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Managing Third Party & Counterparty Relationship Risks


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Procedures to Mitigate Outsourcing Risk

Procedures to Mitigate Outsourcing Risk

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  • Welcome – joke about only being me between conference and the bar (or the Paris shops)Begin with why this is relevantDefinition of what is outsourcingA discussion of when it is a good idea to outsource and what success looks likeAn overview of some of the key risks of outsourcing and procedures to mitigate some of that risk before during and after contractThen, some time for questions
  • Before we can really understand how to mitigate the risks of outsourcing, we need to understand what it is, and why you might want to do it.
  • Many of you will recall the fiasco surrounding G4S and provision of security staff for the Olympics. It finally led to the resignation of Nick Buckles, the extremely successful CEO outsourcer behind G4S (although apparently with a £20m package)
  • Outsourcing means different things for different people. Various models are out there, some of which involve more or less risk for the customer. Putting it simply, the more the customer remains involved with the outsourced process, the more risk he/she will be expected to retain. A company will not take risk for all aspects of an IT system, say, where the client remains responsible for hosting the information.However, if all aspects of a process are bundled together and given to a contractor, then the contractor will be more comfortable taking entire life cycle risk for that process.Alliances are often the most tricky to deal with – these usually involve situations where client/contractor teams are integrated. These provide the customer with the added benefit of additional control, heightened retention of knowledge, but as a result a much murkier liA typical definition is: (read definition).
  • What does BB do in the outsourcing space?We are less about complex IT outsourcing, but rather about outsourcing of functions. BBW provides hard and soft facilities management services for the built environment. Our Living Places businesses focuses on roads management/street lighting. Our Gas & Water business operates and maintains water and gas pipeline networks.Separately, my Division also has an internal shared service organisation called BB WorksSmart. This provides transactional finance, IT, procurement, HR and other back office services to the UK business. It essentially operates as more of a traditional outsourced operation.Finally, also within BBW is a more revolutionary outsourcing model, operating in local authorities like North Tyneside and NE Lincolnshire. In NE Lincs, we have taken over most of the Council’s non-core function – even to the extent of reviewing planning and highways applications etc. All staff were TUPE’d over to BB, and the Council has kept enough staff to fulfil its non-delegable statutory functions.
  • So, what are the main risks of outsourcing that need to be mitigated?
  • This is relevant because this often goes VERY wrong!Take the UK NHS – After 10 years of working on a system to share electronic patient records between GPs, hospitals, etc, the entire system was scrapped after massive overruns.
  • Vanity projects: These are probably the worst of the worst – the vanity project desired by a CEO/Minister with little or no regard for its benefit or whether it can even be implemented. Often driven by the greed of unscrupulous consultants paid on hourly rates, these projects can burn billions with little or no output ever seen. The NHS patient information project is a great example.Lack of buy-in:This can happen in two ways. Either management doesn’t understand the project, and there is no clear executive sponsorship of the deal. You will usually then find that suppliers waste a lot of time and effort coming up with proposals, or working on them, and then a large bill comes in the post that no one wants to pay. Create a clear governance process from the outset and make sure someone at exec level at the client is accountable. Then, you will save yourself and the customer a lot of heartache.You can create the best system or process, but if staff or the ultimate end-user doesn’t actually use the system, and keeps ringing their old contact, then the efficiencies etc will never work. Has to be user friendly, understandable, and “avoidance-proof” – i.e. people have to use it.Multi-sourcing – it is often the case that people will choose to work with multiple suppliers or advisers in order to mitigate their risk (e.g. of insolvency). However, while solving one problem, they create another, and that is interface risk. You run the danger here of no one taking responsibility, and everyone blaming each other, and you really only have one person to blame – yourself for creating this mess in the first place. Organisational design can really help here – clear schedules setting out who is responsible for what, and allocating liability across the group (including yourself) in an alliance style framework may be the best way to deal with this.Working with overseas contractors brings with it an entirely new set of issues
  • Another risk is whether the supplier, or any supplier, actually has the skills to take over your process. Often, to get the understanding, the supplier ends up shadowing the organisation for months, learning everything about their processes, ways of operating, and so on. At the end of all this, they TUPE your staff into their organisation, along with all their intellectual capital. How do you value the benefit of this knowledge. What stops the supplier from taking this talent and using it to develop a business with your competitors. All of this can be a big risk – you may be better off just leaving the capability within your own organisation.This is particularly the case if you become too dependent on your supplier. What if they go bust, or you see a gradual reduction in service levels which over time ends up costing your business. Can the supplier become so embedded that they cease to care, and get the same amount of money knowing that if they slash overhead, they start to make some serious profit off you.
  • And, I think this slide indicates well the general risk that sometimes customers just don’t realise how complex their own organisations are, or even what they do. When you start picking at the edges of something, you realise how much it is tied into lots of other ancillary services. Each of these items requires a clear understanding of who’s responsible, or otherwise your contract will become a vacuum for variation orders and a field day for lawyers like me.Something which you might consider fairly simple like maintenance of a road, can actually be divided into 40 capability sets. And, beware of replicating this for all roads – in Australia, there might be a separate capability for protecting koalas crossing the street, or for dealing with bushfire response.Each one of these categories could probably be divided further into multiple other categories, each with its own complexity and regulation.
  • We have heard enough of the doom and gloom – the next part of the talk deals with some tools and procedures for how to mitigate the risk of outsourcing. Some of this is legal, but most of it isn’t. Strangely enough, my part of Balfour Beatty gets involved in less litigation than all the other divisions of the group. Generally speaking we resolve matters commercially. Why? Because we have a lasting relationship with our customers – we are there for the long haul, and it doesn’t really help us to have litigation in the third year of a seven year relationship. Also, a lot of our business depends on contract renewals. There is little chance of a renewal if you end up suing your customer. And the other way around? Also easy, the client holds the money and just deducts it from the next month’s payments. It can be tough for outsourcers….
  • The US Navy contracted with EDS (now HP) to create the world’s biggest intranet. The project was plagued by delays and controversy, and let to EDS suffering an in quarter overall loss.4,100 servers handling 2.3 petabytes of data – 2nd largest network in the world (after the internet)Now, due to concerns about everything being in one place, the whole intranet is being unbundled.
  • Generally speaking, there is a much greater opportunity for an outsourcing to be successful if supplier and customer have a shared set of values. The above slide is an example of some work that Balfour Beatty Utility Solutions did with National Grid, showing that we did have a consistent set of values and that we were working together to achieve them.
  • In addition to values, it is very important to have a shared vision. A vision is more than just a bland statement – it is a process that builds in outcomes based on the shared values and goals. This example from a recent bid shows how we will work together with our client to achieve a vision. Each of these boxes on this chart would have its own implementation plan – and deals with both human and process elements to achieve performance outcomes for the project.
  • One key element to mitigate risk on an outsourcing project is to set up an appropriate organisational design. This needs to match relevant staff at the customer with staff at the supplier. Clear accountability needs to be set up for relevant aspects of the project, and governance arrangements put in place to escalate issues/queries.This slide is an example of how responsibility across an outsourcing can be divided up, although under the control of one named individual.
  • And from our Balfour Beatty WorkSmart business, I think this graphic sets out neatly all the building blocks in terms of overall success. There needs to be executive buy in. There needs to be a sense of partnership and working together through shared values and vision. There needs to be appropriate organisational design through a service management framework. And, importantly, the right people need to be put in place with a proper set of accountabilities and objectives. I will come to speak about data management shortly, as it ties neatly in to the risk mitigation principles set out in a standard outsourcing contract
  • I like this diagram as a great example of where outsourcing is a success. The “sweet spot” is where process innovation, cultural innovation and technical innovation all come together to create real value, and all of this is encased in a robust system of performance measurement. The performance measurement serves two purposes here – to keep the supplier on their toes, and to keep the customer satisfied that the partnership is, in fact, working.In a well run outsourcing, the measurement should also lead to performance incentives – both a carrot and a stick.
  • British Standards has developed BS11000, which is a process looking at collaboration between contractors and clients. Balfour Beatty participated in several pilot projects to develop the standards, along side Network Rail and National Grid in the UK.The Standard looks at the entire life cycle of collaboration from inception to termination. It can provide a useful basis for working together, particularly if such projects are a regular part of your business. The standard is a framework for developing the policies and processes, culture and behaviours required to drive continual improvement with key suppliers.
  • What tools/processes do we have at our disposal to prevent things from going wrong. A lot of this is contractual – and we lawyers love to get excited about all the things that can possibly go wrong and try and second guess them. This comes with a health warning however, sometimes the more you try to predict and deal with things going wrong, the more you tie yourself up with dealing with them commercially.
  • Again, sticking with G4S, the saga that is all over the press right now in the UK.G4S and Serco are alleged to have wrongfully charged the UK government £50m for tagging of prisoners who had either been released, put back in jail, or were dead.Fraud is an offence under UK and European procurement channels which can lead to mandatory debarment if proven. This means no future work for the companies involved with the UK government. There has been a significant drop in share price, and Serco’s European Head’s head is on the block.
  • When tendering for an outsourcing project, there is often a rush to get to contract.Scope is poorly defined, entire schedules are left to be agreed. Clients take entrenched positions because it is too difficult to negotiate with 13 tenderers. There is not enough time spent working out what the current state is, and often existing suppliers are relied on for information/analysis.Then, during the process itself, the in house team dealing with the project can be forced to negotiate with multiple suppliers at once – leading to poor outcomes, split expertise (because you can’t have the same person in three rooms at once), and generally very tired negotiators.
  • The roles and responsibilities in your contract are paramount.I can’t tell you the number of times I have seen shoddy pdf documents taken from a generic document written three years ago tacked onto the back of an extremely well drafted front end contract. Customers note – this is where you are at your weakest. You don’t understand how important these documents are. Your lawyers will fight for days over step in rights, but the scope will be so loosely drafted that you will be too afraid to use them.If you get this wrong, anything outside the contract wording will need to be a variation. This means extra cost. This means uncertainty. This means money for jam.There has to be a clear delineation of roles. E.g. what happens if I am providing your catering, but you are providing me with the power for the ovens. You will end up paying me for a day’s work when I don’t have to do anything.I cannot emphasise this point often enough – almost all the time on outsourcing contracts is spent discussing what we will provide – when understanding what you will provide is at least as important.
  • There needs to be consideration of a life cycle. There’s no point in believing that life will always be rosey. The threat of a retender will keep the supplier trying to improve their performance, more than the threat of a few service credits. So, make sure the entry, performance, and termination of the contract are clear.Mobilisation is absolutely key – where we have had issues in the past, they have usually arisen as a result of delayed mobilisation, and then we spend the rest of the contract trying to catch up to meet milestones. By the time the service levels start failing, and people get exhausted trying to meet them, everyone will have forgotten that it was the failure to get that environmental clearance back in 2010 that meant we were all delayed by 6 months. PLAN PLANPLANYou will find that often the best way to get value from a provider is not through beating them over the head – it is giving us more profit. We live to make you happy if it gets us more profit. This doesn’t mean it has to be at your expense – it could be through a well drafted pain/gain share mechanism with us benefiting from extra efficiencies we deliver over the contract life cycle.And the nasty stuff – termination. All clients want termination for convenience. This is not unreasonble. Nor is it unreasonable for us to at least seek some of the profit we expected over the lifetime of the contract, and our costs incurred for terminating subcontractors, making staff redundant etc. Everything comes at a price, including changing your mind.Generally speaking you will want us around to help out the new provider. We will often charge for these transitional services, and the rate won’t be cheap.
  • The contract should deal with risk and reward.There are some clients who try and drop all risk on the contractor – even where this makes no sense. Often, for example, contractors are asked to take all historic pension deficit risk from clients for staff who transfer over. Why? We will just price something outlandish, as there is no way that we can estimate what the prospective liability should be. And, nor may this ever materialise.For each risk, the parties should think who is best placed to deal with it, can it be insured, can we lay it off some other way.As noted earlier, pain/gain share mechanisms can be a really powerful way to incentivise contractors.In terms of risk – there is often a debate around who controls claims. If a third party claim comes in from an end user, and I have indemnified you for it, I will not want you settling it without coming to me first. If it’s reputational, do you really want me involved? If so, why are you trying to lay off the risk onto me? There are some risks depending on the contract that need to be dealt with specifically given the circumstances. Consider which indemnities might be relevant for your type of contract, but again, don’t go overboard, because we will price in a contingency based on the perceived risk and how we can manage it.
  • Every contract needs to have its policing mechanisms.The main mechanism is KPIs. Often clients fall into the trap of setting hundreds of KPIs. However, if you asked them – which are important, they would say “I just want these three.” Well, if they are the most important, make them the subject of the “penalties” under the contract. Nothing will focus our attention more keenly.If you end up trying to measure hundreds of KPIs, there is every chance the real message will get lost in the data. Try and keep reporting simple and focused. Adopt traffic light measuring systems, but keep your eyes on the key KPIs, and make these the subject of your service credit regimes.Service credits are in essence a form of liquidated damages. However, many customers believe they should be entitled to deduct payments, and then be entitled to sue for losses as well. Beware, your service credit regime may be struck out as a penalty, given it clearly no longer is a true pre-agreed estimate of loss.And, what if the loss can’t be valued, or is so important it doesn’t reflect a KPI – get it out of service levels and make it an indemnity. It doesn’t matter how many service credits you have if your supplier has just shut down your entire trading platform due to poor virus protection.Every contract needs to have a good governance structure. This should be a speedy escalation process to the right people.Termination rights will be required for contractor default.Lawyers often get excited about “step in” rights. I have never seen this happen – how would you step in anyway? We have taken over your entire capability. Focus on performance management is my humble view…
  • Our approach can best be summarised by ….‘You cannot manage what you cannot measure’Bill Hewlett (co-founder of HP) KPIs and SLAs define and underpin our commitments to our customers/clientsMaintaining a data based perspective on performance – vs a subjective and perception based responseSomewhat adding apples and oranges in aggregating individual metrics
  • For the first time, comparative operational performance indicators across OpCos are visible, causing some interesting Group level discussions and consternation in some quarters … but importantly, it is data-based, open and transparent, and forms a basis for actionThese actions are built into Joint Business Plans, reviewed Quarterly to ensure we’re all on the same page.
  • Clients often exercised about benchmarkingHowever:it’s expensive and time consumingGenerally, there are very few real comparators on most projectsIf you have built in a proper improvement across the life-cycle of the contract, why do you care? Much easier on simple one off contracts.
  • There are various other protections that you should put in place during a contract (and keep maintaining)Make sure that insurance is kept up to date (either by you or the contractor as agreed).To the extent that security is relevant make sure you get a parent company guarantee, or alternative third party support. This often has to be renewed across the life of the outsourcing contract.Ask your legal team to do you a contract summary. Often, the fundamental problem is that people don’t know what’s in the contract, and all our hard work is wasted.
  • Demobilisation of a contract can be expensive, time consuming, and your current supplier is in a great position. They now hold more information than you did about the relevant service and how it’s provided.During this period, staff can become demotivated, and performance levels can slip. We are particularly worried about safety during these periods.During transition periods, you can expect to pay twice, as you will have one contractor learning from the incumbent.
  • How can you mitigate risk during this period.Consider bonus payments for good performance. Lock down your IP. Make sure you have copies of source code, manuals, records, reports etc.Check whether TUPE will apply – otherwise, all those terrible staff you have just terminated will end up with your new provider, and a huge consultation process.Perhaps you should offer to pay key staff golden handcuffs, to keep them sweet during the transition (or for years afterwards).Look at your confidentiality/non poaching clauses – these may come in handy.Make sure you consider re-branding early . This can be a cost, and you don’t want to end up in a trademark dispute with your old supplier.Finally – consider the vehicle the services are provided by. If you may want to take the service back in house one day, why not set it all up within a corporate entity and include a share buy out option at the end of the period.
  • And, just in case you think this is a modern phenomenon, back in 240 B.C., a Carthaginian leader decided to hire a bunch of Numidans as mercenaries to fight the Romans. After some losses, the government attempted to demobilise the mercenaries in separate waves, hoping to delay supplier payments.Unfortunately, unsatisfied with being put off, the mercenaries all banded together and seized the capital of Carthage.Fortunately, for Carthage, the Client achieved a change in management, appointing HamilcarBarca as leader, who divided the suppliers, killed their leaders and dispersed them.These remedies are not readily available to today’s business leaders’ however.
  • Transcript

    • 1. Procedures to Mitigate Outsourcing Risk 9 October 2013 Matthew Flood General Counsel, Support Services
    • 2. Introduction   What are the risks of outsourcing?  Mitigation: Planning for success  Risk Mitigation: Specific Actions  2 What is outsourcing? Questions?
    • 3. What is Outsourcing?
    • 4. Why is this relevant?   £250m contract for 10,400 security staff  G4S unable to provide enough staff  4,700 members of the armed forces deployed  4 G4S London 2012 Olympic Games Security Contract Resignation of CEO
    • 5. Definition of Outsourcing  A "typical" definition: "the process of transferring the responsibility for a specific business function from an employee group to a nonemployee group, which may or may not include the transfer of assets and personnel”  Means different things in different situations: ● ● ● 5 Contracting relationships Sub-contracting arrangements Alliances/partnerships
    • 6. What does Balfour Beatty do in the outsourcing space?   Energy services (WorkPlace)  Roads networks (Living Places)  Gas/water networks (Gas & Water)  Business Process Outsourcing (WorkSmart/WorkPlace)  6 Facilities Management (WorkPlace) Total Outsourcing (WorkPlace)
    • 7. Risks of Outsourcing
    • 8. Why is this relevant?   £12 billion scheme to provide electronic patient records  Scrapped after 10 years  8 National Health Service – NHS National Programme for IT (NPfIT) Estimated overruns of £7.4billion, multiple supplier contracts terminated
    • 9. General risks  Vanity Projects  Lack of buy-in/understanding ● ●  At executive level Generally by staff Working with contractors (especially overseas) ● ● ● Lack of cultural understanding Data protection Bribery/Ethical risks   9 Bespoke vs Generic system “Non-outsourcable” responsibility
    • 10. General risks: continued  Capability ● ● ●  Intellectual Property ● ●  10 Do they know what they’re doing? Losing talent to the contractor? Can they take you for a ride? Benefit of developments? Selling your knowledge to other customers/competitors? Dependence
    • 11. Is this more complex than you think?: Balfour Beatty Living Places’ capabilities on roads         11 Highways and Transportation Strategic management of highways and street lighting assets Network management Health and safety management and delivery Congestion reduction Programme management Project management Street-lighting design and maintenance           Road safety & travel planning Highways design and maintenance services Winter maintenance Emergency response Vehicle management and maintenance services Grounds maintenance services Construction Site supervision Sustainability Environmental services           Performance and risk management Change management Highway asset management CDM services Street-lighting design and maintenance Highways inspection Traffic control systems including traffic lights Planned & reactive maintenance Enquiries from the public Road space management             Traffic Management Act coordination Third Party claims management Tree management Drainage Lighting management Parking control Travel & information management Streetworks Network coordination Traffic monitoring Material testing Annual road user casualty reduction
    • 12. Mitigation: Planning for success
    • 13. Why is this relevant?   $4billion deal for EDS to provide world’s largest intranet  700,000 users, 400,000 computers in 620 locations  Project plagued by delays and controversy  $550 million in deferred costs written down in 2003  13 US Navy EDS IT Contract Now, whole site being “unbundled”
    • 14. What makes it work?: Shared Values 14
    • 15. What makes it work?: Shared Vision 15
    • 16. What makes it work: Organisational Design 16
    • 17. What makes it work: Critical Success Factors Game changing Business STRATEGIC Partnership ‘Working together’ Executive sponsorship 17 Data-based approach early identification of trends WorkSmart Shared Services Service Management framework Fielding the Right Team
    • 18. What does success look like?   18 Success is where the outsourcing delivers better value than the client could generate doing the work itself And, this success can actually be measured
    • 19. Preparing for success: Is there an ideal process?   Provides a process clients/contractors can use to work together effectively  19 BS11000 Collaborative Business Relationships Auditable
    • 20. Risk Mitigation: Specific Actions
    • 21. Why is this relevant?  G4S/Serco Prisoner Electronic Tagging Contracts  Alleged overcharging of up to £50 million pounds  Offenders had been released, were in prison or even deceased  Serious Fraud Office to investigate  Banning from government contracts? (c. 50% of Serco Revenues) 21
    • 22. Mitigation BEFORE
    • 23. Contracting: More Haste Less Speed  Rush to “get to contract”  Scope poorly defined, terms harsh/unmoving, schedules left “TBA”  Time not spent on: ● ● ● 23 current state; what is required; nor what success looks like.
    • 24. Contracting Framework: Roles and Responsibilities  SCOPE! ● ● ●  Set out clearly what client does vs what supplier must do ● ● 24 Must be clear, consistent, If not included, will usually be a variation “Kitchen sink” language Client dependencies Outsourcing contracts fail where gap in understanding
    • 25. Contracting: Outsourcing life cycle  Beginning, middle and end  Leave enough time for the handover  Contract operation ● improving metrics/efficiencies over the life cycle  Extension?  Termination/hand over mechanics ● ● ● 25 Termination for convenience? Transitional services? Break costs?
    • 26. Contracting: Risk and Reward  Client risk or contractor risk? ● ● Who is best placed to pay for it? Do you REALLY want the contractor to take it?  Pain/Gain share mechanisms  Claims/investigations?  Specific risks ● ● 26 Bribery/data protection/HSE/personal injury etc Indemnities?
    • 27. Contracting: Policing Mechanics  KPIs  Service Credit regimes/Liquidated damages ● ●  Should this apply across all KPIs? Exclusive remedy? Reporting requirements/Escalation Procedures ● ● Governance structure? Consistent data/data overload   27 Termination Rights (on default, change of control etc) Step In Rights
    • 28. Mitigation DURING
    • 29. Mobilisation/Ongoing review  Planning is no good if actual implementation is poor  Transformational shift in culture ● ● ● ● Safety Efficiency Redundancies? On-going employee engagement   29 Data in agreed form ready to be produced Contract summary
    • 30. WorkSmart service management Our Service Management framework has assured performance transparency and enables collaboration with our clients ‘You cannot manage what you cannot measure’ WorkSmart Only Data based and Baselined metrics Bill Hewlett (co-founder of HP) Driving accountability and E2E improvement 30 End-to-End • We measure WorkSmart only and End-to-End performance metrics, and embed in Service Agreements
    • 31. WorkSmart service management End-to-End Performance reviews are held monthly with each Client, chaired by BBWS Account Manager and incl. WorkSmart Only and End to End performance. • End-to-End achieved 66% GREEN SLA compliance (Mar) • AP invoices POT % + Level of aged Debt compared to baselined expected and minimums varies by OpCo • Payroll accuracy + Timeliness + Payslip distribution compared to baselines • % addressable spend going through SCM agreements + % of forecast benefit achieved + % rebates collected Insights: 31 • End-to-end comparative metrics are a catalyst for change • Stronger client relationships accelerate benefits and value-add
    • 32. HEAVEN/HELL 4% efficiency challenge to tendered outputs 10% of 8 year programme by December Subcontract reinstatement Improve external stakeholder relationship WIP < 155 days <50mil Efficiency programme < 4% Staff churn Employee attrition Year 1 workload target & risk removal delivered IT systems delivering eg audits MI capability Employee Engagement survey Innovation – mains lining; asbestos insertion Relationship with local authority improved No Section 74 Contract KPIs delivered Robust MI/ contract measurement & environment All staff have objectives linked to Biz plan Customer Sat > 8.05 Developed sustainable manpower strategy that covers winter/ summer requirement Meet budget All BB employees Hit Zero harm target Accumen live NW GDSP & Data Fit for purpose tendered structure in place Year 2 programme in place Engaged workforce 62+ (79) D42 achieved Year two Design submitted Customer score 8.5 Restructure complete Paperless system Dateline Ops not delivering - programme adherence Succession planning – losing key talent April 2014 April 2015 Low Employee engagement results Exceed mains replacement target 7% efficiency to tender contract BMS non compliant Increase in staff numbers to manage inefficient processes/ systems HSE consultation cuts too deep – unsafe network Reputation on 3rd party reinstatement £££ 32 Property portfolio stable (optimal) Development plans not in place GDFO issues WIP >55m High customer complaints and enquiries S74 performance not improving Lack of confidence in the reinstatement process Poor relationship with stakeholders Stakeholder relationship not improved Transformation team/ projects delayed due to consultation 8+ look ahead work & design People issues – relationships; competence blocker on delivery; succession planning Open book supply chain orders Achieve Zero harm target H&S performance declines NWGA pack completion Front end focus not backend loaded New innovations process/ IT
    • 33. Benchmarking   What criteria?  33 How often? Outcome?
    • 34. Insurance/Security  Consider what insurance policies required ● ● ●  Security ● ● 34 Who should insure (client/contractor) For what (design, physical damage etc)? Ensure currency of coverage Bank guarantees/insurance bonds Parent company guarantees
    • 35. Mitigation AFTER
    • 36. Risks on retendering  Demobilisation can be expensive  Your current supplier is in the best position  Culture ●  Transition ● ● 36 People can take their eye off the ball Expect to pay twice Does the contract still work 5 years on?
    • 37. Mitigation of risks  Intellectual property – who gets all the handbooks, manuals, IT etc  Staff ● ● ● TUPE – does it apply? It can help (OR NOT!) “Golden handcuffs”/bonuses? Non poaching/confidentiality clauses   37 Branding solutions Buy out the company?
    • 38. Why is this relevant?   Hanno outsources infantry to 20,000 mercenaries  Following contract losses and poor demobilisation, Tunis seized by mercenary army  Previous manager, Hamilcar Barca, reinstated  38 The Truceless War, Carthage, 240 B.C. Resolves the matter out of court by killing them all
    • 39. Questions?