An Auction Approach for Cost and Schedule Management of IT Outsourcing Project

Abstract

Cost and schedule management are important issues in an information technology outsourcing project. Generally, a client does not know much about market quotation and ability of vendors. Thus, an efficient approach should select a suitable vendor for the project with balanced cost and schedule. In this study, an improved standard English auction (ISEA) is designed, in which the multi-attribute situation is considered, and multi-attribute utility theory (MAUT) is introduced. A new auction protocol and a utility increment function are proposed, respectively. Finally, numerical examples are designed to demonstrate the auction process and its operation. Some insights are found: The ISEA is competent to describe the cost and schedule management process in an auction approach. The optimal incremental utility for client and vendor are found, and the proposed auction protocol is a mechanism for the client and vendor to obtain win–win results. The completely consistent results can be obtained from different size cases, which indicates that the validity of the designed auction mechanism and the effect of the utility increase function on the negotiation results.

Evaluation of the main performance criteria of IT outsourcing for contract management in public companies: a bibliometric review

“…Quality is the criterion which means the possibility of improvement of providing public services for IT outsourcing, across specialties and capabilities that the public company does not have, as well as the improvement of routines and processes (Lu et al, 2018;Lin & Hekkala, 2016;Johansson, 2015).…”

Multiple-Criteria Heuristic Rating Estimation

“…This method competes with other decision-making methods in many areas, including logistics optimization [25,26], IT management [27,28], military applications [29] or such exotic applications as analyzing the possibility of oil exploration in the Arctic National Wild refuge [19] (pp. 89-100).…”

Business IT Alignment Impact on Corporate Sustainability

“…Since IT can also have a significant impact on the environment, there could be future research on the influence of BITA and its impact on sustainability if the company uses green IT, which refers to the study and practice of designing, manufacturing, using, and disposing of computers, servers, and related subsystems efficiently and effectively with minimal impact on the environment. Companies with outsourced IT could also be researched, as that approach requires a different BITA approach and raises new challenges, such as effective risk and cost management of outsourcing using different approaches [122,123].…”