The outsourcing process

Outsourcing can be thought of in three distinct phases, each of which can be regarded as a project and in each of which risk management can be applied (Figure 15.2, Table 15.1) strategic analysis is undertaken in order to decide whether to outsource and, if so, what functions or services to outsource transition planning develops the plans needed to outsource and then to move between in-house and outsourced activities and implementation refers to the implementation of those plans and strategies....

Complex requirements and contracts

Size and complexity often go hand in hand, and there are often more than just scale effects. Particular care is needed in tender evaluation, contract negotiation and risk allocation, topics discussed in Chapters 13 and 14. Large outsourcing and PPP arrangements introduce additional risks, as discussed in Chapters 15 and 16. The mine waste management case discussed in Chapter 18 involved many technical, environmental and social risks with complex interrelationships and feedback links. In some...

Case study outsourcing of asset management

This case illustrates some of the functions that must be performed in managing a portfolio of geographically dispersed assets for a government agency (Figure 15.3). It was developed as part of an assessment of the skills the agency would need to acquire before it embarked on a market testing or outsourcing exercise. The nature of the specific assets is not really important similar analyses would apply to assets such as schools, hospitals, employment offices or fire stations. The link to central...

Specific risks associated with outsourcing

Loss of corporate knowledge and skills When an outsourcing initiative is implemented, staff undertaking the activities involved are likely to be redeployed elsewhere within the organization, transferred to the new service Table 15-3 Examples of process risks from a technical market testing activity Contractor Inability of contractor to achieve required performance levels performance A sub-contractor fails to perform to the required standard and capability Contractor does not have the necessary...