When it comes to managing projects, organizations often face the decision of whether to establish an in-house Project Management Office (PMO) or opt for project management outsourcing, recognizing that strong project management is key to delivering on strategic priorities. Both approaches have their own set of advantages and disadvantages, and the choice largely depends on the specific needs and circumstances of the organization. Let’s explore the pros and cons of both in-house and outsourced PMO.
Inhouse PMO
Let’s start by looking at the pros and cons of managing your PMO function internally.
Pros:
- Control and Alignment: Having in-house project managers allows for greater control over project management processes and ensures that the PMO is closely aligned with the organization's goals and culture.
- Dedicated Resources: In-house PMOs have dedicated resources that are fully committed to the organization's projects, leading to potentially higher levels of engagement and accountability.
- Institutional Knowledge: In-house PMO staff possess deep institutional knowledge, which can be invaluable for understanding the organization's history, processes, and internal dynamics.
Cons:
- Higher Costs: Maintaining an in-house PMO can be more costly due to salaries, benefits (health insurance, paid time off, retirement plans, etc.), and other overhead expenses associated with full-time employees, such as ongoing professional development and certifications
- Limited Expertise: In-house project managers may have limited access to specialized expertise, especially if the organization does not have a diverse set of skills within its team.
- Hiring Challenges: Recruiting and retaining qualified project management professionals can be challenging, particularly for part-time or temporary roles.
Before choosing this model, it’s important to consider the benefits of outsourcing project management, especially for organizations seeking specialized skills without long-term commitments.
Project Management Outsourcing
Before choosing this model, it’s important to consider the benefits of outsourcing project management, especially for organizations seeking specialized skills without long-term commitments.
Here’s a closer look at the advantages and potential drawbacks of outsourcing your PMO function.
Pros:
- Access to Specialized Expertise: Outsourcing PMO services through an established advisory firm provides immediate access to a large, multidisciplinary advisory team with diverse skills ranging from project management to accounting, change management, cybersecurity, ERP, CRM, and more.
- Cost Efficiency: Hiring part-time PMO services allows organizations to avoid full-time overhead costs, such as benefits, vacation pay, and long-term commitments.
- Flexibility and Scalability: Outsourcing allows organizations to scale resources based on project needs, ensuring they don’t pay for resources during slower phases or if projects are delayed.
- No Long-Term Commitment: Outsourced PMO services can be tailored to fit the project duration, offering the flexibility of a consultant without the complexity of finding a suitable temporary employee.
- Reduced Hiring Challenges: Working with an outsourced PMO provides access to an experienced team that can seamlessly integrate into any project, eliminating recruitment challenges and allowing leadership to focus on strategic growth.
- Faster Ramp-Up: Outsourced PMO services can quickly integrate and provide hands-on project management expertise without the lengthy onboarding and hiring process.
- Unbiased Oversight: Internal teams may face challenges due to office politics or conflicting priorities. An external PMO operates with an independent perspective, focusing solely on project success, governance, and alignment with business objectives. This objectivity can lead to more effective decision-making and problem resolution.
Cons:
- Less Control: Outsourcing may result in less control over project management processes and a potential misalignment with the organization's goals and culture.
- Dependency on External Providers: Relying on external providers can create dependency, which may pose risks if the provider fails to deliver as expected or if the contract is terminated.
- Communication Challenges: Working with an external PMO can sometimes lead to communication challenges, especially if the provider is located in a different time zone or has different working practices.
A Hybrid Model of PMO
For organizations seeking a balanced approach, a hybrid model can be an effective solution. This involves establishing an in-house PMO while leveraging the expertise of an outsourced PMO to build and elevate the infrastructure.
Pros:
- Control and Alignment: Organizations can benefit from the control and alignment of an in-house PMO, ensuring that project management processes are closely tied to the organization's goals and culture.
- Access to Specialized Skills: Organizations can tap into the specialized expertise of an outsourced PMO for tools, methodologies, coaching, training, documentation, and oversight. This collaborative approach allows the in-house PMO to develop robust capabilities and institutional knowledge, while also gaining access to the latest industry best practices and innovations from the outsourced PMO.
- Cost Optimization: The Hybrid approach reduces the overhead of a fully in-house PMO while ensuring access to external experts when needed.
- Risk Mitigation: This approach reduces reliance on either internal or external teams alone, ensuring continuity even if key staff members leave.
Cons:
- Integration Challenges: Managing both internal and external teams can be challenging, requiring clear communication, and project alignment to avoid duplication of efforts or confusion.
- Varied Processes and Methodologies: In-house and outsourced teams may use different project management frameworks, leading to inconsistencies.
Choosing the Right PMO Model for Your Business
Ultimately, the choice between an in-house and outsourced PMO depends on the organization’s unique needs, size, culture and objectives. Both approaches bring unique strengths to the table: in-house PMOs bring deep institutional knowledge and alignment, while outsourced models offer flexibility and specialized expertise. In some cases, a hybrid approach provides the best of both worlds.
Evaluating the full picture, including the benefits of outsourcing project management, can help your organization build a PMO model that supports lasting project success.
Whether opting for an in-house or outsourced approach, the key to success lies in creating a robust foundation for project execution.
Authors: Isabelle Filion, CPA, PMP, CSM | [email protected] and Kim Gordon, MAcc, CSM | [email protected]
Contact Us
Contact Withum’s PMO Services Team to explore whether project management outsourcing, an in-house PMO or a hybrid model is the right fit for your organization.
