HomeMy WebLinkAboutStaff Report 2606-6480CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, October 05, 2026
Council Chambers & Hybrid
5:30 PM
Agenda Item
3.Best Practices in Managing Consultant Services Staff Presentation
City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: City Manager
Meeting Date: October 5, 2026
Report #:2606-6480
TITLE
Best Practices in Managing Consultant Services
RECOMMENDATION
City Council discussion of ongoing work to ensure high quality and valuable services developed
through the engagement of professional consultants.
EXECUTIVE SUMMARY
The City of Palo Alto relies on professional consultants to supplement staff capacity, provide
specialized expertise, and advance priority projects and services. Consultants support important
City work, including capital improvement planning and delivery, specialized planning and
permitting services, recreation and arts programming, and community studies and plans.
The City’s goal is to ensure that each engagement is properly scoped, efficiently managed,
aligned with City initiatives, and thoroughly evaluated on its outcomes. Strong consultant
management practices help the City efficiently use public resources while preserving staff
capacity to provide local knowledge, policy direction, community engagement, and
accountability.
Since early 2025, staff has reviewed and developed best practices in this field as part of the
2026 Council Priorities workplan. An interdepartmental working group has prepared an internal
Best Practices in Managing Consultant Services guide, included as Attachment A. The guide is
intended to support staff from the initial decision to use a consultant through project closeout
and performance evaluation.
This work has already generated benefits as its principles are being incorporated into recent
and ongoing consultant projects. The next phase of work will focus on broader implementation,
including staff training, pilot tools, and feedback to refine the guide.
BACKGROUND
The City of Palo Alto regularly engages professional consultants for a wide variety of functions.
These include, for example:
Planning, architectural, engineering, and construction management for capital
improvement projects;
Specialized and supplemental staffing for land use planning, processing entitlement
applications, building permitting and inspection, as well as other operations;
Specialized recreation, arts, and enrichment programming for community classes,
summer camps, and other public services;
Development of studies and plans on a broad range of topics in areas such as
economic development, transportation, and facilities planning.
The use of consultants is critical to the City’s ability to produce the volume, pace, and range of
services expected and required by the community. Consultants often provide unique skills and
experience on topics of importance, such as the City’s Auditor Baker-Tilly, Independent Police
Auditor OIR Group, and youth suicide prevention specialist the JED Foundation. At the same
time, in order to ensure that consultant engagements produce work products that provide the
value expected it is critical that expectations are set appropriately and that services provided
meet these expectations.
The City has focused attention on this effort since early 2025. At its May 28, 2025 meeting, the
Policy and Services Committee was presented with a workplan and expressed support for
improving transparency, staff capacity, and consistency in consultant use, while noting
concerns about overreliance and safeguarding community trust. The Committee discussed the
interplay of cost and expertise in long-term staff development, having clearer expectations for
consultants, and maintaining ongoing public engagement. At the October 22, 2025 City Council
meeting, City Council raised areas of interest such as when work should be performed by
consultants versus City staff, how to account for long-term staffing obligations when comparing
alternatives, opportunities to use local and community expertise where appropriate, consultant
responsiveness to Council and community input, the availability of future-year consultant data,
and the need for a more consistent approach to evaluating consultant performance.
The ongoing work has continued forward as one of the 2026 Council Priorities workplan. At its
May 5, 2026 meeting, the Finance Committee discussed consultant services in the context of
government efficiency, productivity, staffing impacts, transparency, and the importance of
being able to measure impacts going forward.
As previously reported to the City Council, much of this work is a leading practice. While within
the local government management profession there is a wealth of established practices on
topics such as procurement and contract management, topics such as ensuring value in
products and building organizational capacity are seldomly addressed in the comprehensive
manner described here.
Purpose of the Consultant Management Review
The overarching goal is to clarify expectations around consultant management and reinforce
practices that ensure effective products, meet organizational needs, and support professional
growth among the City’s professional staff while also maintaining flexibility for the range of
consultant engagements. This effort establishes clear, practical expectations for the City staff
that engage and manage consultant services. The work helps the City:
Make thoughtful decisions about whether consultant services are needed;
Develop clear scopes, schedules, and expected deliverables;
Maintain appropriate City oversight while respecting consultants’ professional expertise
and independence;
Ensure consultants understand Palo Alto’s local context, policy direction, and
community expectations;
Identify and address risks or performance concerns early;
Evaluate completed work and apply lessons learned to future engagements; and
Consider whether recurring consultant work may be more effectively performed by City
staff over time.
The focus is primarily on professional-service engagements for studies, plans, analyses, and
similar work products. These engagements require active project management because the
quality and usefulness of the final product depend on both consultant expertise and effective
management of the engagement by the City.
The staff work completed in keeping with these goals has involved an inter-departmental team
that has examined the lifecycle of consultant engagements from initial concept and budgeting
to project management, issues resolution, and closeout and evaluation. Attachment A, the Best
Practices in Managing Consultant Services Guide, reflects the primary work product of this
effort.
City Auditor Baker-Tilly also contributed to this work, and provided the interdepartmental team
with an advisory report on best practices related to sourcing and contract administration. Their
report is provided as Attachment B.
The Guide is organized along the typical steps involved in consultant engagement, including:
Assessing the need for consultant services;
Developing a clear scope of work and community engagement approach;
Selecting the appropriate service provider;
Establishing project roles, communication practices, and performance expectations;
Managing scope, schedule, budget, risks, and deliverables;
Addressing performance concerns or changes in project direction; and
Closing out projects and evaluating consultant performance.
TABLE 1
Key Stakeholders at Various Points in Project Lifecycle
Phase Key Stakeholders
Precursors to Outsourcing
As part of the annual budget development process, staff assesses whether funds might
be more effectively allocated to consultant services or hiring in-house staff.
Through the City Council’s annual priority setting, projects (“objectives”) requiring
consultant assistance will be identified to enable the City Council to select its priorities
with this awareness.
Additional internal approvals are required for large task orders issued under master
agreements.
The City’s financial tracking system has now been coded to enable ongoing tracking of
consultant services expenditures citywide. Additional system enhancements may be
implemented in the future for reporting needs.
Guidance is provided for staff to develop scopes of service that reinforce clarity and
performance measurement.
The role of City staff relative to the consultant is to be clear. In particular, the scope
should reflect how staff will bring local knowledge (possessed by staff or other
stakeholders) to inform the work.
Scopes of services and roles should align with the City long-term goals for building
internal expertise.
The potential effect of Artificial Intelligence (AI) will be considered when defining the
scope of services.
Major projects may involve City Council review of scopes of services.
Community engagement is a central element of virtually all studies and planning efforts
in Palo Alto. It is therefore important to ensure the consultant is aware of the nature
and extent of community engagement expected.
Department staff consult with the City Manager’s Office communications staff to
develop community engagement plans, updated as projects proceed.
Staff take primary responsibility for identifying key stakeholders and arranging for
meeting venues and logistics. Online engagement tools are also coordinated with the
City Manager’s Office.
Palo Alto is uniquely fortunate to have residents and other community stakeholders
with specific expertise and interest in assisting on related initiatives. Where unique
resident involvement might apply, staff will consult with the City Manager’s Office to
structure involvement, with the goal of leveraging resident expertise while ensuring
objective analysis.
Selecting the Service Provider
In selecting consultants, departments consider not only cost but also expertise,
alignment with project needs, and prior performance.
The process emphasizes open and fair opportunities to submit proposals that are
objectively evaluated and a selection based on the best interests of the City.
For efficiency, the City may procure services by utilizing the competitive bidding process
undertaken by another government entity or a joint purchase agreement.
Circumstances can arise that cause consideration of a change in direction, such as cost
proposals that exceed budget, and a lack of strong proposals. Department management
and the City Manager’s Office evaluate options and determine appropriate steps
forward.
Contract terms specify processes such as overall schedules, progress payments, and
penalties for non-performance. Project managers and departments ensure that
consultant payments align with project milestones, to ensure accountability and timely
progress.
Performance Management and Quality Control
At project kick-off, an important first step in the successful completion of a consultant
engagement is establishing primary points of contact on both the City’s and consultant’s
teams, and reviewing the scope and key understandings needed for the project. Regular
coordination meetings are set.
Project managers establish the City’s expectation for originality in work products and
ensure against the appearance of repackaged materials from prior engagements. In the
case that deliverables appear insufficiently customized, staff will request revision before
accepting the product.
While projects are intended to proceed smoothly, it is common for issues to arise.
Escalation paths provide important secondary points of contact if needed due to
disagreements or performance concerns from either the City or consultant.
Managing High-Visibility and Controversial Projects
The City hires consultants to take on complex and contentious projects, to leverage their
expertise that staff do not have, to provide objective and expert advice. The projects
provide an outlet for residents and other stakeholders to express their advocacy,
sometimes deeply emotionally expressed. Consultants often absorb a portion of that
pressure, allowing staff to continue to maintain productive relationships with
stakeholders they must work with on other issues.
A two-step process for City Council, Boards and Commissions review may use study
sessions or committee hearings prior to action, in order to
• Provide structured opportunities for technical clarifications and response
from the consultant and staff, and
• allow the body to deliberate on policy direction after establishing a shared
baseline of understanding
A structured approach to capturing comments and documenting responses to
comments may be incorporated into the consultant scope of services.
In most circumstances staff must remain the primary interface with the community.
Adequate time for stakeholder feedback, responses to this feedback, and adjustments
to next steps should be anticipated and built into schedules.
Closeout and Evaluation
Project closeout includes confirmation of objectives met, review of team performance,
and feedback to consultants. A standardized evaluation form ensures consistent
reflection and improvement.
When appropriate, a lessons-learned note should identify process improvements for
internal teams and should be indexed so that future scopes and evaluations can
reference it.
Next Steps
This work has already generated benefits as its principles are being incorporated into recent
and ongoing consultant projects. Examples include the synthetic turf study, the South Palo Alto
pedestrian/cycling connectivity, and railroad quiet zone project development. In addition, as
part of the current budget, staffing in the Office of Transportation was augmented in order to
reduce reliance on consultant services.
Staff will continue implementation of the best practices through the following actions:
Distribute the Best Practices guide;
Develop and pilot practical templates and checklists for project managers;
Provide training in coordination with the Administrative Services Department, City
Attorney’s Office, Human Resources, and relevant departments;
Seek feedback from consultants on practices that support successful engagements;
Incorporate lessons learned from pilot projects and staff feedback; and
Continue to integrate review of consultant services into the annual budget development
process.
Training on these best practices must build on current project management training, including
any existing certifications, modules, or external programs used to develop project managers. An
assessment of current training practices across departments is currently under way. Based on
this assessment, Human Resources staff are leading the development of a modular, audience-
appropriate training program that incorporates applicable best practices and may include
certification. Initial modules are expected to address foundational project planning and pre-
engagement activities, with separate modules for financial and relationship management
elements. Staff aim to implement citywide training by the end of FY2027.
FISCAL/RESOURCE IMPACT
The activities described in this report are being conducted within existing City resources. No
consultants were hired for the completion of this project.
STAKEHOLDER ENGAGEMENT
Teams that work closely with consultant management were asked to give feedback on the
consultant review work. As reflected in the workplan, engagement of City staff and the
consultant community is an integral part of ensuring this work is grounded in current practice
and results in advancement of City practices.
ENVIRONMENTAL REVIEW
The work is not a project as defined in the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A: Best Practices in Managing Consultant Services
Attachment B: Best Practices in Consultant Management, Baker Tilly Report
APPROVED BY:
Ed Shikada, City Manager
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Table of Contents
1. Introduction ................................................................................................................... 4
2. Purpose and Overall Approach ........................................................................................ 4
3. Precursors to Outsourcing ............................................................................................... 5
3.A Annual Budget Cycle Review .............................................................................................. 5
3.B Initiating New and Unbudgeted Projects ........................................................................... 6
3.C Financial Tracking of Contracts ........................................................................................... 7
4. The Outsourcing Process ................................................................................................. 7
4.A Developing the RFP Scope of Services ................................................................................ 7
4.B Selection of Contract Terms and Conditions ...................................................................... 9
4.C Scoping Community Engagement ..................................................................................... 10
4.D Finalizing the Scope of Services ........................................................................................ 11
4.E Service Provider Selection and Potential Efficiencies ....................................................... 11
4.F Handling Inadequate Proposals ........................................................................................ 12
4.G Finalizing the Scope of Services and Contract .................................................................. 12
5. Contract Management .................................................................................................. 13
5.A Budget Adherence and Invoicing ...................................................................................... 13
5.B Performance Management, Quality Control, and Timeliness .......................................... 13
5.C Managing High-Visibility and Controversial Projects........................................................ 14
5.D Stakeholder Engagement .................................................................................................. 16
5.E Closeout and Evaluation ................................................................................................... 16
6. Appendices *Finalization of appendices is currently in progress and therefore not
included* ............................................................................................................................ 16
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1. Introduction
This document provides a guide for City of Palo Alto staff on methods to ensure effective and
valuable engagement with professional consultants. It is intended to provide a comprehensive
guide and continuous improvement approach to decision-making and staff responsibilities for
budgeting, contracting, relationship and project management, and interface with community
members. This guide focuses specifically on consultants engaged in the preparation of studies,
plans, and similar types of services.
This resource provides citywide guidance on best practices, and the interdepartmental team
that contributed to its development can be appropriately proud of setting a new standard in
municipal management. It should be recognized, however, that even a well-executed project
can sometimes experience a negative outcome. Misaligned stakeholder expectations, shifting
goals, and community division are some of the factors that could lead to poorly received work
products. In addition, not every project requires extensive management. City staff are
responsible for balancing competing needs, so the tools and practices reflected in this guide
should be considered resources where needed rather than a performance standard. Individual
departments may also provide more specific direction reflecting specialized work that
supplement the guidance provided here.
2. Purpose and Overall Approach
The purpose of this guide is to set clear guidance and expectations in consultant engagement
while maintaining flexibility for specific situations and promoting professional growth. The
effective use of consultant services requires the involvement of organizational practices,
expectations, and responsibilities of City project managers, management, and others involved.
Overall, the practices and tools provided through this guide reflect the following key principles:
● Contracting is a partnership, requiring engagement and diligence from both the City and
consultants (service providers).
● Service providers bring subject matter experience, technical expertise, frequently
professional licenses, and proprietary tools.
● Staff bring local knowledge, including, an understanding of community expectations,
sources of available information, City resources, Council priorities, and established
practices. While consultants may perform specific tasks, the City retains ownership,
accountability, and informed oversight of the work and its outcomes.
● Balancing these perspectives requires engagement, skill, regular training, and
teamwork.
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Reflecting the common steps through which consultant projects are planned and implemented,
this guide focuses on enhancing organizational effectiveness and practices across the typical life
cycle of consultant engagements.
3. Precursors to Outsourcing
3.A Annual Budget Cycle Review
On an annual basis, the City Council has two primary touchpoints on overall consultant usage.
These are the annual budget adoption that occurs before the beginning of each fiscal year, and
the other is the annual priority setting that occurs at the beginning of each calendar year.
Budgeting for consultant services is typically handled through the annual budget process at an
aggregated level, with funding needs appropriated through each department’s Contractual
Services line item. Contractual Services currently includes all contract services, so professional
services are likely a subset of department line-item budgets and require specific review.
Alternatively, a special funding allocation may be made as a result of a grant or special City
Council action.
Each fiscal year, the Office of Management and Budget will issue guidance to departments on
budget development. Through each annual budget development process, Departments review
Contractual Services line items with the Budget Office and City Manager’s Off ice to (a) discuss
anticipated consultant projects and funding required, and (b) to determine whether fundings
would be better allocated toward hiring in-house staff to complete the required work on an
ongoing basis. The following considerations can guide this review:
a. Distinguishing Staffing/Augmentation and/both Technical/Subject Matter Experts:
Staffing augmentation contracts temporarily increase workforce capacity without
permanent hires. Technical services contracts allow the City to gain technical expertise
from firms or subject matter experts who have special skillsets, capabilities, or deep
knowledge in specific areas not available in-house. Both types of contracts allow the City
to respond efficiently to varying workload demands and specialized project
requirements. Lead departments should consult with the City Attorney’s Office and
Human Resources Department to ensure the terms of the staffing augmentation align
with the City's legal, labor, and operational requirements.
b. Ensuring Comprehensive Budget Estimates: Staff time required for project management,
oversight, and coordination must also be accounted for in workplans through FTE (full-
time equivalent) staff allocation and should reflect realistic estimates that incorporate
contingencies and additional services as needed. Absent specific estimates, staff time
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equal to 10-20% of anticipated consultant costs should be allocated for staff project
management. If not included in consultant costs, budgets must account for all applicable
resources required for anticipated projects such as technology licenses, office space,
and vehicles. Including administrative costs and timelines associated with outsourcing is
necessary for a comprehensive evaluation of trade-offs.
c. Balancing Consultant Services and In-House Staffing: Staff should evaluate where on-call
services might be more effective if converted to additional in-house staffing. This may
depend on skills required as well as the frequency of services required. Adding staff may
be justifiable when the resources involved are expected to be required for 3-5 years or
more. Where specialties may be needed, overall consultant costs may be reduced by
City staff handling administrative and other elements including community engagement.
The results of this evaluation will be integrated into the existing budget planning
workflow and discussed among departments, the Budget Office, and City Manager’s
Office in preparation of the annual proposed budget. Appendix A – Professional Services
Cost Evaluation provides the overview of the expected additions to the budget review.
The current approach to large contract budget appropriation is an overall review and
justification for the entire project. Future budget development will include evaluation of
the contract by each line-item.
d. Developing an Initial Scope: Large, complex, or high-risk projects can benefit from
development of an initial scope of work for department management and City
Manager’s Office (CMO) review. Similar to a budget justification, this would be a short
internal summary of the business need, desired outcomes, why consultant support is
needed, anticipated deliverables, and the expected roles of city staff versus the
consultant. Incorporating this step will help align expectations early, support budgeting
and staffing estimates, as well as result in a clearer, more focused final scope of work.
As referenced above, at the beginning of each calendar year the City Council annually sets
priorities for the upcoming year. As a part of this process, specific projects (or objectives) may
be identified that staff anticipates will require consultant assistance. In order to enable the City
Council to select priorities with awareness of consultant needs, staff will include this
information as part of the priority-setting process.
3.B Initiating New and Unbudgeted Projects
Consultant engagements may also be initiated outside the annual budget process, typically as a
result of City Council direction, involving budget amendments where needed. Where such
project assignments arise, departments should use the evaluation method described in Section
4.A to estimate staff allocation required for project management.
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At the start of each calendar year, the City Council sets priorities for the year. Given recent
increased interest in monitoring the use of consultants, staff will identify priority projects that
will likely involve consultants. This enables the City Council to consider this when determining
how many and which initiatives should be prioritized for the year.
3.C Financial Tracking of Contracts
Effective in 2026, all professional service engagements are assigned internal order number
“90240 - Professional Services” to individual contract requests. This practice will remain in
effect while SAP is the current system and will be updated as systems evolve. Staff will provide
the City Council a consolidated summary report semiannually to promote ongoing awareness
and decision-making.
Private development professional agreements will be excluded from reporting as this activity is
exempt from competitive solicitation requirements (Municipal Code Section 2.30.360 (h). These
agreements are funded wholly by private developers for private development related studies
and services. Community Services Department service contracts for specific individual’s unique
skills or creative output such as recreation instructors, art instructors and performers will also
be excluded from the reporting and Legal Services contracts that are exempt per PAMC
2.30.360(g).
Master agreements are consultant contracts established for “as needed” or “on-call” services,
where a contract is established without a specific scope of services . The City has used master
agreements as an efficient means of completing the procurement process in order to have one
or several consultants ready to start when specific projects are initiated. Task orders are then
issued to the consultant with a specific scope of services and budget. In order to ensure
consistent practices, all task orders valued at $100,000 or higher require City Manager
approval. This threshold will be periodically reviewed and subject to change (Appendix B – Task
Order Template).
4. The Outsourcing Process
4.A Developing the RFP Scope of Services
Once the decision to engage consultant services has been made, a scope of services must be
developed in order to conduct a Request for Proposals (RFP) or other solicitation. In the
infrequent case of a consultant being pre-selected, this section nonetheless provides guidance
for negotiating a scope of services that supports an effective outcome and staff meeting project
management responsibilities.
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The scope of services is a critical element of successful consultant engagement, as it provides
the “roadmap” of tasks and deliverables to be provided. It also represents a critical step at
which expectations of the products and services can be confirmed. Failure to adequately
anticipate these expectations can lead not only to unsuccessful outcomes, but also the need to
repeat steps and incur unnecessary costs.
Project managers should develop scopes that are outcomes-driven and reviewable, with
particular attention to the following:
a. Describe deliverables with measurable indicators of sufficiency.
b. Identify key milestones and timelines, including any critical deadlines.
c. Structure compensation to the completion of defined tasks.
d. Specify internal (“administrative”) reviews of draft deliverables where applicable,
including sufficient lead time.
e. Specifically address stakeholder engagement including public meetings (see Section
4.B4.B below).
f. Where workable, structure scopes to facilitate knowledge transfer through tactics such
as staff shadowing, co-facilitation, and training deliverables, especially for recurring
work.
g. Consider the role of intellectual property and Artificial Intelligence in the project with
clarity regarding ownership and access to work products following project completion .
It is common that scopes from prior contracts are used as a starting point. However, it is critical
that such drafts be updated for current circumstances and to address the issues above.
Staff may wish to consult peer agencies for examples and lessons learned. Staff may also
leverage the Scope Template Library (Appendix C), which includes examples demonstrating
effective project structure and risk allocation, and productive peer reviews received prior to
RFP issuance. If staff have examples of excellent work to contribute to the library, they may
contact the CMO coordinator to add them to the appendix SharePoint folder.
A key consideration in developing a scope of work is defining the role of City staff relative to the
consultant. In particular, the scope should reflect how staff will bring local knowledge
(possessed by staff or other stakeholders) to inform the work. Here are elements to consider in
defining the scope:
a. Identify prior work such as studies or plans that should be shared and reviewed with the
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consultant.
b. In addition to direct references, are there indirect but relevant recent events or
circumstances that the consultant should be aware of? Consider “onboarding”
meeting(s) between the consultant and key stakeholders early in the work to provide
the consultant with any needed context.
c. The scope of services should provide an initial outline of stakeholder engagement, to be
refined collaboratively with the consultant, as the City will typically have a better sense
than the consultant of community expectations and more effective communication
methods. This is described further in the next section.
d. Clearly identify expected products/deliverables, such as memos, reports, and plans,
including progress drafts. Also set expectations for City review of draft products and the
consultant’s responsibility to respond to comments, both in terms of timeframes as well
as the expected handling of feedback to the consultant. Scopes should articulate any
essential stakeholder touchpoints, and where applicable, how this feedback may affect
subsequent steps. The level of detail to be provided in deliverables (such as format and
analysis detail) should be specified at the outset to the extent applicable to the project.
e. The requested deliverables should be structured in a way that is easily translated to
contract sections. Task 1 should correspond to a similar label in the contract, and have
its pricing clearly marked, and so on. This is meant to minimize back and forth with
Purchasing and the consultant later in the process.
Artificial Intelligence (“AI”) is playing an evolving and increasing role in the workplace, and the
potential effect on the scope of service should be considered: Might some of the required work
be generated by AI and how will this be quality-checked? How would this affect the cost of the
required services? Questions such as these should be considered when developing the scope of
work. The City Attorney’s Office and Procurement staff have developed general disc losure
requirements to be incorporated into RFPs.
4.B Selection of Contract Terms and Conditions
Once a consultant is selected, the City and consultant must enter into a contract with the
consultant before work can begin and payment for services can be made. Project managers
should familiarize themselves with the contract terms and conditions that their consultants will
be required to meet. Pre-approved contract templates are available from Purchasing and can
be found in Appendix D. The template selected will depend on the type of engagement with the
consultant (e.g., professional services, IT services). The scope of services, timeline of
completion, and payment terms will be included as contract exhibits.
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The overall value of the contract will determine who has authority to approve the contract. In
addition, all contracts over $25,000 will need to be approved as to form by the City Attorney.
Consult with the City Attorney’s Office if any changes to the temp late are requested by the
consultant.
The determined scope of the project requires approval of the relevant department director or
their designee before proceeding.
4.C Scoping Community Engagement
Community engagement is a central element of virtually all studies and planning efforts in Palo
Alto. It is therefore important to ensure the consultant is aware of the nature and extent of
community engagement expected. Department staff should consult with the City Manager’s
Office communications staff to review the community engagement plan for a project. Project
managers should use the Project Coordination Plan Worksheet (Appendix E) to outline
anticipated community engagement efforts. Additional resources and training on community
engagement are under development.
Roles of the consultant and staff in community engagement should be carefully considered. In
general, staff should take the primary responsibility for identifying key stakeholders and
arranging for meeting venues and logistics. Any online engagement tools should be coordinated
with the City Manager’s Office communications staff.
Palo Alto is uniquely fortunate to have residents and other community stakeholders with
specific expertise and interest in volunteering to assist the City on related initiatives. Should
project managers encounter a situation in which unique resident involvement might apply, they
should consult with the City Manager’s Office to structure such involvement. The City’s goal
would be to leverage resident expertise to support engagement and project success while
ensuring objectivity and appropriate access to products in progress.
To ensure comprehensive notification of community stakeholders, project managers should
reference the developed Community Engagement Guide (Appendix F). It outlines standards for
what level of community engagement is required for different project types. Staff should
reference the training in community engagement strategies to develop a clear scope of work
that outlines project goals and anticipated levels of effort.
Engagement should be calibrated to decision points and led by City staff. Project managers
should define who needs to be informed, consulted, or asked to decide, and they should
schedule outreach at milestones where input will shape outcomes. Materials sho uld be
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accurate, accessible, and consistent with Council-adopted policies; consultants should support
creation and logistics while the City sets the message and remains the primary voice of the
project. The handling of stakeholder feedback should also be intentional, with responsibilities
assigned as appropriate to the consultant for documenting comments and responses to
comments.
4.D Finalizing the Scope of Services
Once drafted, project managers should consider the level of stakeholder engagement that
should be undertaken on the RFP itself prior to issuance. In some cases, a formal review up to
City Council approval of the scope of services may be warranted to ensure that the scope aligns
with expectations of the work product. If required approvals are uncertain, departments should
consult the City Manager’s Office.
4.E Service Provider Selection and Potential Efficiencies
Consultant selection should prioritize expertise, cost, and alignment with project objectives.
The selection process is managed by the Administrative Services Department Purchasing
Division, and references and training for staff to navigate this process are provided in the
Purchasing Manual (Appendix G). In particular, Chapter 8 – Professional Services provides
comprehensive guidance and procedures for the procurement of consultant services .
For efficiency, the City may also procure services by utilizing the competitive bidding process
undertaken by another government entity (known as Piggybacking) or through a joint purchase
agreement with one or more public agencies (Cooperative Purchasing).
Piggybacking: The City's utilization of the competitive solicitation process undertaken by
another public entity to award a contract for goods or services.
Cooperative (Joint) Purchasing (Co-op): Procuring goods or services through a regional or
national purchasing cooperative or by directly joining with one or more public agencies.
These alternative procurement methods are permissible, subject to the Municipal Code and
requirements including that the other government entity or Cooperative conducted a
competitive solicitation that are substantially the same as those required by the City, and that
process must have been substantially similar to the competitive bidding requirements; t he City
will realize overall value; and that the awarding agency is preferably governed by California law.
Before moving forward with a Piggybacking process or Cooperative agreement, the
Procurement Officer and/or the City Attorney’s Office must evaluate the timeliness and the
ability to negotiate additional pricing reductions or more favorable contract terms (e.g., liability,
indemnification, performance guarantees) beyond those in the original award.
Master Agreements: As noted previously in Section 3.C, the City may use Master Agreements
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to secure services. Master Agreements are consultant contracts established for “as-needed” or
“on-call” services, where a contract is established without a specific scope of services. This can
be an efficient means of completing the procurement process in order to have one or several
consultants ready to start when specific projects are initiated. Task orders are then issued to
the consultant with a specific scope of services and budget.
Project managers should consult with the Procurement team on the applicability of these
procurement options.
4.F Handling Inadequate Proposals
At various points in the consultant selection process, circumstances can arise that warrant a
change in direction. Project Managers should evaluate these circumstances and take
appropriate action to balance tensions between completing tasks and reconsidering the path
forward. During the outsourcing process, some of the issues that can arise include:
• Whether budget allocations are sufficient to achieve project objectives;
• Whether consultant interest in a project is sufficient to generate competitive and
worthwhile proposals;
• Whether the project scope is sufficiently defined to allow consultants to prepare
responsive proposals;
• Whether significant changes in project priorities, funding, schedule, or other
requirements have occurred since the solicitation was developed;
• Whether the proposals received demonstrate the qualifications, experience, or technical
approach necessary for successful project completion.
4.G Finalizing the Scope of Services and Contract
Following selection, the selected proposal is translated into the final scope of services attached
to the consultant’s contract. For simple projects this could be the consultant’s proposal as
submitted. For more complex projects, however, staff will discuss and finalize the scope of
services with the consultant. This provides and opportunity to confirm that the final scope of
services addresses:
a. Key elements described in Section 4.D, such as deliverables and progress payments;
b. Project staffing and key personnel;
c. Confirm the expected value of deliverables relative to cost, with an understanding of the
consultant’s cost to produce the needed work versus work produced previously for
other clients as well as AI-generated products;
d. Confirm community meetings and other engagement, boards and commission reviews,
council meetings;
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e. Comparison of costs relative to other similar work, using both internal and external
references.
5. Contract Management
Effective contract management requires clear and mutually reinforced alignment between
milestones, deliverables, payments, and other contract terms.
5.A Budget Adherence and Invoicing
The handling of invoices is an integral part of the client-consultant relationship. Progress
payments demonstrate the City’s satisfaction with consultant work, consistent with the scope
of services and compliance with agreed-upon terms. Project managers should verify invoice
consistency with the following:
a. Payments for the invoiced period (e.g. monthly) should be consistent with progress
toward deliverables. This should be confirmed quantitatively if provided for in
contract terms, or qualitatively if not.
b. Project managers should reconcile invoices with contract milestones, verify hourly
rates, and maintain a concise change log that explains scope and budget
adjustments.
c. Expiration checks should be calendared, and amendments initiated early to prevent
service gaps.
d. Project managers should also track payments to ensure timely payment of invoices.
e. Ensure any new tasks are properly approved before authorizing work to proceed.
f. At the department level, shared dashboards should show contract value, burn rates,
pending invoices, and critical dates.
One of the leading causes of increased consultant costs occurs through the inconsistent
handling of change orders, amendments, and additional work. The City’s Purchasing Manual
(Appendix G) defines how to properly organize and execute these auxiliary steps that can
become necessary for project success. The Public Works Consultant Management Guide
(Appendix H) outlines things to look out for and contingencies to manage.
Contract Management Training Resources and Templates are provided in Appendix I. Invoice
and Payment Tracking Tools are provided in Appendix J.
5.B Performance Management, Quality Control, and Timeliness
Performance management refers to the activities involved in ensuring quality deliverables and
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timeliness. Expectations should be measurable and reinforced in both the scope and working
cadence.
The project kick-off meeting is an important first step in the successful completion of a
consultant engagement. This meeting should include the primary points of contact on both the
City’s and consultants’ teams and review the scope and key understandings needed for the
project. See Kick-off Meeting Agenda Template (Appendix K). Among the topics to be covered
are:
a. Review scope of services, schedule, and deliverables as well as roles, responsibilities,
and expectations. The RACI (Responsible, Accountable, Consulted, Informed) matrix is
one such method for clarifying task ownership by mapping each project task to a team
role to reduce redundancies and unclaimed responsibilities.
b. Discussion of escalation paths - who to contact for inadequate responsiveness, delays in
projects and performance concerns. Establish standing meetings or other means of
progress coordination.
c. Documentation responsibilities, including agendas and meeting notes .
d. Lead time and turnaround expectations for scheduling meetings, review of deliverables.
e. Discussion of any key contract terms, if needed.
Project managers should ensure that consultant work products are tailored to the City’s specific
project, policy context, and stakeholder conditions. Project managers should establish the City’s
expectation for originality in work products and ensure against the appearance of repackaged
materials from prior engagements. In the case that deliverables appear insufficiently
customized, the project manager should request revision before accepting the product.
While projects are intended to proceed smoothly, it is common for issues to arise. It is,
therefore, important for protocols to be in place and proactive management to address issues
before they threaten successful and timely project completion. Escalation paths provide
important secondary points of contact if needed due to disagreements or performance
concerns from either the City or consultant. Escalation paths may also be reinforced
contractually, including implications for delays in the case of time-sensitive projects. While
strict enforcement can be challenging in a collaborative environment, contract terms can
reinforce expectations when needed. See example letters and guides for escalating inadequate
consultant performance in Appendix L.
5.C Managing High-Visibility and Controversial Projects
A key challenge that can arise in consultant engagements is how the work can proceed through
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projects that involve a high level of community scrutiny or controversy. This can range from
consultant-staff disagreements involving professional differences to public criticism of the work
that can become personal in nature.
The City hires consultants to take on complex and contentious projects, to leverage their
expertise that staff do not have, to provide objective and expert advice. The projects provide an
outlet for residents and other stakeholders to express their advocacy, sometimes deeply
emotionally expressed. Consultants often absorb a portion of that pressure, allowing staff to
continue to maintain productive relationships with stakeholders they must work with on other
issues.
To help navigate these dynamics, the following practices are particularly important:
a. Set expectations early in the engagement for quality of deliverables and responsiveness
to issues as they arise.
b. Maintain regular progress meetings involving management from both the consultant
and City, with meeting summaries and action items distributed for broader awareness
and aligned goals.
c. Progress payments are linked to acceptance of deliverables, as well as payment
turnaround times monitored.
d. Interdepartmental review, including CMO as well as any departments with relevant
expertise are scheduled in advance to avoid delays. Project managers should consult
with CMO staff to review applicability.
e. Consider a two-step process for City Council, Boards and Commissions using study
sessions or committee hearings prior to action, in order to
• Provide structured opportunities for technical clarifications and response from
the consultant and staff, and
• allow the body to deliberate on policy direction after establishing a shared
baseline of understanding
f. Structure the handling of public feedback Consider public comment period on draft
products to ensure transparent community review. Particular attention should be paid
to handling of comments received and other stakeholder feedback, including City
Council feedback received through study sessions as well as commissions and
community members. As applicable, a structured approach to capturing comments and
documenting responses to comments should be incorporated into the consultant scope
of services.
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5.D Stakeholder Engagement
When consultant projects involve stakeholder engagement, in most circumstances staff must
remain the primary interface with the community. Adequate time for stakeholder feedback,
responses to this feedback, and adjustments to next steps should be anticipated and built into
schedules.
Stakeholder engagement should proceed as described in the Project Coordination Plan
Worksheet (Appendix E) referenced in Section 4.B. Should issues arise that require variance
from this plan, project managers and department management should determine whether
revising the worksheet would be prudent to support project completion. Approaches and
methods that the City uses for community engagement are broad and tailored to the audience,
type of input sought, and timing available to gain the feedback to help inform decision -making.
5.E Closeout and Evaluation
Project closeout should include confirmation of objectives met, review of team performance,
and feedback to consultants. A standardized evaluation form ensures consistent reflection and
improvement. This could additionally include a periodic meeting with key city staff project
participants to develop lessons learned for continual training for subsequent projects.
Closeout should confirm delivery, capture learning, and inform future selections. Staff should
verify that all deliverables are accepted, files are archived to the designated repository, and
intellectual property and data handoffs are completed. A short performance evaluation should
record quality, timeliness, collaboration, and budget stewardship and should be shared with the
consultant along with any constructive feedback (Appendix M – Consultant
Completion/Evaluation Template). When appropriate, a lessons-learned note should identify
process improvements for internal teams and should be indexed so that future scopes and
evaluations can reference it.
6. Appendices *Finalization of appendices is currently in progress and therefore not included*
A. Professional Services Cost Evaluation
B. Task Order Template
C. Scope Template Library
D. Purchasing Contract Templates
E. Project Coordination Plan Worksheet
F. Community Engagement Guide
G. Purchasing Manual
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H. Public Works Consultant Management Guide
I. Contract Management Training Resources
J. Invoice and Payment Tracking Tools
K. Kickoff Meeting Agenda Template
L. Sample Consultant Performance Escalation Letter
M. Consultant Completion/Evaluation Template
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City of Palo Alto
Best Practices in
Consultant Management
December 8, 2025
ATTACHMENT B: BEST PRACTICES IN CONSULTANT MANAGEMENT
2
Best Practices in Consultant Management
•Comprehensive City study currently underway to ensure high quality
services are delivered through the engagement of professional
consultants
•City study extends beyond procurement and contract management
processes for a more wholistic approach
o Strategically and flexibly leverage contracted consultants to perform studies to
address priorities while building organizational capacity
•Given a dearth of available best practice information in this area, Palo
Alto’s work is leading edge
•Baker Tilly analysis meant to augment City study by recommending
enhancements to certain aspects of the consultant management life
cycle
3
Palo Alto Major Area of Consultant Focus
•Professional services related to studies, plans, and similar
scopes of work
o Majority of Council priority objectives rely on consulting services to
produce these studies
o Most work produced in this area requires specialized local
knowledge and robust community engagement
o Many of the studies require expertise beyond that of in-house staff
o Staff’s local knowledge and skill in managing contracts are essential
components to ensure success in effective consultant management
4
Palo Alto Consultant Engagement Process and Areas for Reinforcement (October 22, 2025, Report 2507-4924)
Outsourcing
Precursors
Decision to
Outsource
Determine
Scope of
Services
Community
Engagement
Approach
Service Provider
Selection
Managing
Contingencies
Communication
and
Collaboration
Contract
Management
Performance
Management
Risk
Management
Closeout and
Evaluation
Baker Tilly Areas of Focus, Reframed (Life Cycle Phases)
•Planning and Solicitation
o Determination of solicitation method (request for proposals or
qualifications)
o Scope of service development, including approach to community
engagement
o Strategic, targeted service provider selection
o Effective scope and fee discussions and negotiation of mutually
agreeable terms and conditions
•Contract Administration and Management
o Facilitated communication and collaboration
o Contract closeout and evaluation
Professional services related to studies, plans, and similar scopes of work: Planning and solicitation phases
Recommendation 1: Leverage the use of prequalification programs to create a stable of consultants and subconsultants.
•Can include requirements for local knowledge
•Can be based on professional service specialty such as strategic planning or economic/fiscal analysis
•Can include consultant, sub-consultant pairings as a submittal option
•Can focus on area/degree of specialization such as community engagement
•Selection should be based on demonstrated competence, work history, etc.
•Can include negotiated hourly rates
Local
Knowledge
Professional
Service
Specialty
Professional
Service Sub-
specialty
Area of
Specialization
(Community
Engagement)
Professional services related to studies, plans, and similar scopes of work: Planning and solicitation phases
Recommendation 2: Use best practice procurement tools to develop strategic relationships with consultants.
•Can incorporate aspects of strategic plan goals and objectives (Strategic Procurement Planning )
•Can include formal processes to identify and contract with consultants based on strategic, longer-term relationships (Supplier Relationship Management)
•Can include supplier diversity and sustainability goals
•Can incorporate elements of scope/opportunities for staff to participate in community engagement facilitation or other tasks to help build inhouse capacity, knowledge and knowhow
Professional services related to studies, plans, and similar scopes of work: Planning and solicitation phases
Recommendation 3: Use a
consistent task / milestone /
deliverable-based template
approach that clearly ties City’s
acceptance of task completion
to progress payments.
Recommendation 4: Ensure that
city-generated scopes of work
are consistently used in
consulting contracts.
Scope Item(s)Cost Proposal Alignment
Task 2: Community Engagement Cost of Task 2:
$25,000
Subtask 2a:
Conduct one community workshop
Cost of subtask 2a:
$7,500
Deliverable(s):
1.Workshop agenda materials
2.Memorandum of workshop
results
Review and Accept Deliverables:
A.Review draft memo of workshop
results and finalize
B.Accept final memo and
authorize payment
Subtask 2b:
Conduct one community survey
Cost of subtask 2b:
$17,500
Deliverable(s):
1.Survey
2.Analysis of survey results and
associated takeaways
Review and Accept Deliverables:
A.Review draft survey and survey
results and finalize
B.Accept final analysis of survey
results and authorize payment
Professional services related to studies, plans, and similar scopes of work: Planning and solicitation phases
Recommendation 5: Incorporate mutually
agreeable terms and conditions for resolving
professional disagreements or mediating disputes
in consultant contracts.
•Should discuss expectations during contract
negotiations
•Can include techniques such as Alternative
Dispute Resolution (ADR)
Professional services related to studies, plans, and similar scopes of work: Contract administration and management
Recommendation 6: Establish a regular meeting cadence with the
consulting team’s project manager to facilitate efficient project completion
and enhance collaboration and clarity in communication.
•Should include short prescheduled check-in meetings every other week
to discuss project/deliverable status, budget, challenges, and consultant
performance
Professional services related to studies, plans, and similar scopes of work: Contract administration and management
Recommendation 7: Implement processes and
procedures to evaluate consultant performance.
•Should include performance-based discussions
during engagements
•Can include a structured framework, i.e., a
balanced scorecard approach
•Can incorporate community feedback
October 2026 www.paloalto.gov
Best Practices in Managing Consultant Services
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October 2026 2
PURPOSE
Discussion of ongoing work to ensure high quality and valuable services
developed through the engagement of professional consultants:
•Review status of ongoing work
•Reflect on path forward
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October 2026 3
OVERVIEW
•Since early 2025, staff has reviewed and developed best practices to clarify
expectations for consultant management and reinforce practices that
ensure effective products and meet organizational needs.
•Identify strengths and challenges in current processes, recognizing effective
practices already in place.
•Improve consistency, oversight, and collaboration with consultants.
•Position the City to lead on innovative, accountable consultant
management.
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October 2026 4
Initial Assessment: Interviews and surveys completed across city departments
Budget Development Integration: Consultant expenditures now systematically
reviewed during FY 2026 budget cycle and going forward
Practice Improvements: Best-practices being reviewed and tools being
developed; City Auditor’s Office also reviewed best practices
Working Group: Cross-departmental staff engaged in identifying and developing
best practices resources
Best Practices Guide: Primary resource for staff for all aspects of professional
services consultant management
PROGRESS TO DATE
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October 2026 5
•Precursors to Outsourcing
•The Outsourcing Process
•Determining a Scope of Services
•Scoping Community Engagement
•Selecting the Service Provider
•Managing Contingencies
•Contract Management
•Establishing Points of Contact,
Communication Expectations, and
Handling Professional Differences
•Performance Management and
Quality Control
•Risk Management
•Closeout and Evaluation
CONSULTANT ENGAGEMENT OVERVIEW
October 2026 6
KEY STAKEHOLDERS IN PROJECT LIFECYCLE
Phase Key Stakeholders
Annual Budget, Council Priority-Setting City Council, City Manager’s Office, Lead Department management
Financial Tracking Lead Departments, Administrative Services
Outsourcing Process Lead Departments, Administrative Services, Human Resources, City
Council (if applicable)
Performance Management, Quality Control, and
Timeliness
Lead Department management, City Manager’s Office
Managing High-Visibility and Controversial
Projects
Lead Department management, City Manager’s Office
Stakeholder Engagement Community members, Lead Department management, City Manager’s
Office, City Boards and Commissions, City Council
Closeout and Evaluation Lead Department management, City Attorney’s Office, Administrative
Services
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October 2026 7
BEST PRACTICES IN ACTION
Synthetic Turf Study
High-visibility project management and stakeholder engagement
Pedestrian/Cycling Connectivity
Structured oversight and cross-functional coordination
Railroad Quiet Zone
Clear roles, performance expectations, and issue resolution
Transportation Staffing
Reduced consultant reliance through targeted in-house capacity
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October 2026 8
•Discussion and review of ongoing work from City Council and public through this
study session to ensure perspectives have been reflected in the work
•Develop and implement a modular, audience-appropriate training program that
builds on current project management training
•Highlight options at annual budget, priority setting, and project-specific decision
points
•Solicit feedback from consultants on practice guide
•Ongoing reinforcement and refinement of practices
NEXT STEPS
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October 2026 9
•Contracting is a partnership
•Service providers bring subject matter experience, technical expertise, professional
licenses, and proprietary tools
•Staff bring local knowledge, including, an understanding of community expectations,
sources of available information, City resources, Council priorities, and established
practices. While consultants may perform specific tasks, the City retains ownership,
accountability, and informed oversight of the work and its outcomes
•Balancing these perspectives requires engagement, skill, regular training, and
teamwork
KEY PRINCIPLES