6 Steps to Minimise Risk and Maximise Project Performance
Byon January 15, 2016
To achieve success in outsourced projects, you need to enlist the help of skilled people, placed in the right roles, while allowing them the freedom necessary to bring their skills and expertise to bear on the project. Nothing new there I appreciate, but it’s how you go about ensuring this that could well separate the service you’ll receive this year from the problematic outsourcing projects others will experience.
Although a ‘skills gap’ is often cited as the primary reason for projects failing to achieve their intended outcomes, this is just one of a number of important issues that combine to sap the energy out of a relationship. Other factors are also at work which could hold you back and remove any chance of innovations developing – innovations that could not only see your expectations met, but surpassed by a partner in tune with your needs and dedicated to doing their best for you and your project.
In today’s complex, cut-throat world of large contract outsourcing and ever-tightening budgetary constraints, it’s all the more important to do the little things that could make a big difference to your projects and the relationships that guide them.
After all, if a change in approach was all that was needed to minimise project risk, and maximise everyone’s performance potential, there would be few who would argue against its worthiness for consideration.
Six minor shifts in approach that could have a major impact on your outsourced relationships
1. Labour over your business case
If you don’t know what you are looking to achieve and why, you cannot effectively communicate this to your outsourced partner. If they don’t have a crystal clear understanding of your goals, it’s unlikely that they’ll be able to achieve them. It’s therefore, imperative that your organisation undertakes an extensive analysis of what it wishes to achieve and why, to provide the clarity necessary to reach a successful outcome. To do so may prevent misunderstandings that otherwise could occur and cause problems later in the project.
In our experience, when outsourcing projects run into trouble, it is common for us to find that there is a lack of clarity in the business case, either in defining the intended outcomes, or in KPI setting that would allow for effective monitoring of the relationship. When building your business case, you would do well to ensure that the project has a clearly defined outcome that justifies all necessary investment that the organisation will need to make throughout the entire lifecycle of the relationship. When the outcome – or outcomes – have been properly defined, you’ll find it much easier to identify possible risks and opportunities that will need to be accounted for; in turn, this will aid you in producing more accurate costings and timescales. At this point, it’s important to consider whether all the right stakeholders have been involved in the analysis, and whether you have gained buy-in from all those you need on your side to support the project. If you neglect any of these areas, you will open yourself, your project and your organisation up to miscommunication which could lead to increased costs, spiralling timescales and a lack of support from senior stakeholders. In our experience, this could well reduce your project’s chances of success.
The clearer you can be, the more confident and collaborative your relationship with your outsourced partner will become.
2. Work out what motivates your service provider
An autocratic approach to management may work with some simpler supplier relationships, but when managing complex projects, it is important to work with your service provider to achieve the best results. It has, therefore, become increasingly important for clients to understand how best to motivate their outsourced partners to get the most from them. Having built a robust and comprehensive business case in step one above, you’ll know exactly what you need from your provider. But you will require help getting there. Understanding the mindset of the people you will be working with can help you in your negotiations with them, and in gaining their undivided commitment to your goals. It may even encourage innovations that could see greater outcomes than those you had envisaged at the outset.
Unless you understand your partner you cannot create an agreement that effectively incentivises them, contains penalties they will truly wish to avoid, or which builds an environment that entices the right behaviours needed to drive strong project performance and shared aspirations.
We cannot overstate the need for building a collaborative relationship with your outsourced partners. Misunderstandings, diverging objectives, animosity, and a breakdown in communications – all can have a significantly detrimental impact on a project. The risk of this happening on your project can be minimised by starting the relationship off in the right way, understanding one another and having clarity of purpose.
3. Properly utilise service provider expertise
Where you have selected your outsourced partner for their specific expertise, utilise it. After all, as specialists in their field they are likely to have worked on more projects like yours than you have. Your provider may well have insights and ideas that could benefit your project, and they are very likely to be better placed to determine ‘how’ to achieve the outcomes you have identified in your business case for the project.
Gaining their expert advice, getting them to ‘sense check’ your goals and objectives, and having them carry out due diligence on the project before you commit significant funds to it makes good sense.
Doing so may throw up new ways of working that had not previously been considered. A bond is formed thanks to the duty of care the advising organisation must take to not only develop the best solutions, but to warn against any issues. This is an opportunity to start a collaborative relationship in the right way by agreeing mutually beneficial approaches that can be built into your agreement.
Be careful not to unnecessarily constrain your provider. If they aren’t given the freedom to propose new ideas to realise your intended objectives, you’re unlikely to reap the full value of the provider’s expertise.
4. Clear contracts lead to better working relationships and improved project performance
As we noted in #3 above, it’s important in many outsourced relationships to leave the details of how they will achieve your objectives to the vendor that you instruct, but that does not mean your contract with them should be ambiguous. The more clarity you can bring to the contract development stage of your relationship the more fruitful that relationship will be.
Minimise the potential for risks, unforeseen costs, or misunderstandings by specifying clear, mutually agreed goals and governance. Build into the agreement a regular review and update schedule so that your contract can evolve with the relationship. And, be sure to build a roadmap from inception to completion so that each stage can be considered, discussed, and outlined for all to understand and agree upon.
While pressures to launch a project may be intense, it should not be a reason to cut corners in the formation of your agreement. An ‘agreement to agree’, where ambiguity is built into a contract to be cleared up later, increases risks, and should be avoided where possible.
5. Intelligent Client Function (ICF) and the need for in-house expertise
Management is a talent that requires a delicate touch. Too little and your trust could be misplaced or abused, too much and you can stifle creativity and encourage a work-to-rule mentality.
Some project managers may feel that when outsourcing to a provider it is they who should take full responsibility for the management of that project. While many providers will be more than happy to do so, by going this route you run the very real risk of losing the in-house skills and knowledge that could provide the insights necessary to keep a relationship and the project/service delivery on track.
The management of outsourcing relationships should always be handled by an in-house function or team. Their involvement will ensure that any early indicators of trouble are recognised and pre-empted. Similarly, where a number of options arise to improve service delivery, your own team will then be able to influence the final decision to get the right outcome for your organisation. If you leave it entirely up to the provider, you will likely lose that degree of control.
Ultimate responsibility for management remaining in-house means having the right people with the right knowledge firmly embedded in the decision-making process to be followed by the vendor’s project team.
An ICF team does just this. Consisting of in-house and newly recruited specialists with overlapping areas of project-specific and technical expertise, their pooled skills will ensure that future challenges are dealt with appropriately while minimising risk. Their communication skills and technological prowess will ensure that they remained informed and able to positively influence the behaviours of all concerned, to guide the project through rocky waters to a successful conclusion.
Effective management means foresight, influence and the strength to wield it, and this should always be governed by you.
6. Comprehensive project team handover process
Once procurement, legal and commercial teams have done their bit and the project is underway the project team will often take over. The common problem with this is that all the good will and collegiate feeling built up in the initial stages, doesn’t necessarily get passed on when the project changes hands.
One way of ensuring continuity is to develop a comprehensive handover process where all pertinent information is passed on, though this is not done nearly as often as it should be. Then there is the option of integrating members from the earlier teams into the new project team so that familiar faces can smooth the transition. Better still, involving your ICF team in these aforementioned early stages eliminates many of the issues associated with a handover, as their presence will persist throughout the entirety of the relationship, so that nothing is lost.
Know what you want to achieve and why, understand how to influence your strategic partners to achieve your goals, listen to the right people, banish contractual ambiguity in favour of clear, informed, agreed and mutually beneficial contracts, keep overall control in-house, and ensure that every opportunity for collaborative working is exposed and exploited. In doing so, you’ll unlock greater value and drive greater project performance over the partnership’s life and you’ll open the doors to innovations that will lead to true business transformation.