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Chapter 12 Presentation

The document discusses best practices for outsourcing project work including well-defined requirements, extensive training, conflict management processes, and incentive-laden contracts. It also covers strategies for effective communication with outsourcers, partnering versus traditional contracting approaches, and managing customer relations. Key aspects of contract management are defined, such as types of contracts, contract changes, and procurement processes.

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Wa Qās Rajpoøt
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67 views31 pages

Chapter 12 Presentation

The document discusses best practices for outsourcing project work including well-defined requirements, extensive training, conflict management processes, and incentive-laden contracts. It also covers strategies for effective communication with outsourcers, partnering versus traditional contracting approaches, and managing customer relations. Key aspects of contract management are defined, such as types of contracts, contract changes, and procurement processes.

Uploaded by

Wa Qās Rajpoøt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CHAPTER 12

Outsourcing: Managing
Interorganizational Relations
Group Members

● M. Rafique Ahmed
● M. Ubaid Ali
● Fahad Shaukat
● M. Sikander
● Syeda Kianat Fida
Outsourcing Project Work
• Advantages • Disadvantages
– Cost reduction – Coordination
– Faster project breakdowns
completion – Loss of
– High level of control
expertise – Interpersonal
– Flexibility conflict
– Security
issues
– Political hot
potato
Best Practices in Outsourcing Project Work

• 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.
Key Differences Between Partnering and Traditional
Approaches to Managing Contracted Relationships

Partnering Approach Traditional Approach

Mutual trust forms the basis for Suspicion and distrust; each party is
strong working relationships. wary of the motives of the other.
Shared goals and objectives Each party’s goals and objectives,
ensure common direction. while similar, are geared to what is
best for them.
Joint project team exists with Independent project teams; teams
high level of interaction. are spatially separated with managed
interactions.
Open communications avoid Communications are structured
misdirection and bolster effective and guarded.
working relationships.
Long-term commitment provides Single project contracting is
the opportunity to attain continuous normal.
improvement.
Strategies for Communicating
with Outsourcers

STRATEGY 1: Recognize cultural differences

STRATEGY 2: Choose the right words

STRATEGY 3: Confirm your requirements

STRATEGY 4: Set deadlines


Project Partnering Charter
Preproject Activities—Setting the Stage
for Successful Partnering

• Selecting a Partner(s)
– Voluntary, experienced, willing,
with committed top management.
• Team Building: The Project
Managers
– Build a collaborative relationship among
the project managers.
• Team Building: The Stakeholders
– Expand the partnership commitment to include
other key managers and specialists.
Project Implementation—Sustaining
Collaborative Relationships
• Establish a “we” as opposed to “us and them”
attitude toward the project.
– Co-location: employees from different organizations
work together at the same location.
• Establish mechanisms that will ensure the
relationship withstands problems and setbacks.
– Problem resolution
– Continuous improvement
– Joint evaluation
– Persistent leadership
Project Completion—Celebrating Success
• Conduct a joint review of accomplishments
and disappointments.
• Hold a celebration for all project participants.
• Recognize special contributions.
Sample Online
Partnering Survey
Why Project Partnering Efforts Fail
• Causes of Partnering Failures
– Senior management fails to address problems or does not
empower team members to solve problems.
– Cultural differences are not adequately dealt with
such that a common team culture develops.
– No formal evaluation process is in place to identify
problems and opportunities at the operating level or to
assess the current state of the partnering relationship.
– A lack of incentive for continuous improvement by
contractors participating in the partnering relationship.
Advantages of Long-term Partnerships

• Reduced administrative costs


• More efficient utilization of resources
• Improved communication
• Improved innovation
• Improved performance
The Art of Negotiating
• 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
1. Separate the people from the problem
2. Focus on interests, not positions
3. Invent options for mutual gain
4. When possible, use objective criteria
The Art of Negotiating (cont’d)
• Dealing with Unreasonable People
– If pushed, don’t push back.
– Ask questions instead of making statements.
– Use silence as a response to unreasonable
demands.
– Ask for advice and encourage others to criticize your
ideas and positions.
– Use Fisher and Ury’s best alternative to a negotiated
agreement (BATNA) concept to work toward a win/win
scenario.
Managing Customer Relations
• 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.
Managing Customer Relations (cont’d)
• 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, and Strategies
Procurement Management Process

1. Planning purchases and acquisitions


2. Planning contracting
3. Requesting seller responses
4. Selecting sellers
5. Administering the contract
6. Closing the contract
CONTRACT
MANAGEMENT
Contract
• A formal agreement between two parties
wherein the contractor obligates itself to
perform a service and the client obligates
itself to do something in return.
– Defines the responsibilities of the parties,
spells out the conditions of its operations.
– Defines rights of the parties to each other.
– Grants remedies to a party if the other party
breaches its transactional obligations.
Types of Contracts
• Fixed-Price (FP) Contract
or Lump-sum Agreement
– The contractor with the lowest bid agrees to perform all
work specified in the contract at a fixed price.
– The disadvantage for owners is that it is more difficult
and more costly to prepare.
– The primary disadvantage for contractors is the risk of
underestimating project costs.
– Contract adjustments:
• Redetermination provisions
• Performance incentives
Types of Contracts (cont’d)

• Cost-Plus Contracts
– The contractor is reimbursed for all direct allowable costs
(materials, labor, travel) plus an additional prior-
negotiated fee (set as a percentage of the total costs) to
cover overhead and profit.
– Risk to client is in relying on the contractor’s best
efforts to contain costs.
– Controls on contractors:
• Performance and schedule incentives
• Costs-sharing clauses
Contract Type versus Risk
Contract Changes
• Contract Change Control System
– Defines the process by which a contract’s authorized
scope (costs and activities) may be modified:
• Paperwork
• Tracking systems
• Dispute resolution procedures
• Approval levels necessary for authorizing changes
– Best practice is the inclusion of change control
system provisions in the original contract.
THANK YOU

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