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Internal vs External Project Management - Which is Right for Your Company?

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Should you be using an internal or external project manager?

This is a question that many organisations regularly face, as both have distinct advantages and disadvantages. Both help companies meet project goals within set time and financial limits, but the path you should take largely depends on the needs and capabilities of your business at a set point in time.

This article will help you understand how each approach differs so you can make an informed decision about how best to manage your next major project.

Internal vs External

Internal or in-house project management involves using people from within your organisation to manage and monitor a project. Project managers are sourced from your existing staff and are usually selected based on skills and capabilities suited to the project’s goals. External project management involves bringing in external specialists instead. It essentially means you will be contracting project managers on a project by project basis.

To determine which is the best strategy for your business, it is worth exploring the pros and cons of each:

Internal Project Management

The strongest case for using internal project managers is that they know your company. Not only are they familiar with the company history and business goals, they understand the company culture. They have a proven level of experience in the industry and know the standard operations processes. This means they know the company’s way of doing things, will be hitting the ground running, and are less likely to encounter staff conflicts.

However, an important factor to consider with internal project management is cost. Can you justify having a dedicated project manager when the scope of the project may not require it? The project may also be a one-off, so better suited to a specialist or short-term contract. Internal staff may find it more difficult to make tough decisions when necessary due to their existing position and contacts within the company.

External Project Management

One major drawcard is that in many respects, external project managers can be fearless. They are able to objectively look at the business and are generally able to avoid being caught up in company politics. This makes them more agile, gives them more freedom to make difficult decisions, and able to look at ways to cut costs and streamline processes without worrying too much about how much it might rock the boat. Provided they are carefully selected, it is also possible to hire a project manager with talent and experience directly related to the project at hand, rather than needing to rely simply on an internal staff member that is the most suitable of the available staff. Sometimes there is no substitute for using a specialist.

One of the main disadvantages of using external project managers is they sometimes need additional time to understand internal processes, people, and resources. Bringing in someone external additionally necessitates sharing important company data with a contractor who may get a deep insight into the interior workings of the company only to leave a few months later to work with what could be a direct competitor. For some companies this isn’t an issue but for others with highly sensitive operations or those at the forefront of their industries, this just adds additional levels of risk.

Conclusion

There are clear pros and cons associated with taking an internal or external project management approach. The decision to go with one or the other is heavily dependent on company goals and expectations as well as other factors like cash flow and the number of qualified internal personnel.

To find out more about what project management approach is right for your company, talk to the experts at FinXL.