There can be many benefits to outsourcing your company's project management functions, with 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.
Factors that might motivate you to think about outsourcing project management
Low staffing levels. Depending on the size of your business, you may not have sufficient staff in place to set up and support a project management office (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 and/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 an FTE.
What are some of the benefits of outsourcing project management?
Cost structure can be lower. All project management vendors work differently, and offer different pricing structures depending on their level of services, experience, business model and overhead, as well as consideration for their target markets. It may take some upfront 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).
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