While outsourcing is often a method used to reduce or control costs, it raises obvious worries regarding control over service delivery, quality control and the fixing of priorities. A purchasing department needs to be able to provide expert advice to ope
September 19, 2023
Irrespective of how an outsourcing arrangement may be structured, risk and rewards must be shared between the partners on a rational basis which fairly reflects the legitimate expectations of each of them. Operations — The non-government partner should be required to assume all or most of the risk that the revenues will cover expenditures while providing stipulated service levels.
To set standards and to monitor performance to ensure those standards are being achieved and maintained;impose penalties in order to discourage the possibility of cheating; andOutsourcing is beneficial only where the cost to the municipality of adopting such a method of providing services is less than the cost of providing them internally.
To ensure outsourcing will result in lower aggregate costs many municipalities have now introduced a practice of having internal divisions within the municipality submit a bid when work is offered to outside suppliers through a tender or RFP. To achieve a sensible cost comparison, care must be taken to ensure the in-house bid is a cost exercise.
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