Thinking about whether to outsource your project management

Things to consider

Evaluating whether or not to outsource your company’s project-management functions can be challenging. Before making this potentially risky leap, you have to assess if this is a good move for your business while keeping in mind that what works for your business today may not work in the future.

There can be many benefits to outsourcing your company’s project-management functions, and equally as many pitfalls. There aren’t any one-size-fits-all solutions based on your industry, type, or size of business. Just as you would with different project management methodologies, consider the risks and rewards carefully and take the time to thoroughly evaluate why outsourcing project management may or may not be a good move for your organization.

Low staffing levels

Depending on the size of your business, you may not have sufficient staff in place to set up and support a PMO. Many businesses simply do not have adequate staffing levels to dedicate one or more employees to solely focus on projects; often, existing resources may already be overextended and only able to focus efforts on daily operational duties.

Shortage of highly experienced staff

Whether you have a small, midmarket, or large company, your internal staff may not have the specific project management experience or training you need to effectively take a project from inception to closeout. In fact, the nature of the project may necessitate very specialized expertise.

If you’re a home-building contractor, for example, you might require engineering project-management skills that are different from software developers tasked with implementing a new inventory management system for your business. In this case, it may make sense to seek external vendors with the appropriate technical project-management expertise to assist with your unique projects.

Cash-flow constraints

This can be an ongoing concern for businesses regardless of type or size. As budgets shrink and competition grows, businesses often struggle to find the capital to fund projects. Finding additional financial resources to hire specialized staff like project managers can be difficult, especially when those resources are already earmarked to support operations. In this case, it may make sense to find vendors that offer project-management services on a per-project basis.

Business-model decisions

You may choose to outsource your project management functions as a result of your business model. If your projects are of the one-off or ad-hoc variety, then hiring internal project-management staff may not make sense. It may be less cost-effective and more of an administrative burden to hire, train, and retain a full-time employee (FTE).

What are some of the benefits of outsourcing project management?

Lower cost structure

All project-management vendors work differently and offer different pricing structures depending on their level of services, their experience, and their business model and overhead, as well as consideration for their target markets. It may take some up-front work to solidify details and obtain quotes from these vendors prior to determining if any given vendor is a cost-effective option for your business. And don’t forget to factor in the longer-term factors as well (such as the cost of maintaining FTE PM roles in-house).

A higher level of experience and competence

Project management is a highly specialized area of knowledge and skill that requires significant attention to detail as well as the ability to see the broader scope in order to ensure strategic business alignment. In addition, people with the ability to effectively manage multiple resources, juggle hectic schedules, deal with difficult situations, and keep within scope are in high demand, yet they are hard to find.

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