A survey conducted by the Center for Business Practices (CBP), the research arm of project management consultancy PM Solutions, reveals an upward trend in the number of Global 2000 companies that are turning to project management as a cost-effective, long-term solution. In addition, the survey found that more Global 2000 companies are using project management consultants and augmented staffing to complete project implementations.
According to survey respondents, 39 percent of the companies currently outsource project management functions or are considering it. More than half of the responding companies use consultants for project management, primarily for managing projects (66 percent) and augmented staffing (61 percent). In addition, the study found that the most common functions currently outsourced are project delivery, project management training, and complete project management (at 40.7 percent each).
The truth is that most companies do not have a large enough in-house staff to successfully accomplish project objectives. By outsourcing project management functions – either entirely or through the use of consulting companies can achieve a higher project success rate at a lower cost.
Most companies take a minimum of five to seven years of corporate investment in order to develop an in-house team of competent project managers and business analyst. This investment takes time and money that many companies no longer have. In the interim, corporations lose potential profit through missed delivery dates and failed projects.
By outsourcing their project offices and/or project management improvement initiatives, companies can achieve a higher project success rate at a lower cost, enabling them to increase the value of project management competency within the organization. In addition, by working with a skilled consultancy, in-house staff benefit from a valuable knowledge transfer that can enhance the existing staffs understanding of project management, business analysis and how to achieve optimal performance.
Here is a summary of the benefits of project management outsourcing:
Reduced costs: Bringing in a project management outsourcing partner eliminates the need to invest in internal project management training and infrastructure development. It also eliminates the need to recruit and assimilate project management specialists for unique situations. The savings can be significant.
Improved time to market: Projects that are completed on time are the key to bringing products and services to market before the competition. Products that are late to market can lose much of their profit-making potential.
A framework for continuous improvement: Bringing in ready-made processes, staff and support services jump-start the entire project management function. Service firms coach and mentor internal staff as well. By reducing the burdens of managing projects in house, companies can focus on improving in other operational areas, such as research and development, software engineering, staff productivity and quality assurance.
Decreased employee turnover: Turnover costs of a project manager average 150 percent of the employee salary. This includes tangible costs such as hiring and relocating new employees and intangible costs such as inefficiency and lost productivity while the job is vacant.
Improved customer satisfaction: When companies achieve new levels of efficiency and product and service quality, customer satisfaction improves. And customer satisfaction is the key to growing sales and profits.
A healthier bottom line: Having a team of established experts in place to take over the project management function enables companies to focus on improving profitability much more quickly than otherwise possible. Increasing productivity, decreasing operational costs and improving product and service quality usually result in significant improvements to company’s profitability.
A healthy and motivated sales staff component, armed with key insight into target markets will be necessary to drive these advantages and enable FCG to meet their objectives in the provision of full Project Management Office solutions or Project Management Outsourcing to their targeted client base.
There are three basic project management outsourcing offerings to consider:
• Outsource the Entire Project Office Function
• Resource Capacity Management – Internal and External Resources to Manage Projects
• Project Management Training and Certification