Electric Energy T&D - Index

Electric Energy T&D - EE Magazine March / April 2009 - Index

All in the Family: Managing Outsourced Service Contractors
Challenges of contracting
As Harry’s story illustrates, there are quite a few challenges involved
in contracting. Let’s review the issues Harry needs to overcome,
including some that we didn’t mention in the story out of fairness to
Harry – after all, he had a tough weekend…
• Long-range forecasting and planning: The organization needs to
establish just the right amount of guaranteed contracts to ensure
sufficient work capacity for all types of outsourced work and at all
locations, either under a full outsourcing model, or as fully-badged
and managed resources. Errors in forecasting the work capacity
that would be “sufficient” – either too much or too little – may be
costly.
• visibility into contractor status: It’s hard for the organization
to know how much work the contractor can really perform, where
and when. Even when the guaranteed commitment for this month
has not been fully consumed, the contractor may be available in
one week but not in another. Assigning another job to the same
contractor may or may not be possible, depending on whether the
same contractor employee (or a single of equipment) is required for
both jobs – information that is not always visible to the organization.
The same applies for shifting the job’s date by one week – it’s hard
to tell which contractor will be able to meet the new date, and to
assess the impact on other jobs already committed to that contractor.
Finally, the organization does not have any visibility into the job’s
progress. What sub-tasks need to be completed today? Will they
indeed be completed? Does this affect estimated time of completion
for the whole job? All of these require substantial voice and written
communication, without automated support. This communication is
error-prone, hard to track and record, and quite costly.
• Short-range planning in reaction to unforeseen events: Harry’s
story is mainly about this set of challenges. As a result of the lack of
visibility into contractor status, Harry does not know which changes
will be feasible. If he delays the job by one week, will this contractor
still be available? How about another contractor? How will the
change affect other jobs? Will the effect be limited for only a short
time period, or will it have repercussions extending months ahead
and interfering with the long-range planning?
• Sharing information with contractors: As the contractor does
not have access into the organization’s information systems, the
required information needs to be manually extracted and sent to
the contractor. Any changes and updates then need to be manually
sent by the contractor and manually entered into the information
systems. If the contractor needs more information, in the best
case this causes delays and more work as the contractor requests
the information. In worst cases, the contractor does not know that
crucial information is missing, and this may lead to costly or even
dangerous results.
40 I March-April 2009 Issue
• maintaining consistency, quality and safety standards: The
contracting organization needs to maintain standards for all work,
whether performed by contractors or in-house employees. There are
usually strong practices in place to do this for in-house employees
– e.g., periodic reviews and assessments, employee and job records,
audit processes – but these are hard to apply for contractors. Thus,
the organization finds it hard to assess the contracted work quality and
even harder to make sure that the work follows consistent processes
no matter which contractor is assigned to do the work.
• customer-facing issues: While all of the above apply to asset work
as well as to customer-facing work, customer-facing work exacerbates
some of these issues and introduces new issues. For example, the
lack of up-to-the-minute job status updates may not be critical when
assigning a multi-day digging job, but it is far more critical when
setting a customer visit to install a new smart meter. Furthermore,
once the contractor arrives at the customer’s premise, the customer
may discover that the contractor has not been provided with the
required information, leading to postponing the installation, resulting
in an unhappy customer and often, bad press. The customer may also
have questions about other tasks, including those performed during
the previous month. In those cases, customers do not appreciate
hearing, “’Sorry, sir, but I’m just a contractor; please take it up with
our call center.”
Tips and best practices
Possibly the most important common theme to all of these challenges
is information sharing. That is, how much demand is expected and with
what confidence? What is the progress on currently contracted work?
How much additional capacity is available, and for what crew types?
If Harry and his contractors had a way to pool their information
about jobs, projects, customers, capacity and availability, they could
reach much better decisions – and do it more quickly. However,
there are substantial difficulties involved in sharing information. The
organization needs to protect commercial information and to avoid
exposing customers’ private records. The contractors also have their
own commercial information, including their employee records and
the work they do for other contracting organizations.
In some cases, a good approach is to provide the contractors with
some limited access, via a “contractor portal”, to the organization’s
planning and scheduling software. That way, that they can record and
update more details of their day-to-day availability (in terms of work
hours, skills, equipment, etc.); have access to the most up-to-date
information they need to perform their job; and collaborate with the
internal workforce on coordinating and updating progress for ongoing
and planned projects.
The above practice enables the contracting organization to have one
shared work management solution and expose just the information
that can, and should, be exposed. Subcontractors gain from process
improvements, opportunities to bid for more business, and access to