With the PwC inquiry into G4S’s performance at the Olympics published, there are many learnings for the outsourcing community. This was an unprecedented operation with unique challenges. The report specifically mentioned that the monitoring and tracking of the security workforce was not suited for scale of the project and this is something many outsourcing clients and suppliers should be taking note of. G4S has suffered the loss of two senior executives which starkly illustrates that while you may outsource a job, you cannot outsource all the risk.

G4S is continuing to enter into new public sector tendering processes and it will take some time to restore its reputation, but its Olympics experience is a salutary lesson for both clients and suppliers in outsourcing. I believe that cases like this highlight that having a mechanism in place to performance manage contracts is crucial for the successful delivery of services. Clients should insist on evidence of this at tender stage, and suppliers must provide reporting that monitors and flags up potential issues far in advance of the problem actually happening.

Only when both sides have full visibility based on timely data can the supplier be sure they are doing a good job, and the client that they are managing the risk, both to the contract, and their job.

With the competition for government outsourcing growing, and the government trying to open up their tendering processes to SMEs rather than just the giants, it is more important than ever for suppliers to be able to point to clear performance management in the tender document. With the government pushing for better terms, it is also important for suppliers to have absolute confidence in their service. The move towards payment for results means that suppliers really have to put their money where their mouth is.

But both sides have responsibility when it comes to running a successful outsourcing contract. Where many contracts run into trouble is when assumptions are made on either side on who is responsible for what. The interplay between dependencies in a contract has huge implications for the success, or failure, of the project. These dependencies need to be clearly defined at the beginning of the relationship. For example, with security staff, the supplier needs to know (among other things) how many staff are required, the skill level they need, what accreditation and security clearance they need and who is responsible for gaining this clearance. In some cases the supplier can run these background checks, but for top-level security a government check is necessary. All of these dependencies need to be factored into a job with clear agreements as to who is doing what.

With this joint understanding the supplier and client can clearly see whether something is running to plan, whether there is a slight deviation from the plan which is allowable, or whether the deviation is so great that immediate action much be taken to rectify the problem. The client and supplier should be sitting down at regular intervals and reviewing the project against the scorecard which was agreed at the outset of the project.

Organisations involved in outsourcing, whether client or supplier, must learn from G4S’s experience so they do not run into the same problems. If you’re not measuring it, you’re not managing it - an old management saying that is truer than ever in outsourcing today.