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Writer's pictureSergey Miron

Understanding the 3 Types of Projects Your Organization May Run

Updated: May 23, 2021


Here’s a conundrum: all organizations have to run projects. To do so, many organizations pay for project management. Nevertheless, a lot of projects fail to finish on time, to stick to their budget, or to earn a profit. What’s going wrong?


I’ll be exploring this question in a series of articles starting with this one. To understand the problem, we first need to establish what kinds of projects a given organization is likely to run. Even if delivering projects for customers is not what we do on daily basis, still, from time to time, we have to initiate changes to address business needs, and we can call these changes “projects.”


If the change is an internal transformation, we would probably assign an internal project manager (PM) to manage the change. Alternatively, some organizations deliver products and services to other individuals and organizations; we call these “relationship projects,” and we might have full-time PMs managing those relationships. Conversely, our organization might partner with external solution providers to run the projects for us, with someone from our organization—usually a subject matter expert—serving as the single point of contact.


In all three types of projects, internally assigned PMs often face challenges that hamper the projects’ success, or, in some cases, lead to issues with clients and reduce the organization’s profit. As I will explain in the rest of this series, hiring an external PM consultant can prevent some or all of these negative impacts on the project and organization. I will explore challenges and factors that may hurt the success and efficiency of an internal PM, depending in large part on the maturity of the project management process and how well it is embedded into the organization. In addition, I will share some ideas about why and when hiring an external PM might help address some of the challenges.


To begin, let’s zero in on the three types of projects by the relationship their human resources have with a reference organization.


1. Internal Projects. These are projects initiated by a reference organization with a goal of delivering value in the form of a service or product for internal use. They use mostly internal resources. Depending on the maturity of project management and of the organization overall, a PM might be appointed, a cross-functional team might be assembled to deliver the work, and, based on the project’s perceived risks and impacts, a steering committee might be established to make key decisions.


2. External Projects – Service Provider. If the organization is a service or product provider, it will be engaged by other organizations, their clients, to deliver projects as per signed Statements of Work (SOWs). The reference organization provides resources to deliver the agreed scope and a PM manages the delivery. In addition, the organization probably has another group, e.g., Sales, Account Management, or Business Development, that is concerned with the success of each client engagement and overall client satisfaction.


3. External Projects – Service Recipient. In this type of relationship, the reference organization signs a SOW with one or more other organizations to receive goods and services as per contracts. Similar to internal projects, there is usually a PM or an executive appointed to manage the relationship with the service provider, and a formal or informal steering committee can be appointed to guide the decision-making.


In my next series of articles, I map out different challenges that we can face on projects and also suggest how external project management consultants can help address them.

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