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EVALUATION
FOR OUTSOURCED PROJECT PROVIDERS
Abstract
1. Introduction
In the last two decades, increased demand for the evolution of infrastructure in Brazil
has resulted in a rapid nationwide expansion of telecommunications services. Consequent
market pressure has forced companies to restructure in order to remain competitive, and bring
new services, namely in mobile communication, the corporate market and data
communication access. To survive this new context, companies have adopted strategies for
cost reduction, higher productivity, enhanced quality, service diversification and higher
shareholder return. One of the means adopted to make these objectives operable has been
Outsourcing, resulting in a network of service providers for telecommunications operators.
This context also comprises the organization in which this research was conducted. In
this company, outsourced providers needed approval of the corresponding branch project
manager in order to act in data communication systems expansion projects. The decision,
From the moment in which competitiveness started ignoring frontiers, enabling the
opening of protected markets to global competition, companies have been forced to rethink
operation methods to assure survival in a new scenario. Adopted strategies to confront this
challenge of increasing dynamicity include Outsourcing.
The concept of outsourcing has thus evolved from simple transfer of activities of no
financial interest to a source of specialization and differential competitiveness. This evolution
displaced the focus of cost reduction and quality improvement to include performance
enhancement and added value to customers.
In Brazil, outsourcing has gained force since the start of the 1990s, with the end of
market reserve laws, start of public service privatizations, increase of fixed costs, tax burden
and number of inputs needed for support activities. In telecommunications, outsourcing
became a viable option with the privatization of state companies in 1998. Since then, the use
Decision Aid arises from the presumption that decisions are complex and
personalized, and that stakeholders do not have the understanding that allows prevision of
consequences of their decision in their system of values (Roy and Vanderpootem, 1996).
4. Case Study
This item discusses the research Case Study in three sections, in accordance with
stages of the MCDA-C model.
4.1 Structuring
The Case Study was conducted in a telecommunications operator with activity in the
South of Brazil. In this company, expansion projects of data communication systems are
performed by outsourced providers. The company has around six thousand collaborators, and
more than 10 million customers. Data communication expansion projects are conducted in the
parent company, which is also responsible for drafting contracts for outsourced project
providers. Projects approved in the parent company are managed in each branch by the
corresponding project managers, who directly interact with outsourced company technicians
responsible for execution of works. In order to operate, outsourced companies need approval
of the project manager of each branch, who issues his/her decision and sends it to the parent
company. Subsequently, the outsourced provider starts activities with temporary approval
until the final decision of the recommended manager to continue, or not, provision of
services.
The evaluation process of outsourced companies under the responsibility of the project
manager, however, was essentially based on intuition. The evaluation procedure used to
decide approval or non-approval of companies did not observe requirements considered
necessary. This procedure showed fragility and resulted in unfounded and unjustified
company approval, lacking decision history or feedback of outsourced companies that could
enable performance enhancement.
Consequently, the actors involved in this context were identified, which are: (i)
decision-maker: project manager; (ii) stakeholders: telecommunications operator auditors,
network directories, suppliers, fault management, operations and maintenance management;
Anatel (Agência Nacional de Telecomunicações [National Telecommunications Agency]);
(iii) the agents: customers, society and outsourced technicians; (iv) facilitators: authors of the
article.
An interactive process between facilitators and the decision-maker was subsequently
adopted to create a Label that closely represented decision-maker concerns regarding the
problem, which in this case was defined as: creation of a structured process that evaluates
performance of outsourced providers.
Meet installation
standards....have internal
problems and with Anatel
Figure 1 – Partial of the Means-Ends Map for Compliance with standards Cluster.
The following step of the MCDA-C approach consists of converting the structure of
Means-End Maps to a Hierarchy Structure of Value. Each cluster should be tested to meet the
following properties: essential, controllable, complete, measurable, operational, isolable, non-
redundant, concise and comprehensible (Keeney, 1992; Ensslin, Montibeller & Noronha,
2001; Roy, 2005). Clusters that meet these properties receive the denomination Fundamental
Point of View (FPV).
FPVs, however, are too broad to be measured. For this reason, returns to Means-Ends
Maps in order to analyze the sub clusters. Their transformation process is equivalent to that of
FPVs. This subcriterion is denominated Elementary Points of View (EPVs). The breakdown
process continues until EPV is reached which represents a context priority and thus can be
measured in an objective and unambiguous manner. Figure 2 shows the Arborescence for
first-level EPVs of the created model.
Once the Hierarchy Structure of Value is built, the next step is the creation of ordinal
scales to measure Points of View. These ordinal scales are called, Descriptors.
Ordinal scales are built using an interactive process that also counts on active
participation of the decision-maker. At this moment, the decision-maker creates a scale that
best represents that which he/she judges relevant, and identifies the Reference Levels (Good
Level – above which performance is excellent; Neutral Level – below which performance is
endanger). Between these two points is considered market performance (Roy, 2005).
Figure 3 partially shows the Hierarchy Structure of Value for FPV Patterns Serving,
with corresponding EPVs and Descriptors.
4.2 Evaluation
Ordinal scales created for descriptors often contain representative numeric symbols,
which are not numbers of the ℜ set of real numbers, (Barzilai, 2001; Azevedo, 2001).
Therefore, these scales should not be used for functions that involve numeric operations.
Figure 4 – Transformation of Prior Auditing Descriptor into Value Function using Macbeth
Methodology.
Figure 5 portrays the partial set of cardinal scales for FPV Pattern serving.
To meet the conditions for evaluation that allows performance comparison of different
outsourced companies, local values of each criterion are added to a global evaluation value,
thus allowing performance measurements of each outsourced company. Integration is possible
using Substitution Rates. In order to prevent the decision-maker from expressing numeric
judgement values, the Macbeth comparison method was adopted to provide semantic values.
Firstly, the desired hierarchical structure is identified. Figure 6 highlights the
hierarchical structure for better illustration of the process, which is the determination of rates
for EPVs – Project Conformity, Document Markings, Timeline for Start of Installation and
Prior Auditing.
Potential actions that represent the contribution of the transfer from Neutral Level to
Good Level are created in each desired criterion substitution rate, along with reference actions
with Neutral performance in all points of view, as specified in Figure 7. In sequence, the list
of alternatives is ordered according to preferences of the decision-maker. Listed alternatives
and semantic judgements of the attractiveness difference after switching one action for
another are inserted in M-Macbeth software, which provides the Substitution Rates.
The same procedure is adopted with the other hierarchical structures. Figure 8 shows
the Hierarchy Structure of Value with Substitution Rates of the created model.
In order to globally evaluate the impact of an action, local evaluations of each action
should be added, providing a weighted sum with punctuation obtained by the action in each
criteria multiplied by the corresponding criteria weight. This results in a global equation of
the Case Study model, which is:
In equation (1), constants are obtained by the product of rates in the ascending
Hierarchy Structure of Value. The generic integration equation form is:
V FPV k (a ) = ∑ w i ,k • v i ,k (a )
nk
i =1 (2)
In which:
V FPVk (a ) : global value of action a of FPVk, k = 1,… m;
vi,k(a): partial value of action a of criterion i, i = 1,...n, of FPVk, k = 1,… m;
a: level of impact of action a;
wi,k : substitution rate of criterion i, i = 1,... n, of FPVk, k = 1,… m;
nk: number of criteria of FPVk, k = 1,… m;
m: number of FPVs to the model.
Figure 9 – Impact Profile with status quo of the three evaluated outsourced providers.
4.3 Recommendations
5. Final Considerations
The objective of this article was to show the construction of a performance evaluation
model of outsourced providers of a Brazilian telecommunications operator. The MCDA-C
approach was adopted as intervention instrument due to the complexity of the context, with
conflicting interests, in which the decision-maker had no clear knowledge of the criteria that
should be included in the performance evaluation model. Data used for model construction
was obtained through non-structured interviews with a project manager of one of the
company branches and contractual documents. Research was exploratory, in the form of Case
Study, with a qualitative and quantitative approach.
The participative decision aid process allowed the decision-maker to identify,
organize, measure and integrate aspects he/she considered necessary and sufficient to evaluate
outsourced company performance. In this way, the project manager had the conditions to: (i)
provide feedback to companies regarding the criteria considered relevant in the evaluation;
(ii) know local punctuation of each criterion of each company; (iii) know global evaluation of
companies; (iv) compare company performances; (v) use an instrument that justified issuance
of final approval, or not, of the company that provided services in the acceptance period; and,
(vi) acquire knowledge of the impact of potential actions in the performance of each
company.
Acknowledgment
The authors would like to thank to Cipriana Leme da Silva who made the translation
of this paper.
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