Project manager: hire from outside or appoint "our own"?

The article examines the choice between bringing in an external project manager—outsourcing management—and appointing an in-house employee, or insourcing. The author warns that these decisions are often made spontaneously, with an unjustified preference for “our own people” because of budget constraints and underestimated risks, ultimately leading to project failure. Five comparison criteria are proposed: cost, with outsourcing only slightly more expensive than the full cost of an employee; qualifications, with external specialists generally offering stronger expertise backed by the experience of their entire company; risk management, where external professionals are more capable; recruitment effort, which is comparable for both options; and mobilization time, ranging from two weeks to six months. The practical recommendation is to develop in-house project managers when project delivery is a company’s core, long-term business, and engage a specialist organization for one-off projects in companies whose core business lies elsewhere. The key takeaway is to make a considered decision based not only on cost, but also on qualifications, risks, and the company’s strategic priorities.

Introduction

When planning resources to implement company production plans, management often has to choose between hiring external contractors or performing the work in-house.

Typically, one-time or periodic short-term work that requires highly qualified specialists and/or unique mechanisms is entrusted to contractors (it is not profitable for a company to keep highly qualified expensive personnel and expensive unique mechanisms idle).

And long-term and regular work, in which the company specializes, is usually carried out in-house.

The question of choosing between "our own" or an attracted specialist arises before the management and in the case of determining the project manager and project management team: to attract "mercenaries" - a specialized project management company (project management outsourcing) or to manage the project on its own (project management insourcing)

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According to the experience of PM Excellence, unfortunately, sometimes decisions on this issue (about the choice between "our own" and "mercenary") are made spontaneously, without thoughtful analysis.

And often the choice is unreasonably made in favor of their specialists, primarily due to budget restrictions and underestimation of the risk of failure to complete the project within the given parameters of time, money and quality.

Often in such cases, the role of project manager is transferred to a full-time classroom specialist as an additional load - in addition to existing responsibilities.

Or a good, temporarily unloaded "technician" who understands the subject area, but has no experience and knowledge in project management, is appointed to the role of project manager.

The consequence of such spontaneous, ill-considered decisions are actually ruined projects: unfinished, or seriously missed in terms of time and budget.

Let's take a more systematic look at the possible criteria for selecting a project manager and/or project management team between "our own" specialists and "mercenaries" - i.e. between outsourcing project management and in-house project management:

Cost

As a rule, companies' costs for searching, adaptation, training, and salaries of project management personnel are only slightly lower than the cost of project management outsourcing services from an external specialized company.

Qualification

In most cases, the qualifications of external project management specialists exceed the qualifications of in-house personnel, since the "mercenary" has a wealth of practical experience, as well as the qualifications of the entire company that provided the specialist as part of the project management outsourcing service.

Project risks

As a rule, project managers from specialized companies providing project management outsourcing services have more experience and knowledge in risk management compared to "in-house" specialists, therefore the likelihood of risk events occurring in the case of an involved project manager is reduced compared to the practice of managing a project on its own.

The complexity of selecting a project manager and a project management team

The labor intensity of searching and selecting external or "in-house" project managers is comparable - both approaches require significant effort from the customer.

Good ready-made project management specialists are not easy to find these days. Standard "mass" services for finding experienced project managers are usually not enough, and you have to resort to the help of specialized agencies.

And if an external outsourcing company is involved, the time it takes to find a specialist for the customer is less, but it may be necessary to carry out competitive procedures with the preparation of appropriate documentation.

Time frame for attracting a manager and project management team

As a rule, the time frame for attracting specialists is comparable and ranges from two weeks to six months.

There may be more selection criteria; they must take into account the specifics of the project, the stage/phase of the project (whether deadlines are running out), the consequences of delays in project deadlines, the required level of immersion of the project manager and project team in the subject/technical area, and others.

Thus, the decision to choose between project management outsourcing and project management in-house depends on the selection criteria, i.e. in fact, it depends on the priorities of the company's corporate culture.

Advice from PM Excellence:

In companies in which project activities are the main activity, and where the number of projects is not decreasing (or the project lasts quite a long time), it is more advisable to develop their own project management personnel.

In companies where project activities are not the main one, but there is a need for one-time projects, it is more advisable to engage a specialized company to provide project management services (project management outsourcing)

The project management outsourcing service has already grown significantly in Russia compared to the times of 10-15 years ago. However, it is still not widespread compared to world practice.

Similar issues of choosing between "mercenaries" and "our own" also have to be resolved in the case of managing large-scale projects and megaprojects. This is discussed in more detail in the article about the rationale for attracting PMC contractors.

In general, it's up to you, the leaders, to decide. And for the project it is important that the decision is not spontaneous and is not determined solely by the criterion of cost.