Why is formal project management more expensive than informal project management?
Formal project management: It basically involves using the traditional approach such a planning, analyzing, scoping, and bench marking to manage the entire project. This technique of formal project management consists of using traditional tools to achieve the objectives. Here the project managers have certification in more than one traditional approach. They are supposed to be experts in the technical domain and give guidance to the team by sharing their expertise.
Informal project management on the other hand is not very rigid and traditional in it’s approach and does not involve very strict rules and standards for managing the project. The project manager manages the projects based on the market and project requirements and it is not very structured.
Formal project management generally will always be more expensive in comparison to the informal project management because formal project management involves various defined steps, rule and guidelines where as informal project management Is very flexible in it’s approach.In the very initial years of business, the project managers spent a considerable amount of time and money in investing all their resources in writing policies and procedures which highlighted all the guidelines and rules, they felt this is the right and apt way to deal with the project. As a result, this increased the overall cost.Project managers always revolved their entire process around the needs and wants of the customer. However, when the concept of management of project become more and more established in the business, project managers felt customer requirement is the major motive behind the formal documentation of various policies and guidelines. The best part was that customer always continued paying for the extra cost of these formal projects but still there was a high amount og cost which was borne by the management. In order to save this cost, project managers started doing their business in an informal manner which saved them both time and money and that is how informal project management came into picture.
The brief difference between the formal and informal project management is as follows:
| Basis of Difference | Formal Project Management | Informal Project Management |
| The level of the Project manager | The level of the project manager is very High | The level of the project manager is in between Low to middle |
| The authority of the Project manager | Mainly the authority of the project manager is properly documented. | Mainly the authority of the project manager is not properly documented, but it is implied. |
| Use Paperwork | There is huge amount of paper work which is used. | Here, paper work is not important and it is hardly used. |
From the above difference and table, it is quiet clear that the major difference between informal project management and formal project management is of the paper work. Paper work overall is a very traditional approach, which massively adds to the cost and time of the project manager. An example of this is, even the most basic task of handing over the paper work to the project team and initiate a cost of $2000 which involves preparation at each stages. All the executives and top level management are very well versed with the cost and cons of paper work and they themselves, prefer to use various informal methods of project management to save cost and time.