In the Make, Lease or Buy analysis, after defining outputs and calculating outsourcing savings, what is the next step?

• A. Define outputs
• B. Compute the costs of contracting from the private sector
• C. Compare the difference and make a decision
• D. Reassess the outputs

Answer: (B)

After defining the outputs and estimating outsourcing savings, the next step is to quantify what it would cost to contract with the private sector. This means calculating all relevant outsourcing price elements—base charges, transition costs, ongoing service fees, maintenance, and any contractual terms that affect cost. Having these contract costs lets you directly compare them with the in-house or other alternatives to see whether outsourcing truly delivers savings when the full price is considered. Once you have the contract costs, you can then compare the differences and make a decision.