Wireless carriers often face a dilemma in obtaining radio-frequency engineering services to
implement and operate their networks. How do they find experienced RF engineers to design and build those networks,
while at the same time controlling costs for recruiting or consulting? Carriers must find a way to outsource this
requirement in an efficient and cost-effective way.
The effects of competition between four, five or even six carriers
in the subscriber marketplace are being felt in all corners of the wireless world. Carriers must look at every line item in
their budgets to ensure they are getting the most out of each dollar spent.
It is costly for a wireless carrier to obtain
RF engineering services. To hire a dedicated staff of employees involves salary and benefits, not to mention recruiting
and relocation expenses. If a candidate declines an offer, the whole process begins again, with the additional cost of lost
time tacked on. No matter how effective the hiring program, it seems the workload increases faster.
As an
alternative to hiring full-time employees, a carrier can choose to use consultants on a time and materials basis.
Consulting on a T&M basis allows for a great deal of flexibility, which is advantageous in the early stages of building
out a personal communications services network. Engineers working on a T&M basis are able to take on whatever
challenges come down the pike, and spend appropriate time on each item, with a minimum of planning. While this
allows for a quick start, when you factor in labor rates and per-diem costs, this can exhaust a budget
quickly.
Benefits of fixed-priced outsourcing
The time has come for carriers to outsource RF engineering
services for design, implementation and optimization on a fixed-price basis. In a very competitive market, this method
is necessary to receive maximum value from the money budgeted.
It long has been standard practice to bid out the
physical construction of a site to contract vendors. It is more effective to outsource the construction work than to have a
dedicated staff in place to do it. Economies are achieved because this allows the carrier to avoid unproductive expenses
during slack periods in the buildout schedule.
Using contract services reduces the cost of certain tasks. For example,
carriers have found that hiring an architectural engineering firm on a fixed-price basis reduces costs significantly.
Contracts for this type of work today are significantly lower than those associated with the earliest cell sites
built.
Most carriers do not like to hire consultants to perform work on a time and materials basis because they can
hire their own employees at a lower cost. However, consider that the employees, in effect, also perform their work on a
time and materials basis. The employer pays their salary plus any expenses and overhead.
Therefore, sometimes it’s
expedient to hire consultants on a time and materials basis for projects that are short-term, or where the scope of work
is not well-defined. However, when the means and objectives are known, fixed-price engineering can be more cost-
effective.
Outsourcing RF engineering can be just as effective as outsourcing other services, particularly when done
on a fixed-price basis. Contractors providing RF engineering services are no different than other contractors providing
a service: They have to be efficient, or the work won’t be completed on schedule, deadlines will slip and money
will be lost.
Work that costs you time and resources can be handled efficiently when you outsource it. Consider all
of the costs associated with performing a site-qualification drive test. First you have to select and purchase the test
equipment and vehicle, then you need someone to schedule the test, set up the transmitter, actually perform the drive
test, take care of the equipment, and present the results. Also, consider that the unit cost increases as the number of
planned sites decreases. This is just one of the many functions for which outsourcing can save you time, and effectively
give you more “bang for your buck.”
Some people believe fixed-price engineering is too difficult to
manage or too expensive to implement. However, if other departments can manage it and save money doing so, why
not implement it for RF engineering?
This doesn’t mean carriers should eliminate their RF engineering staff.
Dedicated engineers and managers still are needed to plan, monitor and review the completed work. Carriers certainly
will want to ensure the quality of the work completed and verify it meets their guidelines. They also will want to
reserve the critical judgement calls for managers and directors. However, as the market changes, outsourcing RF
engineering work will become an increasingly sensible and cost-effective option.
Understanding the economics of
fixed-price engineering
Outsourcing on a time and materials basis is like riding in a taxi; when you get into the taxi,
the meter starts running. The taxi will take you wherever you want to go, and you don’t have to know your own way
around. You depend on the taxi to get you where you’re going by the most efficient route, and you even pay a premium
for that service. As with T&M, when you arrive, you pay the fare and are done.
To further the analogy, having
employees can be compared to owning a car. Over the long haul, it’s cheaper than using a taxi because you can use the
car anytime you want and the cost for gas is less than traveling by taxi. But as with employees, there are numerous
hidden costs, such as maintenance, repairs and insurance (with employees, there’s training, vacation and medical
benefits). When you get to the destination, you still own the car, and have to park it until you need it again.
Fixed-
price engineering is similar to riding on a train. It costs much less than the other two options (taxi or car), and it still
takes you from point A to point B. You plan your own itinerary with maximum efficiency, and you only pay the fare
for the distance traveled. Once you get off the train, you can stay as long as you like, and when you’re ready to go
further, you hop on the next train. This is the most cost-effective option. As your budget gets tighter and tighter, you
need to get to your destination as efficiently as possible.
Determining the value of fixed-cost outsourcing
What
does it cost you now to design, implement and optimize your system with the RF engineering staff you have in place?
When a large project, such as a re-home or a re-tune takes all of the time of the in-house staff, wouldn’t it be efficient to
outsource the day-to-day RF engineering work on a fixed-price basis? Many operators are finding the answer is, yes; it
can be more effective, if done correctly.
For example, there are certain tasks, such as zoning testimony, that involve
night hours and may involve waiting time at municipal meetings, which many engineers would prefer to avoid. Often
that means the junior members of the team end up with those assignments. Assigning this work to an experienced
engineer on a fixed-price basis can save time, get the sites approved and free up the dedicated staff to handle their own
responsibilities.
Another area where this type of outsourcing can be of value to carriers is system optimization.
Carriers currently bear the expense of having a staff in place to optimize their system. When you look back at the past
year, how does the cost of that staff stack up against the improvements measured? For example, if you were to take that
co
st and divide it by the decrease in dropped calls or blocking, you may be very surprised by the cost/benefit ratio. In
addition, keep in mind there are no guarantees the ratio will go down over the years.
Outsourcing
the system
optimization on a fixed-price basis guarantees you will only pay for results. You determine the critical parameters, how
much you are willing to pay for improvements, which tasks should be handled by your own RF staff, and where you
may need to supplement their efforts.
Carriers need to recognize outsourcing RF engineering this way will help
them meet their objectives while increasing efficiency and reducing costs. However, to fully appreciate the bottom-line
value of outsourcing, they first need to understand their internal costs for RF engineering. The accounting departments
of most companies can determine exactly how much it cost to build a particular site, and the breakdown of those costs
per department. That analysis can be used to maximize the efficiency of the engineering budget.
There are several
ways to negotiate with an RF engineering company offering outsourcing services.
Per-day cost
This variation on
T&M is a simple and easy approach for vendors and carriers and has been in use for some time. Carriers have the
ability to use an RF Engineer for any necessary tasks, and they are able to forecast costs accurately. However, many
carriers do not like this approach because there is no guarantee of any particular individual’s productivity. This
approach works well for projects for which it is difficult to define a specific scope of w work.
Per-site cost
The
idea behind this approach is that an RF engineering company is involved in the entire implementation process and then
paid at certain milestones. This approach has been used extensively with site-acquisition companies.
The site-
acquisition company is paid when it identifies site candidates, performs a site visit, signs a lease and receives permits
for the site. In theory, this should work well; carriers and site-acquisition companies alike want to see the milestones
reached as quickly as possible, though each for their own reasons. In practice, though, this approach can have its
challenges.
Task-oriented fixed pricing
This is one of the best approaches to outsourcing on a fixed-price basis
because it allows the carriers to control both network cost and quality.
Task-oriented fixed pricing means you pay a
fixed price for a provider to perform a certain task. For example, you would have an RF engineering company perform
a drive test, a site visit or analyze a particular site, and in each case pay the cost appropriate for that task. This approach
is very easy to implement since it can be applied to sites in any stage of completion and is also cheaper than other
options.
A good model for this type of approach is outsourcing for architectural engineering services. Consider the
different products that may be required: lease exhibits, structural analyses, construction drawings, zoning drawings
and even photographic renderings. Task-oriented pricing allows you to select, use and pay for only those items that you
need for a particular site.
There are many ways to begin outsourcing. You can start with small steps by outsourcing
certain tasks, such as drive testing or zoning testimony. The next step might be developing request for proposals for all
of the tasks involved in engineering your network. Preparing an RFP or a scope of work for RF engineering tasks is not
as difficult as you might think. When you consider the benefits to be gained, the time and expense required can be
justified easily.
Carl Busseno is chief technical officer and Rich Berliner is CEO of Berliner Communications Inc.,
based in Elmwood Park, N.J. Berliner Communications is a vertically integrated supplier of strategic services and
solutions covering all phases of wireless network deployment, including RF engineering, site acquisition, zoning, tower
construction and project management. www.bcisites.com
