Outsourcing Project Management: Cost-Effectiveness vs. Control

We find that organisations in the Food & Beverage industry are continually seeking ways to streamline operations, reduce costs, and enhance efficiency. One strategy that has gained traction is outsourcing capital project management. By leveraging external expertise, companies can often realise significant cost savings and focus more on their core competencies. However, this approach also brings challenges, particularly around maintaining control over project execution and ensuring the quality of outcomes. In this blog, we will explore the trade-offs between cost-effectiveness and control when outsourcing project management and provide insights on how to navigate these challenges effectively.

The Appeal of Outsourcing Project Management

Outsourcing project management of capital projects can be highly attractive for several reasons. Hiring an external project management firm can be more economical than maintaining an in-house team, especially for companies that do not have a consistent flow of projects. Outsourcing allows businesses to access skilled project managers without the overhead costs associated with full-time employees, such as salaries, benefits, and training. Moreover, with an organisation  like TEG Projects, you’re not just getting the expertise of a single project manager—you gain the collective knowledge and experience of the entire consultancy. Good project management  invests in continuous training for their teams, covering both technical and interpersonal skills. At TEG Projects, this commitment is highly valued by our staff, as seen in their feedback shared in our “Staff Stories.” A prime example of our development efforts includes workshops led by Janine Gould, focusing on ‘Managing your relationships professionally using your EQ’ and ‘Managing meetings both face-to-face and virtually.’

External project management consultancies should bring a wealth of experience and specialised knowledge to the table. TEG Projects have a track record of managing similar projects across various industries, giving our team  a broad perspective and the ability to anticipate potential challenges. This expertise can lead to more efficient project execution, reduced risks, and better overall outcomes.

Organisations often choose to outsource project management of capital projects to TEG Projects because it offers flexibility, enabling them to scale resources up or down as needed.This adaptability is particularly valuable in industries with fluctuating project demands such as the food and beverage manufacturing industry, as it allows businesses to allocate resources more efficiently without the burden of balancing the productivity within an in-house project management team.

The Trade-Off: Control vs. Cost-Effectiveness

While the benefits of outsourcing project management are clear, it is important to consider the potential trade-offs, particularly in terms of control over project execution and quality.

When project management is outsourced, companies may feel a loss of direct control over the day-to-day activities of the project. External project managers may not have the same depth of understanding of the company’s culture, values, and strategic objectives as internal teams do. This can potentially lead to misalignment between the project’s execution and the company’s goals, affecting the project’s overall success. 

Ensuring that an outsourced project management firm maintains the same level of quality as an in-house team can be challenging. External firms may be managing multiple projects simultaneously, which can lead to divided attention and less focus on your specific project. Without proper oversight and stringent quality control measures, the final deliverables may not meet the company’s standards. We recommend doing your homework before signing on with an Outsourced Project Manager. Research the type of work they’ve successfully completed, request testimonials and client feedback, ascertain the calibre of clients they have previously worked with, and seek referrals within your industry. 

At TEG Projects, we recognise the risks inherent in choosing a Project Manager and have developed strategies to mitigate them, including clear communication protocols and regular updates with key stakeholders. Additionally, the long-term nature of the projects we manage allows our team to deeply understand the culture and values of the organisations we work with. Many of our projects stem from long-term relationships and referrals built on this trust. 

Balancing Cost-Effectiveness with Control

To successfully navigate the trade-offs between cost-effectiveness and control, we recommend considering the following strategies:

1. Clearly Define Expectations: Before engaging an external project management firm, it is essential to clearly define the project’s objectives, scope, timelines, and quality standards. These expectations should be communicated and included in the project brief to ensure alignment from the outset.
2. Establish Strong Communication Channels: Regular and transparent communication is key to maintaining control with an outsourced project manager. Companies should establish strong communication channels, including regular status updates, progress reports, and meetings, to ensure that the project stays on track and any issues are addressed promptly. We recommend that before you get into contractual agreements with an organisation, ask to see their reporting communication documents, and their plans around keeping you informed throughout the process. They should be able to provide examples of these documents.
3. Implement Oversight Mechanisms: To maintain quality control, companies can implement oversight mechanisms such as regular audits, performance reviews, and milestone-based evaluations. These measures can help ensure that the outsourced firm adheres to the agreed-upon standards and delivers the expected results.
4. Maintain In-House Expertise: Even when outsourcing capital project management, it is beneficial to retain some level of in-house expertise. An internal project manager or team can oversee the outsourced firm’s work, ensuring that the company’s interests are protected and providing a bridge between the external team and the company’s internal stakeholders. This is generally how our projects work. One of our TEG Projects team is seconded to the in-house client team for the duration of the project. In so doing, the organisation can make the most of the in-house internal knowledge, and the outside perspective and expertise from TEG Projects.
5. Choose the Right Partner: Selecting the right project management firm is critical to balancing cost-effectiveness with control. Companies should thoroughly vet potential partners, considering their experience, track record, and cultural fit with the organisation. A great place to start for this is reading Case Studies of past work. A strong partnership based on trust and mutual understanding can significantly mitigate the risks associated with outsourcing.

Outsourcing project management can offer significant cost savings and access to specialised expertise, making it an attractive option for many companies. Trade-offs in terms of control over project execution and quality can be overcome by doing your homework. By looking into the calibre of past work, clearly defining expectations, establishing strong communication channels and maintaining some in-house expertise, companies can effectively balance cost-effectiveness with control, ensuring successful project outcomes. At TEG Projects, we understand these challenges and work closely with our clients to deliver projects that align with their strategic goals, without compromising on quality or control.Want to find out more about outsourcing your project management with TEG Projects? Get in touch.