How to decide whether to outsource project management

Leaders are often faced with questions on whether they should develop a capability or tool in-house or use outside partners. Here are guidelines for making the call.

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Image: Kawee Wateesatogkij, Getty Images/iStockphoto

I fancy myself as rather handy around the house, having done projects from framing carpentry to major electrical work. When faced with something that needs doing around the home, I generally find myself biased toward doing it myself. When explaining my rationale to my wife, she listens patiently and then suggests I multiply my already conservative timeline by three and cut my estimated cost savings in half. Unfortunately, she's usually right. Despite my careful and conservative planning, the job always takes longer than expected, and my savings takes a few dings due to acquiring new tools or requiring additional materials for the inevitable do-over.

Organizations can have similar DIY personalities, where the natural bias is to do every project—no matter how big or small—internally. Like homeowners, some organizations are cost-conscious, and that drives their DIY orientation; others see DIY as an opportunity to develop new skills. A more nuanced element might be a cultural bias within your organization toward getting work done without resorting to "outsiders," the use of which would indicate a defeat of sorts. It's worth investigating these biases and environmental factors before automatically gravitating toward or away from DIY as the situation warrants, especially since the influence of organizational culture can be incredibly strong yet difficult to detect.

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The price of speed

Speed is difficult to estimate for a job you've never done before, and doubly so if your team has other commitments. If you're DIYing a project you've rarely or never attempted, there will be a significant productivity gap as you learn the skills and potentially rework early efforts. These activities are difficult to estimate and, if you plan to go the DIY route, be sure to build in significant contingency time.

In many cases, the slower pace of a DIY effort can be worth the payoff; however, there are times when market or organizational demands dictate a faster pace. Just as an individual might happily tackle a guest bedroom renovation but leave the most-used bathroom to hired help, there are times when speed overrides most other concerns and requires additional help.

The opportunity cost

The key driver of savings from doing a project in-house is the cost of external labor, which can be significant especially for specialized or rare skills. However, using your internal labor is not completely free. The people you engage on a DIY effort presumably still have other responsibilities, and for larger efforts, the focus of whole groups or teams will be redirected away from their current activities. Just as the weekend mechanic should ask if their time would be better spent on their day job or enjoying some leisure time, so should you account for the opportunity cost in both time and finding when you redirect your team's focus.

Do you really need that skill?

For many DIYers, whether complex IT organizations or individuals, a key attractor to doing the job internally is the acquisition of new skills. While I may never tile another floor, I'm happy to have that skill set. However, some skills either have such limited applicability, or are such a function of labor input that they're not worth acquiring. For example, in my construction projects I've always outsourced hanging drywall. It requires lots of specialized, single-use tools, and is back-breaking work that also requires a level of artistry to do well. Similarly, skills like custom software development on a limited-use platform might be better left to outsiders that have the skills, tools, and bodies that would take months and significant expense to replicate.

Check your bias

If you find yourself constantly gravitating to doing all projects internally, or outsourcing every task that comes your way, take the time to analyze why you're making these decisions. Many leaders and even whole organizations have a bias toward DIY vs. outsourcing that's rooted in unhealthy organizational cultural issues. Making DIY decisions based on cultural expectations rather than the facts on the ground can be a recipe for disaster.

At the end of the day, a DIY decision is incredibly important, and it's one that IT leaders risk making without detailed analysis based on old habits or unacknowledged assumptions about the costs and benefits. With a little diligence, your DIY and outsourced efforts will go smoothly and benefit your organization in the near and longer term.

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