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

Fuqiang Lu (), Yanli Hu (), Hualing Bi, Min Huang () and Meng Zhao ()
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Fuqiang Lu: College of Information Science and Engineering, Northeastern University, Shenyang 110819, P. R. China
Yanli Hu: College of Information Science and Engineering, Northeastern University, Shenyang 110819, P. R. China
Hualing Bi: College of Information Science and Engineering, Northeastern University, Shenyang 110819, P. R. China
Min Huang: College of Information Science and Engineering, Northeastern University, Shenyang 110819, P. R. China
Meng Zhao: College of Information Science and Engineering, Northeastern University, Shenyang 110819, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2018, vol. 35, issue 05, 1-23

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.

Keywords: IT outsourcing; schedule and cost management; standard English auction; multi-attribute utility theory (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S0217595918500343

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