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Improving the alignment of strategic objectives in the outsourced projects management
1. Msc. Edilson Giffhorn - Speaker PhD. Leonardo Ensslin Msc. Rogério Lacerda PhD. Sandra Rolim Ensslin Msc. William Barbosa Vianna Improving the Alignment of Strategic Objectives in the Outsourced Projects Management 23rd European Conference on Operational Research 5. – 8.7.2009, Bonn - Germany
2. Santa Catarina Federal University - Brazil Production Engineering Pos-graduation Program Multicriteria Decision Aid Laboratory - LabMCDA
3. Summary 1. Introduction 1.1 Social Issue 1.2 Bibliographical Support 2. Theoretical Construct 3. Construction of the Performance Evaluation Model 3.1. Model Structuring 3.2. Evaluation 3.3. Recommendations 4. Final Considerations
4. 1. Introduction 1.1 Social Issue: The economic growth of Brazil demands increased infra-structural improvements in the country. One of the areas that has been most affected by this growth is telecommunications. The fall of market reserve laws and the state monopolies in 1998 were the cornerstone of rapid changes and demands of the telecommunications consumer market. The new challenges faced by system operators resulted in the need for new Project Management practices and partial service Outsourcing.
5. This led to an integration of both techniques, namely outsourcing of project execution. The role of project managers became essentially that of managing contracts of outsourced project providers. To a certain extent, the Project Manager no longer had direct control over activity resources but was held accountable for results.
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7. 1.2 Bibliographical Support: A structured process was adopted for the selection of articles that contribute to the provision of theoretical rationale for research. A study of the reference material revealed a gap in methods adopted to identify, organize, measure and integrate KPIs in order to improve the alignment of strategic objectives.
8. 2. Theoretical Construct 2.1. Project Outsourcing and Performance Evaluation In Brazil, outsourcing in telecommunications was definitively incorporated with the privatization of state-owned companies at the end of the 90s. In this context, the final result of a project depends on the joint action of different companies. This calls for the use of tools that allow a broader understanding regarding which KPIs will improve the alignment of the strategic objectives between the companies involved. Multicriteria Decision Aid – Constructivist (MCDA-C) approach was employed as the intervention instrument.
11. 3.1 Structuring 3.1.1 Contextualization The Case Study was developed in the branch of a telecommunications operator in southern Brazil. This operator has around 6000 workers, 10 million customers and yearly gross revenue of approximately 8 billion US dollars. Up until the 90s: state monopoly. In 1995: start of privatizations. Supplier contracts are drafted in the researched parent company and in the branches the projects are conducted by outsourced companies.
13. 3.1.2 Primary Assessment Elements Open interviews were conducted in which the decision-maker was asked to discourse on this issue. Statements were analyzed to identify Primary Assessment Elements (PAE): characteristics or properties that the decision-maker considers may impact his/her values.
14. Direction of preference for each PAE is identified, together with the psychological opposite, to understand the consequences that the decision-maker wishes to avoid (Eden, Ackermann, 1992) . 3.1.3 Concepts
15. 3.1.4 Means-Ends Maps Broadening of understanding through identification of hierarchical relations and relations of influence between concepts. “ How can the end concept be obtained?” “Why is the end concept important?”
17. The relations of influence structure is converted to a Hierarchical Values Structure by incorporating the understanding of preferential judgement of the decision-maker (Keeney, 1992) . 3.1.5 Clusters
18. 3.1.6 Hierarchical Value Structure: Label Areas of Concern Fundamental Points of View: Strategic Objectives Technical Quality Objectives Alignment Communication Evaluate Performance of Outsourced Providers FPV 6 – Technique FPV 7 -Organizational FPV 3 – Testing FPV 4 - Priorities FPV 5 – Routes FPV 1 – Standards Compliance FPV 2 – Professional Qualification
19. 3.1.7 Descriptors - KPIs The construction of ordinal scales to measure Fundamental Points of View result in Descriptors or KPIs. Jeopardize Excellence Good Level Neutral Level Market KPI
21. 3.2 Evaluation KPIs are ordinal scales that do not allow mathematical operations. Information on differences of attractiveness should be added between levels to transform them into (numerical) interval scales. The Macbeth method was adopted to transform ordinal scales into cardinal scales (Bana and Costa, 2008).
22. 3.2.1 Value Functions Cardinal scales are built using information of difference of attractiveness between descriptor levels (ordinal) and M-Macbeth software, resulting in cardinal scales that meet preference judgments of the decision-maker.
24. 3.2.2 Substitution Rates Information that allows the integration of cardinal scales should be incorporated to display measurement of aspects that are considered strategic and tactical.
25. Potential actions that represent a contribution to the transition from Neutral to Good level are created in each criteria in which an establishment of rates is desired.
26. 3.2.3 Global Evaluation and Impact Profile of the Status Quo The global model is provided using the sum of models of each FPV. The model was used to aid the management process. The decision-maker selected three real companies.
27. Status quo Impact Profile of the three companies: strategic objectives
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30. FPV2 Profile of Impact on status quo and with application of Alpha Actions:
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33. References: Bana e Costa, C. A. (1993). Três convicções fundamentais na prática do apoio à decisão. Pesquisa Operacional, 13, 1-12. Bana e Costa, C. A.; Ensslin, L.; Corrêa, E. C.; Vansnick, J. C. (1999). Decision Support Systems in action: integrated application in a multicriteria decision aid process. European Journal of Operational Research, 113, p. 315-335. Bana e Costa, C. A.; De Corte, J.M. & Vansnick, J.C. (2005). On the mathematical foundations of macbeth. In: Multicriteria Decision Analysis: state of the art survey [edited by Greco, J. F. & Ehrgott, S. M.], Springer Verlag, Boston, Dordrecht, London, 409-442. Bana e Costa, C. A, Lorrenço João C. ,Chabas, Mamuel P. , Bana e Costa, João C. “Development of Reusable Bid Evaluation Models for the Portuguese Electric Transmissin Company”. Decision Analysis , Vol. 5, No. 1, March , 2008, pp. 22–42. Eden, C. & Ackermann, F. (1992). The analysis of cause maps. Journal of Management Studies, 29, 309-324. Ensslin, L.; Dutra, A. & Ensslin, S. R. (2000). MCDA: a constructivist approach to the management of human resources at a governmental agency. International Transactions in Operational Research, 7, 79-100. Keeney, R. L. (1992). Value-focused thinking: a path to creative decision making. Harvard University Press, London. Landry, M. (1995). A note on the concept of problem. Organization Studies, 16, 315-343.
34. Roy, B. (1996). Multicriteria Methodology for Decision Aiding. Kluwer Academic Publishers, Dordrecht. Roy, B. (2005). Paradigms and Challenges, Multiple Criteria Decision Analysis – State of the Art Survey. In: Multicriteria Decision Analysis: state of the art survey [edited by Greco, J. F. & Ehrgott, S. M.], Springer Verlag, Boston, Dordrecht, London, 03-24. Skinner, W. (1986). The productivity paradox. Management Review, 75, 41-45.
