W8_Khalid Almamari_Outsourcing of Concept Activities


  1. Problem Definition.

Due to the high loads of projects in the our engineering department, we may need to look for alternatives to chase up our progress in the concept stage and outsource as an option to handle them on time. It isn’t new way as the whole of worlds and most of the companies now a days are concentrating on their businesses and leave other to small and medium enterprises.

2. Identify the Feasible Alternative.

The outsourcing decision matrix helps the project manager to consider two important factors in outsourcing a task as well as they have to consider the cost factor, social factor, information security & Operability.

The strategically importance of the task in project. Where the Strategically important tasks are sources of competitive advantage.

The task’s impact on the project operational performance. Where the tasks which have a high impact on operational performance are those which, if done well, contribute greatly to the smooth running of the organization or, if done badly, greatly disrupt it.

3. Development of the Outcome for Alternative

It is good to analysis the quality of comparing outsourcing and in-house options of any activity in project as per operational performance and strategic importance. Therefore, alternatives and correspondent attributes are below:

Parameter Outsourced In- Housed
Cost Daily or monthly bases without any break dawn cost. Over head cost and Operation cost.
Social Impact Developing SME By awarding Contract to them Don’t support local Committee in terms of business impact
Security Unless confidently agreement in place but still not warranted are take in to account and stander are inspected every time
Operability No control of the staff and their availability as well as if engaged in different and profitable projects The availability of staff and aware of businesses

The following are the weight estimate of each attribute relative to the option below in table 2

Parameter Outsourced In- Housed
Cost  1 4
Social Impact  5 3
Security  3 4
operability  4 2
Note: Score (1-5), so 1 is most difficult, risky & Expensive where 5 least difficult, risky & Expensive

The calculation of Dimensionless value is show below in table no 3 as per the alternative & attributes relative weight from above table

Parameter Outsourced In- Housed
Cost Value 1 4
Dimensionless Value 1 0
Social Impact Value 5 3
Dimensionless Value 2 0
Security Value 3 4
Dimensionless Value 1 1
Operability Value 4 2
Dimensionless Value 0 1
Note: Score (1-5), so 1 is most difficult, risky & Expensive where 5 least difficult, risky & Expensive

 

The below table shows the weight of attribute

Attribute Ranking Weight
Cost 1.0 0.1
Social Impact 3.0 0.3
Security 5.0 0.5
Operability 1.0 0.1
Total 10.0 0.1

 

  1. Selection of the Acceptable Criteria.

Refer to the above tables the highest dimensionless value is the selection criteria.

 

  1. Analysis and Comparison of the Alternative.
Attribute Weight Outsourcing In-house
Dim Value Weigh Value Dim Value Weigh Value
Cost 0.1 0.1 0.1 0 0.4
Social Impact 0.3 0.2 0.5 0 0.3
Security 0.5 0.3 0.1 0.1 0.4
Operability 0.1 0 0.4 0.1 0.2
Total 1.0 1.1 1.3

Refer to above table, it shows the comparison and analysis between outsourcing and in-house assignment in the company.

 

  1. Selection of the Preferred Alternative.

Both options are showing almost the same result with a little higher score to the in-house side which should be considered as project natural and size and to Avoid involved risks wherever exist.

 

  1. Performance Monitoring and the Post Evaluation of Result.

Although, the outsourcing (if selected) results showing good approach but we need to get closed reviews of all studies done to make sure that’s on line with our requirements especially in beginning stage of applying such strategy.

 

References:

  1. com, m. (n.d). decision matrix . Retrieved August 31, 2014, from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0CDgQFjAG&url=http%3A%2F%2Fwww.mindtools.com%2Fpages%2Farticle%2FnewTED_03.htm&ei=JBwHVLK0MIOqyATrz4CICg&usg=AFQjCNGcWmR4WroSBJ07iE1rBWHj82Ecbw&bvm=bv.74115972,d.cWc
  2. com, e. (n.d). outsourcing. Retrieved August 31, 2014, from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cad=rja&uact=8&ved=0CGoQFjAL&url=http%3A%2F%2Fwww.entrepreneur.com%2Farticle%2F204652&ei=rRwHVMO0I5CryAT45oKwBA&usg=AFQjCNHdzgsJtISiGXSs8IBRyvQ04hOqQg&bvm=bv.74115972,d.cWc
  3. edu, d. m. (n.d). outsourcing decision matrix. Retrieved August 31, 2014, from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&cad=rja&uact=8&ved=0CE4QFjAJ&url=http%3A%2F%2Fdspace.mit.edu%2Fbitstream%2Fhandle%2F1721.1%2F34728%2F53343724.pdf%3Fsequence%3D1&ei=Jx0HVNfvJcX-yQSdk4HQAw&usg=AFQjCNEg_IRROKZfPupM0r3hXvkp4Jpo7Q&bvm=bv.74115972,d.cWc
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One thought on “W8_Khalid Almamari_Outsourcing of Concept Activities

  1. Another excellent case study, Khalid and you did a nice job on your analysis.

    What I suggest you do is conduct a couple of PILOT PROJECTS with the outsourcing, picking a minimum of 3 potential sources and having them COMPETE against one another via an AWARD FEE type of contract. http://www.acq.osd.mil/dpap/ccap/cc/jcchb/Files/Topical/1Restricted/award.fee.oct08.pdf

    This should give you a pretty good idea of the general quality of their engineering compared against your in house engineers as well as their reliability and timeliness.

    Good luck!!!

    BR,
    Dr. PDG, Jakarta

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