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Outsourcing and Resource Management Process

 

Project Workflow Management

SERIES ARTICLE

by Dan Epstein

New York, USA

 



Note:
 This article is based on the book Project Workflow Management: A Business Process Approach by Dan Epstein and Rich Maltzman, published by J Ross Publishing in 2014. The book describes PM Workflow® framework, the step-by-step workflow guiding approach using project management methods, practical techniques, examples, tools, templates, checklists and tips, teaching readers the detailed and necessary knowledge required to manage project “hands-on” from scratch, instructing what to do, when to do and how to do it up to delivering the completed and tested product or service to your client.

The project workflow framework is the result of Dan’s research into the subject, having the following objectives:

  1. Create the virtually error-free project management environment to ensure significant reduction of project costs
  2. Reduce demands for highly qualified project managers using the step-by-step workflow guiding approach.

While PM Workflow® is the continuous multi-threaded process, where all PM processes are integrated together, this article will attempt to describe the resource management group of processes as a stand-alone group that can be used independently outside of PM Workflow® framework. It will be difficult in this article not to venture into processes outside of the current subject, such as planning, quality, communications and other management processes, so they will be just mentioned. However, to get full benefit and the error free project management environment, the complete implementation of PM Workflow® is required.

In order to understand how PM Workflow® ensures this environment, I strongly recommend reading my article Project Workflow Framework – An Error Free Project Management Environment. in the PMI affiliated projectmanagement.com (https://www.projectmanagement.com/articles/330037/Project-Workflow-Framework–An-Error-Free-Project-Management-Environment)

The article above provides the overview and explanation of how the project workflow framework works and achieves the established objectives of obtaining resources, both external (P14) and internal (P15) ones.

For more information, please visit my website www.pm-workflow.com

Outsourcing Management

Purpose

The purpose of the Outsourcing Management process in the context of this book is selection of qualified vendors for implementation of project components, as well as managing relationships with vendors for quality deliverables and seamless integration with other components of a project.

Before making a commitment to use outsourcing on a project, there must be a reasonable proof that using outsourcing will increase company benefits and there must be awareness that outsourcing provides significant challenges in producing quality deliverables.

Outsourcing Challenges

Outsourcing, which is also known under the name of subcontracting, exists in several business areas. The government, military, heavy machinery and others use onshore resources, as opposed to the offshore ones. However the heaviest use of offshore outsourcing is in the information technology, electronics and manufacturing industries. In the past ten years there has been a strong trend to take advantage of lower costs of offshore development and manufacturing.

This trend takes jobs out of the higher-cost country, which is profoundly negative, but in order to stay competitive, companies cannot afford to ignore this option. Besides, public companies will have to follow the shareholders’ decisions, which are mostly motivated by profit. It appears that the trend is here to stay for a while, but in the foreseeable future it will slow down or will be gradually reversed, because the cost of the offshore development is steadily going up. As soon as the cost in low cost countries (LCCs) becomes comparable to the cost of the onshore development, the trend will stop. For example, ten years ago Canada was considered a low cost country, because the average rate of the Canadian developer was about 40% lower than the rate of US developers; in part due to 40% difference in value of the Canadian versus the US dollar. Software development by several US corporations was channeled there by using their Canadian branches. Today the cost of software development in Canada is not any lower than in USA and Canada is no longer a low cost country. Having software development done outside the country presents many challenges. Among them are:

  • Language barrier
    In many countries English is spoken only by a small minority. This limits communication between the onshore project manager and the offshore team.
  • Different time zones
    Some of the most popular LCC outsourcing countries have a difference with the US Eastern time zone of 8 to 14 hours. This means that during the period between 8:00AM and 5:00PM Eastern Time, the offshore time may be 8:00PM to 5:00AM, which makes communication for both teams problematic. When email is used for communication, the reply to the query will come – at the earliest -the following day. It is also not always easy to get reliable status reports from an offshore project manager until deliverables are due.
  • Different customs and cultures
    In some cultures people consider asking questions impolite; therefore your business or technical requirements submitted to them must be highly detailed and accurate. If they are not, then the deliverable will reflect the offshore team’s understanding and not yours. This sometimes leads to the misconception that offshore teams are not as qualified as US teams, which is generally incorrect. Experience shows that the problems are often caused by poor – or at least vague -specifications and poor communication, rather than a specific problem of the offshore team’s qualification.
  • Privacy and confidentiality issues
    US companies are not allowed to provide offshore companies with access to actual production data, when it contains private information about customers or other confidential information. This prevents offshore companies from participating in the integration of the deliverables produced by them. The data used by the offshore team must be stripped of all references to the private and confidential information. Whenever the use of large data banks with millions of records is required to test the system, producing and keeping simulated database may be costly and convoluted.

The Outsourcing Process

The Outsourcing process consists of the following elements:

  1. Issue request for proposal
  2. Conduct bidders conference
  3. Receive proposals
  4. Investigate candidates ability to do outsourcing
  5. Select winning proposal
  6. Establish communications and reporting with the outsourcing company
  7. Provide outsourcing company with the detailed SOW and specifications
  8. Receive project plan from the outsourcing company
  9. Track implementation
  10. Track integration with other parts of the project

When outsourcing help is required, the company issues a request for proposal. For the inshore outsourcing, the announcement may be published in a newspaper or sent to a list of potential bidders. For the offshore outsourcing, the request for proposal is sent to a list of the known and reputable offshore companies doing outsourcing business. More details may be provided in a bidders’ conference, which may be either a face-to-face meeting or a teleconference with bidders who expressed interest in bidding. When proposals are received by the due date, they are reviewed and several are selected for further consideration. The bidders whose proposals were selected are investigated for financial strength and the availability of the right resources. All references should be checked. There must be sufficient evidence that the outsourcing company has delivered successfully on similar types of projects in the past with satisfactory quality. Based on the investigation and the suitability of the proposal, a winning proposal is selected. There must be a documented understanding with the outsourcing company that they must adjust their project management processes to make them compatible with standard processes in your organization.

More…

To read entire article, click here

 

Editor’s note: This series of articles is based on the book Project Workflow Management: A Business Process Approach by Dan Epstein and Rich Maltzman, published by J Ross Publishing in 2014. The book describes the PM Workflow® framework, a step-by-step approach using project management methods, practical techniques, examples, tools, templates, checklists and tips.  The book teaches readers how to manage a project “hands-on” from scratch, including what to do, when and how to do it up to delivering a completed and tested product or service to a client.

How to cite this paper: Epstein, D. (2018).  Title, Series on Project Workflow Management, PM World Journal, Vol. VII, Issue XII (December).  Available online at https://pmworldjournal.net/wp-content/uploads/2018/12/pmwj77-Dec2018-Epstein-outsourcing-and-resource-management-process.pdf


 
About the Author


Dan Epstein

New York, USA

 




Dan Epstein
combines over 25 years of experience in the project management field and the best practices area, working for several major Canadian and U.S. corporations, as well as 4 years teaching university students project management and several software engineering subjects. He received a master’s degree in electrical engineering from the LITMO University in Leningrad (today St. Petersburg, Russia), was certified as a Professional Engineer in 1983 by the Canadian Association of Professional Engineers – Ontario, and earned a master’s certificate in project management from George Washington University in 2000 and the Project Management Professional (PMP®) certification from the Project Management Institute (PMI®) in 2001.

Throughout his career, Dan managed multiple complex interdependent projects and programs, traveling extensively worldwide. He possesses multi-industry business analysis, process reengineering, best practices, professional training development and technical background in a wide array of technologies. In 2004 Dan was a keynote speaker and educator at the PMI-sponsored International Project Management Symposium in Central Asia. He published several articles and gave published interviews on several occasions. In the summer of 2008 he published “Methodology for Project Managers Education” in a university journal. His book, Project Workflow Management – The Business Process Approach, written in cooperation with Rich Maltzman, was published in 2014 by J. Ross Publishing.

Dan first started development of the Project Management Workflow in 2003, and it was used in a project management training course. Later this early version of the methodology was used for teaching project management classes at universities in the 2003–2005 school years. Later on, working in the best practices area, the author entertained the idea of presenting project management as a single multithreaded business workflow. In 2007–2008 the idea was further refined when teaching the project management class at a university.

Dan is an author of many publications in professional magazines, speaker at the international presentations, a guest at podcasts, etc. The Project Management Institute’s (PMI) assessment of his book says: “Contains a holistic learning environment so that after finishing the book and assignments, new project managers or students will possess enough knowledge to confidently manage small to medium projects”. The full list of his publications and appearances can be found at the website www.pm-workflow.com in the Publications tab.

Dan can be contacted at [email protected].

To see other works by Dan Epstein, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/dan-epstein/