Advisory & Coaching Implementation & Control Review & Assessment Cost sensitivity in tenders is understandable and sensible. Therefore, when tendering, an external project manager with a lower hourly or daily rate is often preferred in order to supposedly keep the overall project costs low.
The following analysis shows that this can be a fallacy.
By Peter Roth, Octobre 3, 2023
All parents know this. No matter how well you prepare for the birth of your first child, you can attend courses, read books and follow countless well-intentioned practical recommendations from family, friends and acquaintances. But giving birth initiates such big changes that, with the best will in the world, you couldn't have imagined before. The challenges after birth, from babies to pubescent adolescents, also remain large and uncertain. Things go better with the second child, but the second child is often completely different from the first, and new challenges arise that have never been seen before. Every child is an individual with their own character and needs. Even if you get better at your role as a parent, you will never be perfect.
The same thing happens with projects. By definition, every project is unique. A project is also an undertaking in the future, and we don't know exactly what to expect, both in the project and around the project. According to the Cynefin framework, there are five domains of contexts (e.g. projects) with possible solution approaches, the simple/clear domain, the complicated domain, the complex domain, the chaotic domain and the fifth domain Disorder where it is unclear what condition is present. The more complex and chaotic a system is, the less predictable and plannable it is. In the modern (VUCA or BANI) world we are moving more and more in this direction everywhere. Only the greatest possible combination of knowledge and experience in technical, methodological and social areas enables the ability to adequately produce innovative and creative solutions from open problems and to react calmly, competently and constructively to the unforeseen.
Specifically, this means that the more complex and chaotic projects are, the more additional specific and accompanying knowledge and, above all, personal maturity of the project manager with specific experience in the job and other areas of life are necessary.
Accordingly, increasing knowledge and experience increases the likelihood that a complex project will be completed successfully and profitably. Although a project manager with 5 years of experience is considered a senior in the job market, he/she will not have carried out numerous large projects in various areas during this time. Large, complex projects actually require a lot of experience.
Based on this knowledge, a client must now ask himself the following questions:
Furthermore, in all the cost considerations, it should not be forgotten that a positive picture for an experienced project manager is not only in terms of finances, but also in other project aspects such as leadership, planning, control, effectiveness, risk and opportunity management, or for example in the efficiency of execution. While a less experienced project manager has to work hard to find possible solutions to many problems due to a lack of similar experiences, an experienced project manager can pull them out of the drawer and adapt, improve and implement them in a targeted manner. An experienced project manager also recognizes disruptions, problems, conflicts and risks much earlier and can act accordingly at an early stage and with less impact. As a result, an experienced project manager typically requires less effort overall. Of course, these statements depend directly on the person and his/her background and his/her actions and can vary greatly.
Instead of just paying attention to the hourly or daily rate of an external project manager when it comes to the financial aspect of a tender, clients should focus more on the planned total costs for the project manager. And to ensure that these are not exceeded, a cost ceiling can be anchored in the order. This means the client has both, cost efficiency and cost security.