After reviewing/reading Chapter 12 of the textbook, access UC’s online Library and conduct research within the ‘Business Source P
Activity 12
After reviewing/reading Chapter 12 of the textbook, access UC's online Library and conduct research within the "Business Source Premier (EBSCO Host)" search engine and locate a Project Management Journal article among the thousands of journal articles made available within the many years of publications the Library holds. The Project Management Journal article should tie directly into at least one highlight from the assigned chapter (Chapter 12) reading/review material for the week. This weekly research paper should include at least 2 pages, but not more than 3 pages, in the narrative and it should be typed in APA formatting (title page, reference page, no abstract page, double-spacing, Times New Roman 12 font, 1 inch margins, in-text citations, etc…). Your paper should contain the following headings:
- Introduction
- Summary of the article
- Relevant points made by the author
- Critique of the article
- Application of the concepts in the article
Chapter Twelve
Outsourcing: Managing Interorganizational Relations
12–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–2
Project Management 6e.
Learning Objectives
Understand the advantages and disadvantages of outsourcing project work
Describe the basic elements of a Request for Proposal (RFP)
Identify best practices for outsourcing project work
Practice principled negotiation
Describe the met-expectations model of customer satisfaction and its implications for working with customers on projects
12–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
12.1 Outsourcing Project Work
12.2 Request for Proposal (RFP)
12.3 Best Practices in Outsourcing Project Work
12.4 The Art of Negotiating
12.5 A Note on Managing Customer Relations
12–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Outsourcing Project Work
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
12–5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–5
Project Management 6e.
12–6
Reclining Chair Project
FIGURE 12.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–6
Project Management 6e.
12–7
Outsourcing Project Work
Advantages
Cost reduction
Faster project completion
High level of expertise
Flexibility
Disadvantages
Coordination breakdowns
Loss of control
Conflict
Security issues
Political hot potato
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–7
Project Management 6e.
Request for Proposal (RFP)
Be announced to external contractors/vendors with adequate experience to implement the project
Development steps:
12–8
FIGURE 12.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Contractor Evaluation Template
12–9
FIGURE 12.3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–10
Best Practices in Outsourcing Project Work
FIGURE 12.2
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–10
Project Management 6e.
12–11
Key Differences Between Partnering and Traditional Approaches to Managing Contracted Relationships
TABLE 12.1
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.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–11
Project Management 6e.
12–12
Key Differences Between Partnering and Traditional Approaches …(cont’d)
TABLE 12.1 (cont’d)
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.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–12
Project Management 6e.
12–13
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–13
Project Management 6e.
12–14
Project Partnering Charter
FIGURE 12.2
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12–14
Project Management 6e.
12–15
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–15
Project Management 6e.
12–16
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–16
Project Management 6e.
12–17
Project Completion—Celebrating Success
Conduct a joint review of accomplishments and disappointments
Hold a celebration for all project participants
Recognize special contributions
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–17
Project Management 6e.
12–18
FIGURE 12.6
Sample Online Partnering Survey
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–18
Project Management 6e.
12–19
Advantages of Long-term Partnerships
Reduced administrative costs
More efficient utilization of resources
Improved communication
Improved innovation
Improved performance
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–19
Project Management 6e.
12–20
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
TABLE 12.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–20
Project Management 6e.
12–21
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–21
Project Management 6e.
12–22
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.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–22
Project Management 6e.
12–23
The Met-Expectations Model of Customer Satisfaction
FIGURE 12.7
| 0.90 | = | Perceived performance | = | 1.10 |
| Dissatisfied | Expected performance | Very satisfied |
If performance falls short of expectations (ratio < 1), the customer is dissatisfied.
If the performance matches expectations (ratio = 1), the customer is satisfied.
If the performance exceeds expectations (ratio > 1), the customer is very satisfied or even delighted.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–23
Project Management 6e.
12–24
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–24
Project Management 6e.
12–25
Project Roles, Challenges, and Strategies
TABLE 12.3
| Project Manager Roles | Challenges | Strategies |
| Entrepreneur | Navigate unfamiliar surroundings | Use persuasion to influence others |
| Politician | Understand two diverse cultures (parent and client organization) | Align with the powerful individuals |
| Friend | Determine the important relationships to build and sustain outside the team itself | Identify common interests and experiences to bridge a friendship with the client |
| Marketer | Understand the strategic objectives of the client organization | Align new ideas/proposals with the strategic objectives of the client organization |
| Coach | Motivate client team members without formal authority | Provide challenging tasks to build the skills of the team members |
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–25
Project Management 6e.
12–26
Key Terms
Best alternative to a negotiated agreement (BATNA)
Co-location
Escalation
Met-expectations model
Outsourcing
Partnering charter
Principled negotiation
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–26
Project Management 6e.
Contract Management
12–27
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–27
Project Management 6e.
12–28
Procurement Management Process
Planning purchases and acquisitions
Planning contracting
Requesting seller responses
Selecting sellers
Administering the contract
Closing the contract
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–28
Project Management 6e.
12–29
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 the rights of the parties to each other
Grants remedies to a party if the other party breaches its transactional obligations
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–29
Project Management 6e.
12–30
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–30
Project Management 6e.
12–31
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–31
Project Management 6e.
12–32
Contract Type versus Risk
FIGURE A12.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–32
Project Management 6e.
12–33
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.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–33
Project Management 6e.
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