There are myriad of ways to successfully deliver projects and one of the critical considerations is whether to delivery all of your organisation’s projects in-house or to selectively outsource some of them.
Whilst all organisations should strive to develop an in-house project delivery capability, there are some circumstances where outsourcing is the more appropriate option and can lead to better project outcomes.
However, it is vital that the decision to outsource a project is done for the right reasons. It’s not a simple case of one is better than the other both approaches have their pros and cons.
Often the decision comes down to the nature of the project as much as an organisation’s in-house capability. So, what are the key considerations that should be taken into account when deciding whether to outsource a project for delivery or to keep it in-house?
Do You Have the In-house Expertise?
Many organisations have projects that are ‘one-offs’ and require specialist expertise to deliver effectively. It is a significant investment to source and build an internal team with the requisite skills, a cost that may be far greater than by following an outsourcing strategy.
Whilst building in-house expertise should always be a consideration, in certain instances once the project is completed, the skills developed by the internal team may simply not be portable due to the one off nature of the project.
Engaging a partner with runs on the board in an area unfamiliar to the business will reduce the risk of delivery and – if managed well – will increase the opportunity for a quality outcome for the project.
Is it a Repeatable Project?
Paradoxically projects that are repeatable are often very good candidates for outsourcing. With repeatable projects, vendors will have identified the regular needs within their client base, which allows them to develop strong capability and retain expertise.
A good example is desktop computer upgrades. Upgrading your organisation’s desktop computers is a regular occurrence and it may make more sense to identify a partner who does this type of project repeatedly and leverage their expertise and IP rather than mobilise an internal team every three years or so.
Will the Outsource Partner Have Skin in the Game?
This is more a consideration once a decision has been made to outsource. First and foremost, a delivery partner should be identified with the expertise that is required to execute the project.
The next step is to assess if your selected partner has sufficient skin in the game to ensure they will be full committed to the right outcomes for the duration of the project.
Whilst contractually there are some safe guards that can be put in place in terms of SLAs and similar agreements, this should not replace due diligence and significant efforts on the part of both parties to foster an extremely collaborative relationship for the duration of the project.
This is best achieved if the relationship is established from the outset to be less master/servant and more one of a partnership.
What is the Risk to the Business if the Project Fails?
All projects have a certain risk profile that will impact the business if they fail. It is important to fully appreciate this risk to the business of failure when deciding the best delivery approach.
Outsourcing can appear the more costly option at the outset but this should be set against the potential cost, operational and reputational impact to the business of project failure.
Typically the greater the potential adverse impact to the business of project failure then the more consideration should be given to different delivery approaches including outsourcing the project to a specialist partner.
Due Diligence, Contextual Assessment and Governance
The above list is not exhaustive nor can it hope to cover all the various individual considerations organisations need to take into account when deciding how to best deliver a slate of projects.
However, outsourcing is a proven delivery model and should be given due consideration when an organisation is deciding how best to deliver a diverse portfolio of projects.
Regardless of the delivery approach taken, outsourced projects should still be covered by sound portfolio management and internal project governance if the best results are to be achieved.
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