Assignment

What are the Cost Savings when a company outsources?

Background:

In this case study, please choose from one of the areas in an organization that may be outsourced and prepare a cost savings report.

• Finance and Accounting
• Investment and Asset Management
• Human Resources
• Procurement
• Logistics
• Real estate management
• Miscellaneous (energy services, customer service, mailroom, food processing)

Your Assignment:

Prepare an executive summary document that focuses on the cost savings of the outsourcing / contracting process for the business process that you decide to outsource. Your analysis must include the steps below.

• You need to JUSTIFY your decision for the business process outsourced (e.g., accounting, editorial, photography, publishing, distribution, printing, layout, advertising, editing, articles, etc.); and

• For the service that you intend to outsource:

o Establish the preliminary performance targets / level of service that will be required from the selected vendors;

o Establish the type of contract that you will use for each contract (i.e., fixed, cost-plus, reimbursable, unit);

o Determine the evaluation criteria you will use to select the preferred vendor(s) (e.g., low price, best value, etc.). [Are there different evaluation criteria for different business units? Why?];

o Identify the number of vendors that you will select to provide the services to be outsourced (i.e., one vendor for all services versus individual vendors with specific expertise in each of the services to be outsourced); and

o Construct a timeline that summarizes the bid activities and time duration for each contracting process (i.e., plan purchases and acquisition through select sellers).

Directions for Case Study 3

Background:

Case Study 3 will analyze a business process outsourcing scenario from a purely financial perspective. This case study will include items such as the cost to investigate the outsourcing to the cost of who will outsource in both the savings and fees. The paper will cover how the contracting process protects both the buyer and seller and what needs to be included in the contract to accomplish this.

Please see Doc Sharing for Case Study #3.

Terminal Course Objectives (TCOs)

All terminal course objectives studied up through Week 7 are being addressed in Case Study 3.

1 Given a specific project scope, a set of legal and management requirements, and the availability of internal resources, evaluate optional contract structures and recommend and justify the preferred structure for that given situation.

2 Given a simple procurement need and a complex project that requires one or more procurement activities, compare and contrast the scope and functions of contract procurement/management versus project management.

3 Given a specific project and its anticipated contract administration and project management requirements, create a procurement division of the responsibilities matrix and a project division of responsibility matrix that consider the utilization of internal resources in order to define any external resources that will be required.

4 Given specific contract procurement conditions for a project, identify and evaluate the factors that influence a contract pricing strategy and recommend the strategy that is best suited for the given conditions.

5 Given certain contract objectives and related project requirements, formulate the sections of a project plan that specify the budget, schedule, and technical requirements for the contract.

6 Given the need to procure a major contract, select a set of management and commercial requirements that are appropriate for the size and complexity of the contract.

7 Given the need to solicit goods or services from external sources, consolidate all contract and, if applicable, project requirements into a checklist that will form the framework to guide the development of a Request for Proposals (RFP).

8 Given the award and execution of a contract, analyze and select effective management techniques to control quality, cost, schedule, and scope adherence to the associated requirements specified in the contract.

9 Given a specific contract dispute, identify possible conflict resolution alternatives, select an appropriate negotiation strategy, and implement an action plan that effectively mitigates the contract dispute.

10 Given the successful completion of a contract scope of work, identify and organize a set of close-out activities that allows for the successful completion of all contract requirements and culminates with a journal that thoroughly summarizes the life of the contract.

Resources

The weekly lectures and assigned readings serve as a starting point. Please be advised that considerable relevant material is also available on the Internet, so you might want to conduct a search for some materials that may yield insights into the procurement process that you will be undertaking. Remember to properly cite any outside information that you use.

Submittal Format

Case Study 3 should be prepared in MS Word format. Any resources used beyond the ebook need to be cited in your document--including links to relevant websites. Your document shall be written as an executive summary or bulleted list/tables clearly identifying your purpose, relevant data, decision-making/thought process, and conclusion. Your document will be your "go-to" financial plan for your outsourcing process. You need to quickly and succinctly understand the steps that you'll undertake for contracting. This means having minimal paragraph-style text, and instead, introducing a variety of tables, graphs, and charts.