Customer is not the Sponsor

Sponsor

When I conduct PMP and other project management trainings, participants almost always have confusion about the ‘Project Sponsor’.

  • Who is the Sponsor?
  • What is the role of Sponsor?
  • Is Sponsor internal or external to the performing organization?

Let us try to answer these questions with the help of PMBOK guide and some small examples. I have written this post considering PMBOK 4th edition but it holds true otherwise also.

PMBOK’s definition of ‘Project Sponsor’ – It is a person or a department or an organization who provides financial resources for the project.

When we are reading PMBOK we should always remember that PMBOK is not a definitive guide – it is rather a set of good practices which is generally recognized by project management community. The knowledge contained in PMBOK can enhance the chances of success on wide range of projects but it does not mean that it should be applied uniformly to all different type of projects.

Let us consider the case of Client and the Performing Organization (PM’s organization). Generally speaking

  • Client will pay for the services provided by the Performing Organization
  • Performing Organization will utilize part of the funds for performing project activities; some part will left as profit or margin.

It will be generally true to say that ‘Project Sponsor’ would be internal to Performing Organization but it is not always true. ‘Project Sponsor’ will decide the project budget and margin.

Let us consider 2 different situations while thinking about PM of Performing Organization. Let us consider that the project is done under a contract from external organization (Client):
1. A project done FOR PROFIT – Client agrees to pay 100K but a senior manager from Performing Organization decides a budget of 80K for project (20K is projected profit). In this case the senior manager is the ‘Project Sponsor’.
2. A project done FOR NON-PROFIT – A Donor Agency is doing a disaster management project in a specific country. The Donor Agency (Client as well as sponsoring organization) has contracted a particular independent non-profit organization (PM’s Performing Organization) to meet certain objectives. A senior manager from from the Donor Agency will decide about the project budget, disburse the funds as needed and manage the costs. In this case senior manager from the Donor Agency (Client) is the ‘Project Sponsor’.

PMI has written PMBOK in order to to standardize the project management terminologies. Since PMBOK is not a definitve guide and there are other project management standards, it is possible that the role of the ‘Project Sponsor’ might change in a different context.

PMBOK provides definition of ‘Project Sponsor’ as a Role and not as a person or job title. In a particular organization CEO might be the ‘Project Sponsor’ (role) but he would little role in decision making. In another organization a senior manager is a ‘Project Sponsor’ (role) as well as the decision maker. In yet another organization ‘Project Sponsor’ (role) is split between multiple managers.

It is also possible that a person in Project Sponsor’s role could also perform other roles like elucidating product requirements (Customer), providing human resources (Functional Manager), providing subject matter expertise (Consultant) etc.

The reader may also refer to another similar post that I had written earlier. http://www.pmbypm.com/2013/02/what-is-project-charter-is-it-contract/ 

This post is Sponsored by Praveen Malik, PMP and …

Praveen Malik, PMP is a certified Project Management Professional (PMP®) with a rich 20+ years of experience. He is a leading Project Management Instructor and Consultant. He regularly conducts Project Management workshops in India & abroad.

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