Weighing the viability of in-house, outsourced project management

The concept of project co-sourcing – a hybrid model that uses in-house management and outsourced project managers – is not yet readily practiced in South Africa because of perceived resource and intellectual property risks to both owner and contracting firms. During co-sourcing, the resources are structured around the project requirements.

Different project management skills are required for mining houses and consultants or contractors when using co-sourcing, with additional benefits for using using both in-house skills as opposed to outsourcing, says University of Pretoria project management Associate Professor Giel Bekker.

The focal capability and competency differences between in-house and outsourced project management are in the two main phases of a project – the development phase and the implementation phase.

The mining house project managers needs to be well skilled in the developmental phases of a project, including proper needs analysis, business case development, community and environmental considerations, life-of-mine planning and sustainability.

Consultant and contractor project managers focus more on the design and implementation phases and should be well versed in project management tools such as cash flows, scheduling, control and monitoring, as well as quality management, Bekker explains.

The benefits of in-house project management are that mining houses should have better scope definitions and project justifications for technical, statutory and financial considerations. During implementation, the mining house acts mostly as contract managers and also as an “extra pair of eyes” on project progress.

The benefit of outsourcing to professional project management companies is that the mining house contracts experts, with specialised project implementation and coordination skills, he highlights.

However, projects by mining companies are inherently cyclical and the organisation cannot always warrant a full-time, dedicated team.

“In cases where a mining project is co-sourced, in-house project managers will focus on the mining and technical requirements, scope definition and capital expenditure. The contracted, outsourced project managers will be responsible for the detailed project schedule, document control (which can also be done in-house if the mining company has a preferred system), risk management, contractor management, reporting, controlling and general implementation activities,” he explains.

In-house project management is strategically focused, while outsourced project management is implementation-focused and tactically orientated. However, when there are many projects in the portfolio, mining houses prefer to complete all functions in-house.

Operations Manager vs Project Manager

Operating and maintaining a mine differs from managing a project. Mines are production-oriented companies and anything that could prevent their reaching production targets must be addressed immediately. Projects are longer term, with the emphasis on cost efficiency, time planning and quality parameters, Bekker explains.

He says these two key performance indicators are often working against each other, especially on brownfield projects.

“As a general manager once stated when there were differences in opinion: “The operations manager must ensure that I have coal today. The project manager must ensure I have coal next week. Figure out how to work together.”

Further, the management styles of operations and project managers are different.

Both occupations work under enormous pressure, but for the project manager to be successful, he/she must be able to integrate various disciplines into project delivery. This requires a facilitating, yet decisive approach towards resources.

Operations managers require a sense of alertness, a preventative approach and fast response to emergencies, he asserts.

“The current focus at the department is to include research into the complexity of large capital projects, readiness assessments of mining projects, project management system simplification for stay-in-business projects, digital twins and project assurance. For mining project readiness assessments, an analytical, index tool was developed. Other tools are in progress,” says Bekker.

Project management companies are facing a reputational challenge. Unfortunately, in recent years, such companies, specifically in mining, have become more associated with project controls and administration, rather than project management.

Bekker argues that “the value of well-educated and skilled project managers has been suppressed by this tendency which, to a large extent, undermines the progress of project management as a valuable career path.”

However, the impact of 4IR technologies should have an impact on project effectiveness, thereby “rehabilitating” the profession’s reputation, although Bekker cautions that some work on the quantification thereof still needs to be done.

Project modularisation and advanced work packaging could become very important in the future, he concludes.