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Managing Outsourcing Strategy in a Complex Project: A Case Study of a complex of Four Residential Towers Project

FEATURED PAPER

By Ramaz S. Issa

Dubai, UAE
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Executive Summary

Outsourcing became a usual practice for organizations which seek rapid business transformation, neglecting the consequences in long term duration. The case study of this paper is a complex project, where decisions to outsource irrationally lead to increase cost, potential risks and conflicts between outsourcing partners significantly, which lead to low project performance and coordination difficulties.

The purpose of this study is to explore the key factors to effectively managing the coordination mechanisms between more than hundred and eighty external service providers and a main contractor of a complex of four residential towers project “Complex1”, in addition, to focus on the significance of decision-making process prior to outsource.

This paper develops an approach built on sharing information, building trust and commitment, and managing interdependencies, it examines the coordination mechanisms in “Complex1” and the success or failure of the outsourcing decision via conducting a questionnaire-based survey among the outsourcing partners.

Moreover, the study argues that based on “Resource Based View Theory”, organizations may consider implementing a decision-making process to choose outsourcing as a procurement strategy for their projects, rather than deciding irrationally based on short-term benefits. Hence, it proposes an approach for the decision-making process of outsourcing developed from the literature by emphasizing on make-or-buy analysis.

The framework attempts to guide decision makers to gain the competitive advantage of outsourcing, moreover, to guide project managers to avoid potential risks and achieve the required mutual goals in quality, innovation and customer satisfaction.

Introduction

(Grover et al., 1994) Defined Outsourcing as requesting a service from external service provider. (Lankford & Parsa, 2006) Also defined Outsourcing as “The procurement of services from sources that are outside of the organization which generally involves the relocation of operational control to the external service provider”. In the other hand, (Weil & Dalton, 1992) defined complex projects as vulnerable to project performance issues, which projects tend to be “complex” due to multiple changes in design stages, procurement, testing and construction and other sequence activities involved.

Moreover, it is changing in customer requirements and project performance in terms of schedule, time and cost, in addition of the delays in discovering rework.

Outsourcing, which is called in the literature “Contracting-Out”, “Strategic Partnering”, or “External Service Provider”, nowadays became a fashionable strategy for organizations which seek a rapid business transformation in short-term duration (Linder et al., 2002).

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About the Author

pmwj32-mar2015-Issa-PHOTORamaz S. Issaflag-uae

Dubai, UAE

Ramaz S. Issa is a Civil Engineer, is studying for a Master of Science degree in project management at the British University in Dubai, and is a PMP candidate. Ramaz S. Issa is a Civil Project Engineer at Gulf Technical Construction Company, a Drake & Scull International PJSC Company in Dubai, UAE. He has participated in managing three multi-million dollar projects which include, complex of four residential buildings, container terminal works building package that includes offices & various Industrial buildings, and four stars hotel. Ramaz earned his bachelor’s degree in civil engineering from the University of Sharjah and aims to finish his MS degree in project management from the British University in Dubai in 2016.

Contact Info: [email protected]

P.O.Box: 66123, Dubai, UAE