CEO Pulse survey highlights continued global uncertainty as crisis risk

01 August 2017 Consultancy.uk

Uncertainty is increasingly affecting CEOs’ ability to make key business decisions, new research has revealed. Last year saw the unexpected decision to leave the EU by the UK, the election of Donald Trump to the White House, as well as continued economic uncertainty in China, political uncertainty in Latin America and fast paced technological change driving disruption in various markets.

PwC’s latest Pulse CEO study has shown that 2017 has so far been plagued by new disruptions, such as the triggering of Article 50, and the hung parliament after the 2017 general election, while the continuously unpredictable US Trump administration also adds to global uncertainty.

CEOs prededict a growing number of crisis in the next three years

CEOs were found to be relatively weary, following more than a decade of economic uncertainty, with around 15% indicating that they have experienced five or more crises in the past three years, while around 65% experienced at least one. The future remains fraught with crises, with around 30% of respondents say that they expect more than one crisis within the next three years, and 16% saying that they predict no crisis.

In terms of key threats, global economic uncertainty takes the number one spot, as cited by 72% of respondents. Changes within the regulatory landscape come second, cited by 55% as a number one threat. Increased rates in the US, the effect of Brexit on the pound, as well as global volatility as capital flows into safe havens, mean there is increased currency volatility, which is cited by 49% of respondents as a key threat. Geopolitical uncertainty, and the speed of technological change too feature, at 47% and 47% respectively.

Global economic uncertainty

In terms of critical triggers for companies, they tend to stem from across the business value chain. From legal issues related to compliance failure and sanctions to technological issues, pertaining to cyber breaches and R&D fallout. Infrastructure failures and product recalls are noted as risks for operations, while reputational effects may create adverse brand associations and loss of market share.

Recent events were also found to weigh heavy on executives minds, with 80% of respondents have faced a financial crisis, around half have faced an operational one or one pertaining to human capital risks.

Crisis triggers

The study asked respondents which aspect of a crisis result in the highest level of vulnerability for the business affected. Most felt most vulnerable during a crisis when it came to ‘gathering the right information quickly’, as cited by 65%, followed by ‘an out of date business continuity plan’, cited by 57%. ‘Communicating adequately with external stakeholders’ was noted by 55% as an area of key concern.

‘Communication adequately with internal stakeholders’ was the fourth most common area of concern at 51% of respondents, followed by an ‘unclear definition of a crisis’, at 47% of respondents.

Key areas of vulnerability

To manage a crisis, the respondents noted a number of areas in which pre-crisis preparation improve the outcome of the crisis. While 91% of CEOs noted that they were active at the start of a crisis, a well-developed plan of action tends to be required to meet the various challenges thrown up in a period of crisis.

The consultancy firm notes eight key features, including a shared vision and purpose throughout the crisis, and before it, a crisis ‘toolkit’ that is up-to-date and ready, well-trained leaders with clear roles and understood responsibilities, as well as a crisis cover and control structure in place. Getting to grips on key risks, as well as the right mix of skills and capabilities too were noted as important to the overall management of a crisis.

Managing a crisis

A well-managed crisis can actually leave an organisation in better shape, with the firm reinforcing a corporate version of the received wisdom ‘whatever doesn’t kill you makes you stronger.’ The authors concluded, “39% of respondents tell us their ability to manage a crisis well has actually contributed to revenue growth, while a further 44% say that a well-managed crisis has not had a negative impact on their top-line growth.”

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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.”