Driving down costs – Project Managers or Project Management

Driving down costs – Project Managers or Project Management

Every organisation is concerned with cost savings across all aspects of their business, and project portfolios are no exception. This often manifests as pressure on the Portfolio Manager to achieve savings by targeting the portfolio P&L – which puts focus on the cost of the team delivering the programmes and projects with the portfolio. This is completely valid and it’s important that the delivery team, including the PMO, provide value for money and that the running costs of the team are aligned to industry standards.

The cost of reducing competence

This drive to bring running costs down should not, however, be at the cost of competent Project Management.

Industry guidelines suggest project and PMO running costs account for 1/8th of the total portfolio budget, reducing the quality of the delivery team can therefore easily become a false economy.

Organisations rely on the competence of the delivery team to ensure delivery is as efficient and as effective as possible. In a recent APM study: incompetent delivery resources were a key reason behind project failure. The first priority of a portfolio is to deliver strategic change and bring in benefits as quickly as possible, under investment in capable staff puts the PfM ability to perform at risk.

The balance between quality and cost

Some organisations take quality over cost to an extreme and only employ top end, third-party resource to work on their portfolio. That’s an option if budget allows and the importance of delivering change is paramount. For the majority of Portfolio Managers, the challenge is to find the balance where costs can be reduced to a point that doesn’t impact quality and the broader portfolio budget.

How do inefficiency and quality gaps manifest themselves?

There are a multitude of variables at play that mask visibility so it’s important that the portfolio manager identifies and documents scenarios where inefficiency and quality gaps have occurred as a result of incompetence. This could manifest in many ways, commonly as:

  • Inefficiencies such as delays in delivery
  • Issues that aren’t well managed
  • Unnecessary adherence to process steps
  • Over-managing change

This information can be collated and used in management discussions to demonstrate how cost savings with the delivery team has detrimental consequences.

There is a responsibility on Portfolio Managers to ensure they can articulate the case for the best possible team at the best possible price.

Where to find out more

Contact us if you’d like to discuss how to ensure your project succeeds within budget and with optimum quality.

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