Best practice is to get the
rules and prices [for disruption] into
the original contract, well in advance
of any emergency happening.
—Chris Tiernan, Grosvenor Consultancy Services, Twickenham, Middlesex, England
As project sourcing increasingly
stretches across national boundaries,
legal systems, cultures and suppliers,
project managers need new ways to mitigate all those risks.
MISSION CRITICAL
Before companies start sending off work,
they need to do their homework to select
the right country for the job at hand—
and then have a backup option, too.
“If I’m dealing with mission-critical
systems or aspects of a project, I’m
going to want my main supplier to be
in a cost-efficient jurisdiction where
performance standards are high,” says
John Enstone, a London, England-based partner at international law firm
Faegre & Benson. “I’d then want my
fallback position to be in a jurisdiction
that was completely different, and not
subject to any of the same political,
cultural or technical risks as the first
jurisdiction.”
And, what’s more, project managers
shouldn’t just automatically outsource.
Some work is best left in-house, adds
Stan Lepeak, managing director of
global research at advisory firm
EquaTerra, Houston, Texas, USA.
“Take the time to carefully consider
what should be outsourced—and what
shouldn’t be—and what risks are
attached to outsourcing it,” he says.
Take the dangers associated with
data and intellectual property protection, for instance. This might not be a
concern when outsourcing projects to
economies with well-established legal
systems modeled on Western lines,
explains Mr. Lepeak. But it can become
more problematic in the context of
countries such as China, where the law
affords far less protection of intellectual
property.
At a tactical level, policies such as
requiring background checks of an outsourcing partner’s employees can help
to minimize the risk. But at a strategic
level, he adds, a smarter move might be
to allocate work involving particularly
sensitive data to specific countries or
partners with an established record of
handling such information securely.
“[Outsourcing wisely] takes time, and
it takes effort, and not an inconsiderable
amount of either,” warns Mr. Lepeak. “It
also adds cost, and detracts what is seen
as the simplicity of the outsourcing
model, thus diminishing its value. But as
outsourcing becomes more prevalent,
getting the basic steps right is essential.”
At product design company
TheAlloy, for instance, risks to intellectual property are the main security consideration when tendering projects to
multiple parties, says Gus Desbarats,
chairman of the Farnham, Surrey,
England-based organization.
When soliciting quotations from
Asian manufacturers, “we are very careful to create multiparty tender packs in
ways that limit the information we provide to the minimum that’s needed for
costing,” he says. “Only a short list of
trusted suppliers see the full design.”
