ABSTRACT

This chapter describes the process of outsourcing from the decision to consider an outsourced solution through to the management of a live contract. At the highest level the outsourcing cycle can be divided into three main steps: deciding to outsource, procuring a supplier, and managing the contract. Deciding to outsource includes the following sub-stages: planning, strategic analysis, cost and performance analysis, and risk analysis. Procurement includes the following sub-stages: selecting providers, due diligence, and negotiating terms. The provision of planned maintenance is usually a central part of any utility outsourcing contract. Outsourcing of energy and utilities is too complex to have everything happen at once and there has to be an agreed transition plan to move from existing arrangements, whether in-house or through an existing outsourced contract, to the new arrangements. The ideal length of the transition period also depends on the scope and complexity of the project.