The Multiplier as an Indicator of Cost Competitiveness

The multiplier is one possible measure of cost competitiveness between consulting firms. Assuming a particular project requires a fixed number of different kinds of personnel and that raw salaries are similar between firms, the smaller the multiplier of a given firm the less charge there will be to the client and the more eost-competitive the firm will be. Accordingly, potential clients often ask consulting firms for their multiplier and most consulting firms try to keep their multiplier as low as possible. 

However, consider further the assumptions that must be met before a multiplier comparison is useful. Each firm is assumed to require about the same number of hours of various types of professional personnel for a given project and compensation rates for various levels of personnel are essentially the same among the consulting firms. ituations may readily occur which invalidate these assumptions and, therefore, eliminate or greatly reduce the value of comparing multipliers. For example  

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