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Outsourcing Project Management: Operational Factors

The operational factors of outsourcing project management consider the current situation, as well as the more immediate future. We already discussed their strategic counterparts, which are oriented more towards the longer-term goals, and they tend to support the hiring decision more strongly.

(This article is part 6 of a set of articles about project management outsourcing) 

Operational factors

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The right decision is getting less apparent when taking also the operational factors of outsourcing project management into account. Here is the list of those which would strongly favor the outsourcing decision:

  • Is supplier’s project management competence level higher than the organization’s? Specialized companies and free-lancers are usually on a very high level of project management knowledge, skills and experience, due to their specialization and focus.
  • Does supplier invest in project management research more than the organization does? Similar to the previous item, focus and specialization in project management usually result in higher investments in research.
  • Is outsourcing less expensive than hiring in this particular case? Project managers are getting increasingly popular in the job market and their salaries are rising.
  • Does organization have a need for a part-time project manager only? For example, project managers can manage several smaller projects at a time, so it might be an overkill to hire a full-time project manager just to manage one or two small projects.
  • Does organization want to keep the option to select among several suppliers? Competition is good. :-)

If by now you are convinced that the outsourcing is the way, have in mind these operational factors of outsourcing that speak in favor of the hiring decision:

  • Is hiring a project manager less expensive than outsourcing?If you need a full-time project manager then it is likely that outsourcing project management would be a more costly solution.
  • Does organization use its own proprietary methodology? This is not a very common situation, but there are companies that developed their own methodologies and consider them as their own intellectual property, which they are not very keen to share with external partners.
  • Is reliability of the suppliers lower than what organization expects? It might be wiser to hire instead.
  • Is there enough of competent suppliers? This is particularly important if organization looks into outsourcing mainly to be able to select between more suppliers.
  • Is the quantity of work too small to be interesting to the supplier? Suppliers need to invest in the outsourcing deal as well, and for very small quantities of work it might not generate enough business to justify their investment.

Admittedly, the decision could go both ways, as it really depends on the particular situation. But making sure to evaluate these factors increases organization’s chances of making a better decision.

And by being aware of the factors that would be negative in your case, you can better address the risks that could arise. For example, if you decide to outsource project management, and your organization uses its own proprietary methodology, by putting a non-disclosure agreement in place you might be able to address the risk of losing your intellectual capital, while still reaping the benefits of outsourcing.

What is your take on these? Would you agree with all of this or would you have a different view? Let me know. 

In the last article of the series we focus just on the cost part of the picture: Which option is less expensive? 


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