategy will be performed by the consultancy.

In addition, by working to do more with less within the status quo of the budget, the organization doesn’t continuously have to search for more ways to find funds. In other words, there’s less pressure to obtain federal subsidies and other forms of funding, not to mention consider measures such as cutting public funding. This enables the organization to focus its labor and financial resources on its core activities.


Although it might seem counterintuitive to hire an external consultancy firm to help overcome the impact of budget constraints, it is, in fact, nothing short of a good investment that can deliver a significant ROI. The reason is that a reputable agency will possess the expertise regarding lean and agile and will be able to offer the innovation potential that’s needed to truly streamline processes in an effective and sustainable manner. And when this is achieved, any resources spent on external consultants will benefit not only the organization, but ultimately also the welfare of the local government’s constituents.







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