Latest news (14 September 2021): Open Hour event to present the results from the study on Trends in Make-or-Buy Decisions. Click here for information and registration
When managers decide whether to do project work internally or lay it partially or in full into external hands, they change the course of the project in a significant way:
The project becomes a cross-functional, internal project performed by the same organization that will use the results. A set of internal agreements will govern the project. Final resolution of conflicts may require the involvement of management.
Money spent for the project will mostly remain inside the organization, where it can further circulate. The project is a cost center.
The project will turn into cross-corporate project business, performed by one or more - often many more - contractors for the paying customer. One or more contracts will govern the project. Final contract remedy may necessitate litigation.
Money spent by the customer will leave the organization. For the contractors, this money is income, and the project is a temporary profit center.
We gathered data during a survey. We started it on 22-08-2021 and closed it on 30-08-2021.
Two out of three respondents reported a shift towards more buying. Their organizations procured project work more often than before.
Two out of three respondents reported that they expect a future shift towards buying, expecting the trend to hold on.
We looked at 7 world regions and compared the average numbers (from past experience and future expextations):
The results show that the tendency towards Buy is true for all regions.
We asked respondents for project sizes and compared the average numbers (from past experience and future expextations):
For all project sizes, the trend is towards Buy.
The reported data from the survey tell us, most projects already hand out 50% or more of the project workload.
For two of three projects, project management is already project business management, according to the survey data.
One needs to further understand that on the side of the contractors who are doing these projects, there are also project managers, managing the customer projects as temporary profit centers.
Project business is not an irrelevant fringe topic of project management. Today, it is the heart and soul of the project economy.
Another comparison with numbers from the same 2017 report confirms the observable and measurable reality of the trend.
Respondents reported that the part of the work that contractors do in projects is growing. The portion of respondents reporting that at least 50% of the project work is done by contractors became significantly larger:
The survey brought some compelling results for the disciplines of Project Management and Project Business Management:
Project Business is a robust market and soaring as the dominant driver of the Project Economy.
Experts in project management love passionate discussions about topics such as agile methods/mindsets vs. traditional approaches.
However, these discussions fail to include a core aspect of project management in our time: How to successfully run projects as a business on buying or selling side.
Project managers need skills on top of commonly trained Project Management: They need to understand themselves as managers of temporary commercial endeavors, competent in the management of business relationships, but also in legal and financial matters.
Corporations must help their project managers develop their skills in managing Project Business. Project business is high-risk business, and the cost of failure is immense.
As a not-for-profit association, the Project Business Foundation has defined its mission: Help organizations and individuals cope with the complex challenges of Project Business Management. The survey confirms that there is a profound need for such help.
To learn more about project business management and how you can use the Project Business Foundation as a center of solution competency, contact: email@example.com
Survey participants could leave a message. Here is what they told us.
Good topic for the current situation.
Interesting take on studying the trend on Make or Buy, looking forward to the results!
In my company some hubs are created in lower income countries.
Make or buy depends on the situation, my organisation tends to buy components (software) and then act as the Systems Integrator between the different vendors.
My company is a small IT firm - there are 16 people total. We are 90% make. As we grow we are contracting out more work.
Recently I have seen that there is a greater preference in buying solutions to let them be built by specialized entities in lines of business.
I think this survey is missing a few key questions - company size, industry, the buy and modify vs. buy and use as is.
Concerning questions 1 to 4, as time passes, in the initial period, to reduce business complexities, contractors are engaged. On the other hand, companies are expected to go for backward integration, for making their own raw materials. In India, many big corporates followed this trend.
In the field that I currently work in - IT - most equipment is made in countries which provide cheap manufacturing for example China and the surrounding East Asian countries. But very often, quality suffers because of materials and / or workmanship. it's a trade off between cheap cost vs. quality which has to be considered most of the time.
Governments business in construction for health care so most of the time it will be contracted out no in house capabilities. PMs, QA, are in house the rest is outsourced.
Nowadays, it is a lot easier to find somebody who is an expert selling what you want make. Your organization may not have the expertise at various stages of the production of the product which may result is poorer quality if your organization insist on making the product in-house. In the market, you can select from the best of the best and achieve your goals easily than trying to setup the infrastructure for making the product in-house.
Subcontractor are expected to be specialists, but we as project managers must work well with them to make them effective and obtaining good project results. Then we need to involve subcontractors from the very beginning of the project, even if they do not need to start their work immediately, but getting them engaged, involved and giving inputs and feedback.
Our sub contractors are doing all the work but we are the final decision maker.
Looking for the results and interested in what types of projects are being discussed.
When dealing with contractors deadlines and pay schedules need to be clear and precise.
It is better to insource talent and build capacity within one's own organisation.
Looking for the results and interested in what types of projects are being discussed.
Very good approaches.
Each decision is unique based on the prevailing variables at the time of decision making.
We are in times of big change in Subsaharan Africa both in Project Management & in how business is run. I am looking forward to seeing the changes that willl come.
Organizations generally outsource some activities to contractors so that they can focus on their core business functions.
My organization is leaning towards buy so that they don't have to maintain and enhance products.
As the products and services become more specialist in nature and also as the suppliers of some of these products and services benefit from increased economies of scale, the make or break decision moves closer to the buy areas of the spectrum enabling us to focus more on our core business objectives.
Organizations today are re-thinking the effectiveness of buying more vs making within. There will always be physical components that must be bought but the choice to buy other external services vs making within will depend on the composition of project scope, schedule, cost, and risk analysis, and availability of skilled trades and professionals.
In large Financial Services there has been a major shift from Make (pre-2008 crisis) to Buy, but now they are realising that Buying does not necessarily reduce complexity and cost as significant customisation and integration is necessary.
We wanted to know: What is the trend for the projects of corporations and other organizations? More Make? More Buy?
So we asked practitioners from the field.
The survey was held globally and was open from 22 to 30 August 2021. It was closed after 326 respondents.
The survey platform was on Surveymonkey, where the original results are still accessible.
For the first two questions, respondents could use two sliders with seven steps between -3 (= strong trend towards Make) and +3 (= strong trend towards Buy).
The following three questions used a drop-down field to choose from a list. These questions could be skipped by participants
Additional field allowed participants to leave an e-mail address to inform them about the results and a free text field to add comments.
Drop-down fields were used for the questions on
The Project Business Foundation is an independent professional and industry association under Swiss Law (Zivilgesetzbuch, Art. 60-79)