As the trend of outsourcing becomes more popular we want to offer some guidance to help you decide whether or not to outsource your next project. While it is true that managing a project in house could render potential savings, that savings will disappear over time if the project is managed poorly.
So, what is outsourcing? This term refers to a company that uses the services of a third party vendor such as a project management company.
Here’s how you’ll know when it’s right to outsource project management:
1. You lack in-house expertise. If the project requires a highly specialized skill set that your current staff do not possess, outsourcing may be the best solution.
2. You have in-house expertise but workloads are too demanding. Just because your staff have the skills to complete or manage the project doesn’t mean they should. If you can’t afford to pull them away from their current workload, give strong consideration to outsourcing the project.
3. The type of project lends itself well to outsourcing. Projects that are highly complex or large and are tactical (verses strategic) in nature, are well suited for outsourcing. Long term projects can provide a strain on internal resources so they are also well suited for outsourcing. Strategic projects can be outsourcing candidates, however the pros and cons should be considered carefully. If you choose to outsource a strategic project, find a project management firm that can work well with your management team and has experience bringing a healthy mix of objectivity, industry knowledge, and the ability to understand your specific strategic goals and culture.
4. You need temporary project management services. If you have in-house staff that you want to train to take over a project at a certain point, outsourcing the project temporarily, until you have integrated this function into your organization, can be an excellent strategy.
5. Cost savings. Numbers don’t lie. Once you’ve carefully compared the cost of using a project management company to hiring all the staff you need in-house, outsourcing will often be the most cost-effective solution. There are various types of payment contract models that can be used to fit your needs (e.g. Time and Materials contract which often provides a more controlled way of paying for the hours of effort expended by the contractor to deliver the service).
6. Value of efficiency. Sometimes the greatest advantage of using a project management company is not so much in short term cost savings, but other value-added benefits, such as efficiency. Someone has to coordinate the work of the project team members and those who will actually perform the actual tasks to complete the project. A skilled and seasoned project manager can efficiently manage the people and all phases of the project (e.g. resolving conflicts, meeting critical deadlines and managing the budget).
7. You are outsourcing ready. Along with considering the benefits, it’s critical that your company is also prepared for outsourcing. The following are key readiness factors:
► a. A strong and enthusiastic project sponsor inside the organization.
► b. Clear project objectives and outcomes.
► c. Sufficient budget.
Outsourcing is a flexible solution for management of projects. As variables like cost, time, and resources constantly change, consider what type of outsourcing arrangement works best for you. Many project management firms provide options that allow you to outsource all of the project or just the pieces that make sense for you.
What other reasons have you found to outsource project management?
Chrystal Richardson is Managing Partner of CE Wilson Consulting, a project management and business efficiency consulting firm that has managed projects for technology, mining, medical and manufacturing clients since 2001.