MGMT 6084 PROJECT MANAGEMENT

OUTSOURCING

MODULE
TWELVE

Prof. Mohamed Soliman

Project Management by Nick Youngson CC BY-SA 3.0 Alpha Stock Images

The following content was prepared by Prof Robert Brookes and reproduced
from Larson, Gray (2018) Project Management: The Managerial Process.
WHAT ARE WE GOING TO DO TODAY?

 Learn about the advantages and disadvantages of outsourcing project work.

 Learn about the elements of a request for proposal (RFP).
 Practice negotiations and discuss results.
 Best practices for outsourcing.
PROJECT MANAGEMENT

You are here!

WHAT IS OUTSOURCING?

Outsourcing
 The process of transferring of business functions or processes (e.g., customer
support, IT, accounting) to other, often foreign companies.
 Being applied to contracting significant chunks of project work.
 Being applied to the creation of new products and services.
OUTSOURCING EXAMPLES
Name some companies or industries that conduct outsourcing!

Source: Pixabay.com
OUTSOURCING – WHEN?

Advantages Disadvantages
 Cost reduction  Coordination breakdowns

 Faster project completion  Loss of control

 High level of expertise  Conflict

 Flexibility  Security issues

 Political hot potato

THE REQUEST FOR PROPOSAL (RFP)

Development Steps:
EVALUATING RFP’S

 It is not just about cost (but this is normally the most important).
 The more specific you are about deliverables, the more you can rely on lower
priced options. However there should be a ‘range’ – a price that is too good to
be true normally is.
 Use the same procedure you used in project selection (Module 2). Use a
weighted approach that uses quantitative and qualitative criteria.
 Have different qualified stakeholders conduct independent rankings – this will
help eliminate bias.
PARTNERING VERSUS THE TRADITIONAL
APPROACH
Partnering Approach
Mutual trust forms the basis for strong
working relationships.
Shared goals and objectives ensure
common direction.
Joint project team exists with
high level of interaction.
Open communications avoid misdirection
and bolster effective working
relationships.
Long-term commitment provides the
opportunity to attain continuous
improvement.
Traditional Approach
Suspicion and distrust; each party is wary of
the motives of the other.
Each party’s goals and objectives, while
similar, are geared to what is best for them.
Independent project teams; teams are
spatially separated with managed
interactions.
Communications are structured
and guarded.
Single project contracting is normal.
 PARTNERING VERSUS THE TRADITIONAL
APPROACH
Partnering Approach
Objective critique is geared to candid
assessment of performance.
Access to each other’s organization
resources is available.
Total company involvement requires
commitment from CEO to team
members.
Integration of administrative systems
equipment takes place.
Risk is shared jointly among the
partners, encouraging innovation and
continuous improvement.
Traditional Approach
Objectivity is limited due to fear of reprisal and
lack of continuous improvement opportunity.
Access is limited with structured procedures and
self-preservation
taking priority over total optimization.
Involvement is normally limited to project-level
personnel.
Duplication and/or translation takes place with
attendant costs and delays.
Risk is transferred to the other party.
OUTSOURCING – BEST PRACTICES

 Well-defined requirements and procedures

 Extensive training and team-building activities
 Well-established conflict management processes
in place
 Frequent review and status updates
 Co-location when needed
 Fair and incentive-laden contracts
 Long-term outsourcing relationships
THE PARTNERING CHARTER
PARTNERING SURVEY

You may need to work

with the partner again.

Successful project
completion means
there is a possibility of
building a long-term
relationship with the
partner – lowering risk
but potentially
increasing costs.
NEGOTIATION EXERCISE

Objective: Get the most points!

1. You have two poker chips – one is red and the other is blue.

2. Secretly select which colour you want to play, and then simultaneously reveal
your selections.

3. You are not allowed to speak with your partner, and you must STOP when you
finish round 4.
NEGOTIATION DISCUSSION

 How did you do with the point totals?

 What did you lead with (red or blue)?
 How did the ability to communicate change the outcomes?
 Did you feel differently in rounds 9 and 10?
 If you played to win in rounds 9 and 10, how do you think this would affect a
longer term partnership?
THE ART OF NEGOTIATION

Project management is NOT a contest.

 Everyone is on the same side—OURS.

 Everyone is bound by the success of the project.

 Everyone has to continue to work together.

Principled Negotiations
CUSTOMER SATISFACTION

Customer Satisfaction
 The negative effect of dissatisfied customers on a firm’s reputation is far
greater than the positive effect of satisfied customers.
 Every customer has a unique set of performance expectations and met-
performance perceptions.
 Satisfaction is a perceptual relationship:

Perceived performance
Expected performance
 Project managers must be skilled at managing both customer expectations
and perceptions.
BEST PRACTICES IN MANAGING CUSTOMER
RELATIONS

Managing Customer Expectations

 Don’t oversell the project; better to undersell.

 Develop a well-defined project scope statement

 Share significant problems and risks

 Keep everyone informed about the project’s progress

 Involve customers early in decisions about project development changes

 Handle customer relationships and problems in an expeditious, competent,

and professional manner
 Speak with one voice

 Speak the language of the customer

PROJECT ROLES, CHALLENGES, STRATEGIES
Project Manager Roles Challenges
Entrepreneur Navigate unfamiliar
surroundings
Politician Understand two diverse
cultures (parent and client
organization)
Friend Determine the important
relationships to build and
sustain outside the team
itself
Marketer Understand the strategic
objectives of the client
organization
Coach Motivate client team
members without formal
authority
Strategies
Use persuasion to influence
others
Align with the powerful
individuals
Identify common interests
and experiences to bridge
a friendship with the client
Align new ideas/proposals
with the strategic objectives
of the client organization
Provide challenging tasks
to build the skills of the team
members
SUMMARY

 Learn about the advantages and disadvantages of outsourcing project work.

 Learn about the elements of a request for proposal (RFP).
 Practice negotiations and discuss results.
 Best practices for outsourcing.
THINGS TO DO BETWEEN NOW AND THE NEXT
CLASS…

 Continue working on the major project.

 Update on the final exam.
 Read Chapter 16 – Introduction to Agile Management.