P E Final Work.docx

TABLE OF CONTENT 1. Abstract..................................................................................................................... 2 2. Introduction…………………………………………………………………………3 2.1. Company A…………………………………………………………………….3-4 2.2. Figure 1………………………………………………………………...............4 2.3. Figure 2………………………………………………………………………...4 3. Literature Review…………………………………………………………………..5-6 4. Methodology………………………………………………………………………..7-8 4.1. Table 1………………………………………………………………………….7 4.2. Table 2………………………………………………………………………….7 4.3. Table 3………………………………………………………………………….8 5. Discussion of Results………………………………………………………………..8-9 5.1. Graph 1………………………………………………………………………….9 5.2. Graph 2………………………………………………………………………….9 6. Conclusion…………………………………………………………………………...10 7. Recommendations……………………………………………………………………10

8. References……………………………………………………………………………10

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1. ABSTRACT Purpose – The predominant purpose of this study is to outline the advantages, disadvantages and challenges that come with outsourcing of project management activities and to best compare between companies that do project outsourcing versus those that do in-sourcing. Design/methodology/approach – A brief and concise study will be conducted on project outsourcing through the analysis and evaluation of the impact that the presence and absence of project outsourcing has on company’s revenues, employee performance and productivity levels. Data will be captured to help distinguish between the effectiveness and efficiency levels of project outsourcing and in-sourcing. Findings – Based on the data evaluation and the analysis of results, it was evident that the company that outsources its project management activities yields the most revenues, creates better employee performances and improves on productivity as compared to an organization that in-source. Research limitations/implications – The need to access to restricted organizational information. There were information constraints due to both companies not disclosing all the necessary data and company record statuses. However, research was based on the available data that was put on my disposal. This will not show 100% data accuracy and a true reflection of both company’s statuses. Practical implications – Organizations are expected to meet their set of objectives and most importantly to produce products or to provide services that conform to specifications. With the implementation of project outsourcing, organizations are expected to be efficient and effective within their operational activities. Key words – Project outsourcing, in-sourcing, productivity, employee performance, sales, efficiency, effectiveness, resources, outsourcing advantages, outsourcing disadvantages, challenges

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2. INTRODUCTION According to Larson, Eric W., (1952), Project is a temporary endeavour designed to create a unique product, service or results. Concisely, it can be referred to as a non – repetitive, onetime effort limited by time, cost, resources and performance specifications. It is predominately distinguished from other management functions by its defined life span with a beginning and an end. Typically, it involves doing something that has never been done before. Project management is therefore referred to as an application of skills, tools, knowledge, experience and techniques to project activities to meet the specified project requirements. According to Marty Pine., (05 2005), Outsourcing is best described as the strategic use of outside resources/inputs to perform activities that are traditionally handled by internal staff and resources. It can also be defined as a strategy in which organizations use to contract major segments or functions of its product, processes or services to specialized and efficient service providers. These specialized providers are usually eligible to profoundly help organizations to advance its operational functions to meet its products, processes or services specification requirements. It is typically used by companies to save costs. Project outsourcing is therefore defined as a way in which organizations contract their major project functions to specialized service providers. This is applicable when there is an existence of a problem where by an organization experiences troubles in managing its projects. Project outsourcing has got major lucrative benefits and as well as disadvantages that can be harmful to project management activities. Moreover, certain challenges do arise on neither outsourcing of projects nor in-sourcing of projects. A detailed study will be conducted on two companies that manufacture boats. Company A being the one that outsources its project management activities. Company B - being the one that does in-sourcing. The benefits, advantages and disadvantages for both project outsourcing and in-sourcing will be evaluated and analysed to best compare company A and Company B. A judgement will therefore be made based on the finding of results. 2.2 Company A Robertson and Caine international yatch is a boat building company situated in Cape Town, South Africa. The company is the largest boat-builder in southern Africa and one of the

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biggest catamaran builders in the world, having superbly built boats to its credit. Robertson and Caine is currently building a range of population catamarans to the Africa and the world.

2.3. Figure 1: Latest boat manufactured by Robertson and Caine. Company B: Two oceans marine manufacturing was founded in 1989 and has evolved into one of South African leading custom boats, based in Cape Town. Two oceans marine manufacturing specialises in custom boat manufacturing and unique build offers the full range of services need when buying a custom-boat. Two oceans marine manufacturing, manufactures both power and sailing catamarans.

2.4. Figure 2: Latest boat version of two oceans marine manufacturing. 4

A brief study will be conducted on project outsourcing through the analyses and evaluation of the impact of project outsourcing to both companies’ sales, employee performance and productivity. The study will be carried out through capturing data and considering the company’s growth trend record over the years. 3. LITERATURE REVIEW Outsourcing project management advantages: According to Marty Pine., (05 2015) and Dino Butorac., (2016), one of the most advantageous factors brought about outsourcing of projects is to enable organizations to greatly focus their efforts and energy on their strengths with regards to its operational activities and project activities. The creation or development of new ideas of improvement comes into existence. Organizations or project managers tend to tab into a greater pool of ideas and creative ways of thinking due to them having to focus more on fewer segments of their operations whilst the other functions or segments are being contracted to specialized service providers to perform (outsourced). Normally, experiences are brought from the outside and they benefit the organization. External experts or specialized service providers do not only focus on one organization at a time but work simultaneously on other projects not related to this one organization. Through this practise, external experts tend to bring experiences and ideas from dealing with other projects with them to this one organization. This is not about intellectual capital being stolen, but mainly about benchmarking, learning about other areas and applying the lessons to your organization. The exposure to the latest or advanced methodologies that are being used by outside specialists. External specialists tend to invest more into project management research, new technology and methodology. Organizations benefit from this without the need to invest as much themselves to new technologies, methodologies and project management research. This enables organizations to save up on money and resources. Through saving resources or using less the organization tend to have more resources to invest in employee training programs to enhance employee performance. This will result into the organization yielding higher sales/revenues and drastically improving on productivity levels of the organization.

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Outsourcing project management disadvantages: According to Dino Butorac., (2016), possible resistance from within the organization is created through outsourcing of project management activities. Employees from within the organization may start to feel intimidated by an outside expert. This can result to employees not trusting their ability of work and also make them reluctant to changes. The morale of employees has to be always considered, however, failure to do so may affect the employee’s level of involvement to operational activities. This stand a chance to negatively impact the productivity levels of organizations. Outsourcing project management challenges: The often challenges concerning the outsourcing of project management activities are to choose between which service providers to use and need for restricted access to sensitive organizational information. Developing a best selection method for specialists/service providers is sometimes difficult as you may not really know what to expect from them due to lack of trust and unawareness of the actual capabilities and abilities of service providers. The restriction to access sensitive organizational information may tend to affect an outside expert. However, organizations are not always disclosing their secrets because of fair of loosing competitive advantage. In-sourcing In-sourcing project management activities tend to limit project managers in terms of coming up with better ideas. However, it improves on communication within the company. Employees are set to know and understand every single segment of the operational activities as they are obliged to perform without outsourcing any. However, in-sourcing is more expensive as compared to outsourcing of project management activities. In-sourcing has got greater potential of affecting revenues which in turn affects the company’s productivity levels. The company is very responsible for their own research of new technologies and methodologies. This research requires the organization to invest time and resources. With organizations trying to balance resources, efforts and time in in-sourcing project management activities, it deviates them from concentrating into improving on its productivity levels and efficiency. 6

4. METHODOLOGY The methodology or the approach to this research was comparing the sales revenues made by both companies respectively. Data was captured and a comparison was therefore made based on the captured data. The following is a table showing the revenues made by both companies for the last consecutive five (5) financial years. Company A

Company B

Year 1 = 10 000 000

Year 1 = 6 000 000

Year 2 = 12 600 000

Year 2 = 6 500 000

Year 3 = 16 500 000

Year 3 = 9 500 000

Year 4 = 17 000 000

Year 4 = 8 000 000

Year 5 = 20 000 000

Year 5 = 10 000 000

4.1. Table 1: Table showing the difference in sales growth trend and accumulation per each subsequent year in the last five years. Not only revenues were used as a measurement factor. Employee performance and productivity were put to consideration as well. Data was captured through the formulation of a questionnaire for both Company A and B respectively. Senior management and employees were asked questions based on productivity and performance with an intention to measure the organizations employee performance and productivity level. The following table shows the number of people from within the organization who agreed and disagreed to the questions asked per respective company, with agree weighing the highest. Company A: Questions

Agree

Disagree

Q1: is project outsourcing working efficient and effective?

50

20

Q2: has employee performance and involvement improved

50

20

Q3: has productivity Improved over the last five years?

60

10

Q4: are there more problems than solutions?

40

60

Q5: is the company meeting set objectives?

60

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through implementing project outsourcing?

4.2. Table 2: Showing number of people who agree versus those who disagree 7

Company B: Questions

Agree

Disagree

Q1: is in-sourcing working efficient and effective?

20

50

Q2: has employee performance and involvement improved

40

60

Q3: has productivity Improved over the last five years?

30

60

Q4: are there more problems than solutions?

60

30

Q5: is the company meeting set objectives?

20

60

through in-sourcing?

4.3. Table 3: Showing number of people who agree versus those who disagree The above data was captured, verified and confirmed to best achieve accurate results/findings. An analysis of results was conducted to help compare both companies and recommendations were established to help improve. 5. DISCUSSION OF RESULTS Company A: The following is the graphical representation of company A. Showing the sales/revenues growth trend for the past five financial years.

Graphical representation of sales 25000000

sales/revenues

20000000 15000000 10000000

sales

5000000

0 year 1

year 2

year 3

year 4

number of years

5.1. Graph 1: Graphical representation of sales for company A.

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year 5

Company B: The following is the graphical representation of company B. Showing the sales/revenues growth trend for the past five financial years.

Graphical representation of sales 12000000

sales/revenues

10000000 8000000 6000000 sales

4000000 2000000 0 year 1

year 2

year 3

year 4

year 5

number of years

5.2. Graph 2: Graphical representation of sales for company B. Looking at both graphs for both companies respectively, it is evident that company A had an increasing growth trend in sales per each subsequent year. This is positive impact from implementing project outsourcing. However, looking at graph 2, it is as well evident that company B had problems with regards to keeping the consistency of their sales and of course yielding the least sales as compared to company A. Analyzing and evaluating the sales and both questionnaires, it is evident that project outsourcing is much more lucrative than in-sourcing. Company A which does project outsourcing, had attained the highest and the best growth trend in sales. Company B had the least in everything as compared to Company A. As per the questionnaire, more positive feedback was received from Company A than it was with Company B.

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6. CONCLUSION After conducting this study and putting together available resources such as data and information into determining if project outsourcing is better than in-sourcing, it is evident and well substantiated that project outsourcing is one of the best ways that organizations can use to execute its project goals and meet nominal organization’s objectives. However, in-sourcing is neither bad nor better than project outsourcing. In-sourcing requires the most input resources and cannot guarantee the best outcome of results. Inversely, project outsourcing requires the least input resources and can partially guarantee the best outcome of results. 7. RECOMMENDATIONS Based on the outcome of results, I would recommend company B to start introducing project outsourcing within their organization. Company B needs to understand and know how best to implement project outsourcing. This would be a very big crucial step into yielding better sales as possible. Moreover, this will help the organization achieve the best employee performance and importantly help the organization with meeting its set objectives. 8. REFERENCES Larson, Eric W., (1952) – Project management: the managerial process / Eric W. Larson, Clifford F. Gray – 5th ed. Marty pine, (05 2005), why do companies outsource? : https://www.thebalance.com/why-docompanies-outsource-2553035 Dine Butorac. (2016) – Outsourcing Project Management: http://www.project-managementmentor.com/outsourcing-project-management.html

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