While participating in a LinkedIn project management forum, I read about a project management challenge that commonly occurs in IT organizations managing outsourced projects and balancing delivery with accountability. The PMO consultant was working with a client to develop project management processes for projects that heavily relied on outsourcing. Each project involved initiating the project, defining the problem, and following a request for quote process to evaluate, procure, and implement a solution. With each implementation, the performing supplier would provide project management staff to deliver the project in addition to the technical resources. The client also staffed project managers to implement this project. As you can imagine, understanding the specific roles, responsibilities, and overall accountability quickly became a source of confusion across the portfolio.
This situation raises a number of questions for the organization and the supporting PMO. Here are some of the questions you might have if you find yourself in a similar situation, along with my suggestions for handling these complicated issues.
How do the project scope statement and statement of work (SOW) deliverables differ for insourced and outsourced projects? Who is responsible for completing these deliverables?
In a purely insourced project, the project manager develops the project charter, scope statement, and supporting work breakdown structure (WBS). In outsourced projects, an SOW is typically developed to deliver a portion of the WBS or the entire project. When outsourcing, the SOW contains specific deliverables the performing supplier will produce, including assumptions, constraints, and expected service level agreements.
Performing suppliers will negotiate the SOW, but ultimately the company's project manager needs to own these deliverables. In some cases, the project charter, scope statement, WBS, and other project deliverables may be part of the SOW for the performing supplier to provide. In this situation, the company's project manager still needs to collaborate and provide overall approval of these project deliverables.
Who owns, develops, and manages the project schedule?
I've heard a lot of debate about this question. I worked on outsourced projects where I managed an integrated project schedule, and I've been on projects where the outsourced vendor managed the entire project schedule. Some project teams, both internal and external, refuse to provide a detail schedule and rely on milestones. Other project teams want a completely integrated schedule across a common resource pool.
My preference is to jointly develop an integrated project schedule with the vendor so the key milestones, checkpoints, core deliverables, and corporate project management processes are supported. The supplier can detail their specific project tasks to deliver the contracted work. Each week, we conduct a comprehensive schedule review so everyone has the transparency and open communication across the project.
If I outsource a project, I rely on the supplier's project management staff to deliver and manage the project mechanics. As the client project manager, I am still responsible for integrating the outsourced deliverables back into the company. It is important to develop trust and transparency and demonstrate flexibility with the supplier. These are best fostered by working together rather than "throwing the project over the wall" and expecting the supplier to deliver all the work.
A payroll vendor may agree to process payroll for a company and even provide new interfaces to legacy systems; however, it is the client project manager's job to ensure the legacy systems can support new changes, communicate with downstream systems, and provide proper organizational change management. The supplier can still help with these mechanics, but you can't outsource leadership.
Who is responsible for the project — the company or the performing supplier?
The supplier is responsible for the deliverables identified in the SOW. When there is a good working relationship with the supplier, both parties will be flexible on scope and responsibilities. When contract disputes occur, each party will follow the letter of the contract. The supplier may be responsible for specific deliverables, but ultimately the client project manager is responsible and accountable for delivering the project.
Projects generate from a business need. Corporate business customers are depending on the project manager to deliver the project. If the project manager chooses to outsource the delivery, the project manager is still accountable to the business customers and the sizeable investment. When projects get tough, it is easy to say "It is the supplier's problem," but as effective project managers, we need to help the supplier be successful.
How do the project management artifacts and deliverables change to adopt an outsourcing methodology?
The core project documents still need to exist, including the project scope statement, WBS, detailed project schedule, risk log, issue log, change log, etc. Companies leveraging an outsourcing strategy also need to develop acceptance criteria for specific project deliverables.
What happens if the supplier only provides a 10 task project schedule? What if the supplier produces poor deliverables such as poor code, poorly written training materials, or useless test cases? By establishing acceptance criteria for each of the major project management and system development life cycle deliverables, the company and the supplier have a shared definition of quality.
Companies can risk defining an abundance of acceptance criteria that produce diminishing returns. Do we really need acceptance criteria on a properly formatted project issue log? Flexibility needs to be applied, as the supplier wants to deliver for the client without incurring additional administrative burden that they may not have planned for during the proposal response phase.
Independent of insourcing or outsourcing, the client project manager still needs to juggle the triple constraint of time, scope and cost. Outsourcing is just one additional tool to successfully deliver a project. The project management methodology, project artifacts, roles, responsibilities, and expectations need to be defined upfront so both parties deliver with mutual trust, transparency, and flexibility.
Do you agree?
For those of you familiar with outsourcing, do you agree with these responses? What other advice do you have for project managers seeking to apply project management processes to outsourced suppliers? Please comment in the discussion.
Additional TechRepublic resources about outsourcing
If your organization uses outsourcing as a delivery strategy, you'll find these additional articles helpful.
- Outsourcing a project does not relieve you of responsibility
- Three factors that fuel successful outsourcing projects
- Tips to help your project managers successfully track an outsourced project