What a Difference a Day Makes!
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What a Difference a Day Makes! - a little modelling added value for managers tackling performance problems in out-sourced activiy
Rachel Bodle A1angers from a major corporation met wzth representatives of contractors to idiom business-critical activity was oul-sourced so thai thei' could review their combined management of po form once. Their meeting generated a number of insights as to how they might reverse deterioration in both the relationships
between them. and in the performance achieved in the out-
implementing changes to their operation of outsource contracts. Their understanding of the dynamic system linking contractors with their
business clients may be valuable to others who seek
an effective relationship with out-sourced service providers. In addition, the process that helped them
may provide food for thought to management science practitioners who must be pragmatic in
sourced activiti. However, rather than closing their discussions at the end of the dat, the group passed their deliberations over
matching their support to time time and cost budget of their client group whilst leveraging this contribution to maximum effect.
to a modeller who, over the noei 24 hours, built a system dinamic representation of their thinking. JVhen i/me group worked with this relative/i simple model, it stimulated Jùriher insights and ideas for managing their out-source contracts to the greater satibfiiction of both parties.
Managing out-sourced activities
-ooOoo-
Out-sourcing is on the increase, and thc need fbr
contract management capability is challenging diverse organisations. The ideal of contracts which provide both a framework for a mutually rewarding
The client for this work was a major corporation that used engineering contractors to carry Out specialised works on projects around the world. A number of different contractors were used and a
partnership, and a structure for handling disputes
reduction
between the client organisation and their out-source
increasing contract management problems, was
service provider, is not easily achieved. In many
widely apparent.
cases, perfiirmance and financial pressures stress the client / service-provider relationship and the
perfhrrn ance,
accompanied
by
The small group whose meetings are reported here comprised multiple perspectives on the problem and included a contractor representative, an engineer, a technical specialist, and an area contract manager. Given the history of falling performance levels and strained relationships, the group was uneasy at first. There was some distrust of the client organisation's motives in holding these meetings, and considerable cynicism about the likely value of any outcome. The
contractual arrangement proves to be flawed in practice. Such was the case here. Further, what appeared to he an appropriate management response to performance problems had proved unhelpful: reinforced contracts were introduced but perfbrmance levels continued to frill, costs rose, and relationships were becoming increasingly strained.
A small
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