Last edited 07 Feb 2021

Insourcing in the construction industry

[edit] Introduction

Insourcing (or self-sourcing) is the practice of using in-house staff to provide services that are not necessarily related to the primary activities or core competencies of their organisation. This practice may require external input to cross train staff, enabling them to undertake new tasks.

Insourcing services might include IT, security, facilities management, landscaping, accounting and other administrative functions. Some of these tasks are commonly associated with soft facilities management.

Within the construction industry, insourcing services may also include CAD/BIM, project management, preparation of documentation, human resource administration, energy management and other activities associated with operations.

When insourcing is applied to in-house facilities management departments, it may be beneficial to incorporate a charge-back scheme. This allows departments to be treated as an ‘in-house’ outsourced service with the ability to report tangible data.

In the last few years, many local authorities and other public sector entities have begun to review their policies around competitive tendering associated with outsourcing and to reconsider insourcing as a method for encouraging cost containment and accountability.

Competitive tendering became increasingly common in the UK in the 1980s, when it was seen as a way of making public organisations open themselves up to bids from private firms. This was intended to increase transparency, drive down costs and improve the efficiency of central and local government departments. However, it was criticised for placing too much emphasis on cost rather than value, and is now sometimes seen as a 'race to the bottom'. As a result, many organisations have made the decision to move away from long-term outsourcing contracts.

Expand the skills of employees and provide them with a better understanding of different aspects of the organisation and an increased sense of ownership.
Improve the organisation’s ability to respond rapidly to changes in the business environment by redeploying cross-trained employees when necessary.
Establish cost projections (and possibly cut labour costs) by reducing the organisation’s dependence on external resources.
Protect proprietary information about the organisation and its clients, staff and other personnel.
Deliver realistic, reliable services from a flexible, integrated workforce.

Potential negative aspects of insourcing include:

Cross training employees is an investment that will require time and resources. It can also take staff members away from their original roles.
Employees may leave the organisation once they benefit from the cross training they receive.
Employees may not wish to participate in insourcing initiatives and can push back against training and re-allocation of roles.
Employees may require additional continuing education or training to stay current in roles outside their primary skillsets.
Outsourced tasks requirements may be extremely specialised.
It may be difficult to introduce an element of competition, and so services can become inefficient.