Project Management Institute

Outsourcing Done Right

Too Many Organizations Take the Plunge without Setting Themselves Up for Success

By Gilad Lev-Shamur, PMP

Organizations often encounter a range of challenges when they outsource their project management. Some of these issues need to be addressed at the beginning of the journey, while others require ongoing attention after the outsourcing contract begins. Regardless of the timetable, in my experience, there are four must-have elements in a successful project management outsourcing program.

People are the most important part of an outsourcing program. Management must carefully choose the internal leaders for the program. These leaders have two main roles: develop, monitor and control the program, and act as the project management supplier’s ambassador. The second role is not intuitive, although it is critical to the program’s success. Outsourcing programs require internal leaders to not just monitor the program on behalf of their organization, but also understand the supplier and what the supplier’s team needs to succeed.

I recommend establishing a core internal team of up to three people. At the direction of senior management, the team will define the program scope, the contract and the metrics. It will be responsible for stakeholder management, transition period management and internal communication. The team will have two jobs: make sure the supplier is delivering what the contract requires and make sure its organization is doing everything necessary to help the program succeed.

This team also will need visible backing from top management. An outsourcing program means different processes and methods, which some employees might resist. Senior leadership can ease this resistance by demonstrating its commitment to outsourcing and supporting the program team and the execution.

A TRUE PARTNERSHIP

Outsourcing project management services often includes a large number of requirements, templates and reporting mechanisms. It can be very difficult to capture everything in the contract.

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To overcome this, you need to find a supplier that will become your partner. It must be an organization that shares your organization’s ethics, vision and management attitude. The supplier must understand the spirit of the contract and what you are trying to achieve. Finding such a partner lets you reduce the number of commercial disputes during the day-to-day operation of the program.

A TRANSITION PERIOD

Allow yourself and your supplier a sufficient transition period. Usually this period is three to five months, but it’s highly dependent on the maturity of your organization, the geographical area and the industry.

Reject any request to start operating under the new contract before completing the transition. During the transition, allow your supplier to adjust and finalize its organization structure and refine the program’s execution plans. The supplier also needs time to make sure all the systems are operating, all the procedures and templates are written, and everyone in both organizations is trained on the contract and program.

MEANINGFUL MEASUREMENTS

You cannot manage what you do not measure. The program’s performance indicators need to be defined during contract negotiations. The metrics should help to define what success looks like, bring to light project or program risks and focus attention on what actions can solve any problems that emerge. The right set of indicators will open the door to a professional discussion while keeping people from both organizations aligned around the same agenda and program vision.

The supplier must understand the spirit of the contract and what you are trying to achieve.

A word of caution: It is tempting to add additional indicators over time. However, this can turn into a major burden for the supplier, creating scope creep. If more indicators are needed, make sure they are reasonable and priced appropriately.

It is a mistake to think that hiring outside project management services is all about templates and reports. Successful outsourcing isn’t contingent on having the right paperwork and processes. What really matters is that both parties stay flexible and view the engagement as a long-term relationship requiring steady investments of time and energy. PM

img Gilad Lev-Shamur, PMP, is a program manager at Intel, Haifa, Israel.
This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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