McKinsey: Obesity costs UK society 73 billion per year

05 January 2015 Consultancy.uk

Obesity is not only a global issue, also in the UK overweight comes with a hefty price tag. According to a study from McKinsey & Company, the burden on the wider economy amounts to $73 billion a year, making it after smoking the second largest health liability of the UK economy. If adequate measures are not taken, the cost to society will continue to increase.

Overweight or obese people is a major global problem. According a recently released research from McKinsey & Company, every year obesity costs the world economy $2 trillion in economic burden, through both direct medical cost and the indirect cost of decreased productivity. Only smoking ($2.1 trillion of damage) and armed violence, war and terrorism (also $2.1 trillion of damage) cost society more dearly. In the UK the impact of obesity and related costs is in relative terms even larger, as it represents the second most significant human generated drag on the economy. Falling slightly behind smoking, obesity brings along a burden of $73 billion, or around 3% of GDP.

Economic burden of obesity in UK

The medical costs
In the United Kingdom, the government currently spends about £6 billion a year on the direct medical costs of conditions related to being overweight or obese. That is 5% of the entire budget of the NHS. These costs are expected to rise, by 2030 the estimate is for obesity to cost the NHS between £10 billion and £12 billion. To break this down, the per capita spending on patients increases significantly between normal BMI and different overweight classes. Between normal and overweight there is a per capita cost increase of 31% or £247, this different becomes a whopping 80% or £642 increase for the second obese class, and 88% increase from normal BMI for the highest considered weight class.

The burden of obesity on healthcare systems also comes in a number of indirect forms, particularly metabolic disorders like type-2 diabetes create large costs for healthcare system. The chance of developing a metabolic disorder like type-2 diabetes is tied heavily to behaviour associated with becoming obese. A recent US study found that a 7% weight loss accompanied by moderate physical activity decreased the number of new diabetes cases by 58% among the high-risk population. As it stands treating diabetes costs the NHS £10 billion per year, 10% of its total budget.

Medical costs and BMI relationship

The social costs
The McKinsey report also finds that there is an inverse correlation in the UK between obesity and different measures of socioeconomic status, including household income, the occupational status of the parent, educational achievement, and a score of area deprivation. The prevalence of obesity is almost double among women with unskilled occupations (35.2%) than among professional women (18.2%). The most prevalent correlation for men is from education, with the more highly educated being generally less overweight. In the case of British children, the prevalence of obesity is almost 50% as high among boys in the lowest household income quintile as for those in the highest household income quintile; for girls, the prevalence is more than 50% as high. Children in the bottom decile of most deprived areas are twice as likely to be obese as children in the decile of least deprived areas.

Obesity among children

The negative effects of obesity on productivity and its prevalence in low socioeconomic groups, may make upward social mobility a greater challenge for those already disadvantaged by external factors. For example, in a study of 752,081 Swedish men, born between 1951 and 1965, men who were obese at age 18 years were more often downwardly mobile in the social hierarchy and less often upwardly mobile than normal weight men. BMI seems to be a determinant of the social mobility in Swedish men, possibly indicating that societal factors influence the social mobility of obese men.

Action needed
Based on the massive economic and societal costs coupled to obesity, and the grim outlook, McKinsey warns that fighting the disease should be a key strategic priority for public and private sector. The consultants identified a total of 74 possible interventions, which broadly can be categorised into 18 groups. Portion control – the reduction in the calorie intake by reducing portion size – is deemed the most cost effective and efficient way of reducing the burden, saving 2,126 disability-adjusted life years (DALYs*) with a cost of ‘only’ $400 per DALY saved. The second most effective method is reformulation, where the formula for high processed “pre-fabricated” foods has its calorie content reduced. Other sensible interventions include limiting the availability of high-calorie food/beverage, weight-management programs and better parental education.

Obesity interventions in UK

Overall, the authors believe that if 44 of the 74 interventions were to be deployed, the UK could return roughly 20% of overweight and obese individuals to the normal weight category, approximately equivalent to the entire population of Austria (8.5 million).

* The number of years that are lost or rendered economically unproductive due to disease.

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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.”