Understanding Outsourced Project Management

by Andrew Romanek

Upon meeting someone for the first time and them asking me where I went to school, I will typically get one of three reactions when I reply that I went to the University of Notre Dame: 1) They love Notre Dame because they are Irish or Catholic or grew up watching the football team, 2) They don’t particularly care for Notre Dame but respect it as a good school, or 3) They don’t like Notre Dame at all and no description about what Notre Dame embodies (hint, it’s not football) will cause them to view in a different light. Sadly, the third response is the most common.

I feel it is somewhat similar when telling a prospective client about outsourced project management. They often question why they would hire someone external when they can accomplish the same thing with an internal project manager. Those that have tried or currently use an outsourced model will typically sing its praises. However, those that have not rarely give it much consideration.

The definition of outsourced project management is as simple as it sounds. Also often called independent project management, it means hiring an external person or consultant to manage your project or a handful of projects. How it works, though, is different than most people think. Perhaps the easiest way to help introduce outsourced project management is to debunk several myths often associated with it.

Myth #1: It is a lot cheaper to hire an internal project manager.

This is perhaps the biggest myth associated with independent project managers (IPMs). Yes, an IPM’s billing rate will be significantly higher than the raw rate of an internal employee. However, factor in the benefits (e.g., health insurance, vacation, and 401k) paid to internal employees and consider that most IPMs are experts in project management with at least 20 years of experience. Depending on the complexity of the project, an IPM will often only need two to eight hours a week to manage a project to successful outcomes. Additionally, whether through cost savings, reaching goals ahead of schedule, better consultant performance, or other metrics, good IPMs will add more value than it costs to retain them.

Myth #2: IPMs will not tow the company line.

All good IPMs spend considerable effort to understand their clients’ drivers and objectives so that when communicating with internal and external stakeholders, they are acting as a representative of the company. IPMs are highly vested in exceeding expectations as it is a lot easier to dismiss an IPM than an internal PM. Also consider that IPMs will work closely with you to set the appropriate level of autonomy.

Myth #3: Hiring an IPM will mean that I need to cut staff.

If you have sufficient time to devote to your projects and your program already operates at a high level of maturity, then this may be true. However, this is not typically the case for most environmental programs. Hiring an IPM can be a quick and easy way to fill a need or supplement staff, especially when obtaining approval for a request to hire and carving out the time required for recruiting can be significant challenges.

Myth #4: IPMs will not integrate seamlessly with my existing team.

This is also false. In fact, IPMs typically become respected members of a company’s team. They will often serve as mentors to younger, internal project managers while acting as a sounding board to more experienced company project managers and directors. An investment in an IPM is more than just filling a staff need. It can be an investment in your program.

As has been the subject of other pieces I have written on project management, finding a good/great project manager is difficult and frankly not given the effort it deserves by many companies. I will not advocate that the IPM model is a great fit for everyone. In the world of environmental remediation, for example, it works best with corporate environmental groups with leaner operations and that have a portfolio of sites with challenges better suited to a seasoned project manager. Where it is a good fit, though, it offers several advantages:

  • Introduces an expert in project management and environmental remediation (in the case of Dextra) into your team.
  • Brings in an expert that knows how to work collaboratively with regulators, optimize the performance of technical consultants, and leverage their experience to avoid project pitfalls.
  • Reduces the need for project manager oversight, allowing managers and directors to focus on other priorities.
  • Allows, without infringement on intellectual property, insight into how peer companies have tackled similar challenges and what best management practices they have implemented.

There is certainly a lot more to it, and if I have piqued your interest at all, I encourage you to talk to peer companies that have used or currently use IPMs. They will be the best resource for understanding the benefits of outsourced project management as well as the trade-offs. For questions, comments, or references, please do not hesitate to reach out to me at 423.702.4766 or romanek@dextra-group.com.