PwC CEO Survey highlights backlash against globalisation

23 January 2017 Consultancy.uk

CEOs are relatively upbeat about the growth of revenues in the mid-term, a study from PwC finds. The most important countries for future growth is shifting however, towards more developed countries. The negative effects of globalisation are too on the minds of CEOs, as a global backlash against current economic policies continues.

PwC’s latest CEO survey, the 20th in the series, asked nearly 1,400 CEO's from 79 countries about key current trends affecting their respective business. The survey, which was released as part of the wider World Economic Forum 2016 conference in the Swiss city of Davos, highlights increasing concerns around globalisation.

CEOs’ confidence has grown over time

CEO confidence

The survey finds that, even with the political and economic turmoil faced by a host of nations, CEOs are increasingly confident about short- and mid-term revenue growth, as well as the direction of world economy growth as such. CEOs very confident in 3-year revenue prospects has increased 2 percentage points to 51% since last year, while CEOs very confident in 12-month revenue prospects are up 3 percentage points to 38% since last year. Around 29% of respondents are confident global economic growth will improve.

CEOs are looking at mix of countries for growth

While confidence is running relatively high for future revenue growth, a considerable shift has taken place regarding the countries viewed as supplying the conditions for their overall growth prospects for the coming 12 months. The US has, since 2011, increased its standing from second (21% in 2011) to first (43% in 2017), reflecting its recent strong recovery from financial crisis lows. China has fallen slight, from first place (39%) to second place (33%) on the back of its relative economic slowdown and potential for economic bubble. Brazil’s placing has collapsed on the back of its political and economic turmoil, falling from third (19%) to seventh (7%).

The UK has seen its standing increase markedly since 2011, jumping from seventh place (7%) to fourth (15%) even while it is dogged by Brexit uncertainty, while Germany has boosted its standing by two spots, from fifth (12%) to third (17%).

CEOs recognise both the benefits and downsides of globalisation

Globalisation has been a key policy driver for business in recent decades, offering opportunities to leverage global competition to, among others, lower tax rates, reduce labour bargaining power by expanding the labour pool and cut costs. Profits have, as highlighted by a recent report, increased fivefold in 30 years as a result.

According to the CEO survey, questions remain around the effect of globalisation policies on social cohesion – a key theme within the wider business community as increasingly protectionist and nationalist parties gain political share across the globe.

When asked about the benefits and downsides of globalisation, considerable disparity exists. Most CEOs (96%) believe that it has improved the ease of moving capital, people, goods and information, with a similar number stating that is has enabled universal connectivity. It too has supported the development of a skilled and educated labour force and universal access to infrastructure and basic services.

Yet not all aspects of life have benefited. A large proportion (44%) of CEOs believes that globalisation has failed to close the gap between rich and poor, with around a third stating that it has not enhanced the fairness and integrity of global tax systems, and around 30% saying it has failed to avert climate change and resource scarcity issues.

What’s the world coming to?

Regarding questions about ‘what the world is coming to’, CEOs are expecting globalisation to fall into decline in the coming period. 75% of respondents expect the world to move towards regional trading blocks, with 83% expecting to see multiple beliefs and value systems. Around 53% of respondents expect the world to move towards nationalism and devolved nations, with 59% expecting a move toward multiple economic models. The internet is one key are in which more free and open access is expected, cited by 72% of respondents.

According to a recent analysis by Strategy&, PwC's strategy consulting arm, CEO turnover stood at a record high last year, with in particular 'outsider' executives gaining terrain in the boardroom.

Related: CEO confidence in business growth drops slightly (2016 edition of PwC's annual CEO Survey).

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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.”