PwC: Cities must adapt to the increasing urbanisation

16 December 2014 Consultancy.uk

Mega cities must adapt to the rapid urbanisation to stay liveable, says PwC. The firm predicts that by 2050, 70% of the world’s population will live in cities, a percentage cities are not built for. As a result, the number of people living in slums will sharply increase as well. According to PwC, cities should embrace new technologies and transform into liveable places for the future by adapting to their inhabitants needs.

As part of its ‘Megatrends’, professional services firm PwC analyses global urbanisation; it highlights the consequences of this rapid process and gives insights in possible responses to this phenomena. According to the firm, currently 51% of the global population is living in cities, a number that was as low as 2% in 1800, and will be as high as 70% by 2050 if the world carries on its current pathway.

Rapid urbanisation
Every day, 200,000 people migrate from the countryside to the city, which are 1.5 million people a week. PwC predicts that as a result of this, by 2025, the number of cities with a population of more than 10 million could be as high as 40. With the number of people moving to cities increasing, the number of people living in slums is also growing rapidly, as cities are not built for the excess of inhabitants. Leo Johnson, Partner PwC, explains: “By 2030 there are going to be 4.9 billion people living in African and Asian slums alone. So, you’ve got one of the defining challenges of the 21st century, which is what are we going to do with these people? Where are the jobs going to be? How is it going to work? How are we going to avoid the outcome of these crime-ridden slums and the megacities getting swamped?”

PwC urbanisation

As the percentage of slum inhabitants, which grew with 33% since 1900, is expected to grow even more, cities will have to face several challenges in the future, as strong population growth will put big pressures on infrastructure, the environment and the social fabric of the city. The firm predicts that metropolis cities New York, Beijing, Shanghai and London will need $8 trillion in infrastructure investments in the coming 10 years to combat the pressure put on infrastructure by urbanisation.*

Cities of the future       
The consulting firm states that cities will have to change to remain sustainable and liveable, and provides two possible scenarios:

  • Develop a new city built around the latest technologies: the “Smart City”. This city uses digital technologies to improve performance and wellbeing, and to reduce costs and resource consumption.
  • Deploy technology horizontally to smart citizens and cities: the “Bottom-up” city.

In both scenarios, PwC emphasises the importance of new technology as it is used to transform mega cities into liveable cities and is “changing the reason that cities exist in the first place.” Where cities used to attract people because of employment opportunities, more and more people move are attracted to the city by the quality of life this city has to offer. According to the firm, the way a city will evolve, will be determined by the collective preferences of city governments, people and businesses.

Leo Johnson, PwC

“I believe we’re going to see a shift in what a city looks like and it’s not going to be a place that’s built for cars and built for machines. Cities must be adaptive to the needs of people. They must be local things where people have got the power to make that accumulation of small changes that keep the city alive and resilient and vibrant,” concludes Johnson.

* Consulting firm Arthur D. Little recently released a research focussed on Chinese urbanisation, and predicted big mobility challenges for the country’s cities.

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”