What is contract project management? (With benefits)

By Indeed Editorial Team

Updated 17 January 2023

Published 28 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Managing projects is a key part of any organisation, with balancing resources of a range of types playing a key role in producing the best possible outcomes. Many companies engage in relatively few projects, so a comprehensive project management team is an unnecessary aspect of the business. This is where contract project management is important. In this article, we discuss what contract project management is, how third party involvement in project management benefits companies and key steps for getting a role as a contract project manager.

What is contract project management?

Contract project management, also known as third-party project management, is when a company uses a third-party organisation for their project management. Companies use these services in cases where they rarely undertake projects, so hiring a project management professional on a permanent basis is unnecessary. In these instances, hiring a project manager temporarily while they complete the project in question is a beneficial route forwards.

Depending on the service a company uses, different project management companies offer a range of specialities. For example, some focus on the provision of IT expertise in the case of infrastructure changes, while others may specialise in the construction sector. Choosing the right company for project management is essential and sets a project off in the right direction. A good project manager will put in place thorough support structures that will assist in delivering the best possible outcomes at the end of the project.

Related: What is project management? (Definition, process and careers)

Benefits of third-party project management

There are a number of reasons that a company might decide to outsource their project management. Below are some benefits of using third-party project management and how it differs from managing a project internally:

Industry expertise

One of the most important benefits of third-party project management is the increased level of expertise third-party project managers hold. The best external project managers have decades of experience in the industry and specialise in targeting outcomes in the industry of their choice. Specialisation is a key aspect in a wide range of different industries, and specialising in the field of project management is no different. This means that a good third-party project manager has all of the benefits of experience in an industry.

For example, avoiding the pitfalls of a certain process saves a company significant time and resources, while having the right contacts means that a company works with reliable staff in a range of sectors. Having a manager with a significant amount of experience and a thorough understanding of the industry that they work in is very beneficial to a project. This may lead to a project having a higher level of profit and a company achieving the best possible outcomes in the long term.

Limiting costs

A third-party project manager is an alternative to a project manager working within a company. There's a clear reason for a company choosing a project manager from a third party, and that is because having a project manager within the company is not an economical decision. That means paying the member of staff for a permanent role when projects are only very occasional aspects of the company's operations and going through a long hiring process that takes up company resources.

The alternative of using a third party is an effective route for saving a significant amount of money. The company spends less money on hiring a project manager and spends less time in relative paralysis due to the nature of the organisation moving forwards as soon as it finds the right third party. Using a third-party management service is a significant opportunity for saving money and increasing efficiency throughout the company.

Certainty of prices

Depending on the company chosen as a project management partner, the company sets the price of project management services ahead of completing the project management. This means that there are no unexpected fees sprung on the hiring company across the course of the partnership term. This results in complete confidence on behalf of the hiring company and frees them from having to worry about going over budget.

This is beneficial for both small businesses and large businesses alike. For small businesses, it means that they can ensure that there's no need for stretching a thin budget further than necessary. For larger businesses, it means that they can simply and easily account for the outsourcing when documenting expenses. It's far easier to note down a single lump sum as opposed to several smaller fees. This pricing certainty simplifies the entire project management process.

Unbiased and open

Outsourcing project management provides companies with an objective and honest management style. This is because the contracted company has no previous connection to the company, including any prejudices or preferences for competitors. The result of this is that people who only have the project's and company's interests as motivation manage the project, increasing the likelihood of the project's success.

The project is also more likely to reach completion by the necessary deadlines and within budget as the contracted company has no motivation to do otherwise. By hiring a company specifically created for the purpose of managing outsourced projects, you also avoid any conflict of interest that may exist within the hiring company.

Focused point of contact

Especially within larger companies, projects undergo management by a broad group of employees spread across departments. This in itself has many benefits but does mean that establishing a single point of contact has its limits. Contracting a project management company provides you with having a single point of contact to refer to across the duration of the management process.

This has many benefits for the hiring company. One of the largest benefits is the way in which it simplifies communication between involved parties. If an employee of the hiring company wishes to enquire about the progress on a particular part of the project, they now only have one centralised contact to go through as opposed to chasing contacts across various departments.

How to be a third-party project manager

If you intend to work for a contracted project management company, there are some steps you can take. There are many routes into contracted project management, and no singular route is more successful than the other as they all provide different but valuable opportunities. There are some universal steps to keep in mind despite this. Here's how to achieve employment in a project management company and work as a third-party project manager:

1. Consider studying a relevant degree

Having a degree isn't usually a prerequisite for third-party project management companies. Some vacancies specify a relevant degree as one of the candidate criteria whilst others don't. There are many benefits that come with studying for a higher education degree relevant to project management, including developing your project management skills and gaining a deeper understanding of how to get a job within project management. If you're considering studying for a degree, here are some subjects to consider:

  • marketing

  • business management

  • accounting

  • finance

Related: A beginner's guide to earning your undergraduate degree

2. Gain project management experience

One of the most attractive traits to possess as a third-party project management candidate is experience. This is because third-party project management companies wish to employ only the most competent project managers, and experience is one of the most valuable ways to demonstrate such competency. There are many ways that you're able to gain project experience. Undertaking a work experience scheme or shadowing a senior project manager are two of the most commonly taken routes to gain practical experience.

Another way to gain experience within project management is to start in an entry-level role, such as a project management assistant. This provides you with hands-on experience while also learning more about project management.

Related: Project manager requirements (with duties and skills)

3. Build your project management portfolio

As a project manager, having a significant amount of experience in managing projects is beneficial. This means that creating a portfolio of managing projects is a key step forwards in your career. As you gain experience in managing a range of different projects, keep a record of completed projects. Record the duration, key tasks, intended deliverables and the final outcomes of the project.

Armed with a portfolio of project management experience, you can confidently apply for project management positions. Your portfolio will help employers understand your past experiences, how they relate to your predicted outcomes and the way you can benefit their organisation.

Related:

  • What is a contract manager? (Plus tips on becoming one)

  • How much do IT project managers make (with qualifications)

  • What is an employment contract? (Plus types and benefits)

  • How to become a contracts manager (With skills and FAQs)


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