Half of UK businesses lack confidence in government’s Brexit strategy

28 August 2017 Consultancy.uk

The immediate aftermath of the shock Brexit referendum result of 2016 has seen Britain perceived by many businesses as a more volatile, vulnerable place to base operations, while an inconclusive general election a year later has significantly weakened the negotiating hand of beleaguered Prime Minister Theresa May. According to a survey of business leaders in the UK, as many as 60% have lost their confidence in the ability of the government to tackle the challenges which lie ahead.

Britain’s vote to leave the European Union by 2019 has remained a contentious issue long after the apparently definitive vote was taken in 2016. The vote brought national class, generational and immigration-related rifts to the fore of social, political and economic life, as 51.9% of the UK’s voting public voted to reject the continued membership of the EU. The economic community was initially established by the treaty of Rome some 60 years previously, to establish the integration of sovereign power and economic rights in order to bring to stability to the region in the wake of two World Wars and multiple global economic crises. The institution subsequently enshrined a number of key rights for member states, including the tariff-free movement of goods between EU borders, and the free movement of labour, as citizens in the European economic area were granted visa-less travel – something that has become increasingly unpopular not just in the UK, but among remaining member states, suggesting the Union’s future may be a tumultuous one with or without Britain.

A year after the infamous Brexit vote, Britain went to the polls again, having triggered Article 50, the starting gun for negotiations to formally secede, in March. The snap election called by Conservative Prime Minister Theresa May was allegedly called at the behest of Jean Claude Juncker, President of the European Commission, who was said to have suggested the incumbent government did not have a mandate to continue. The election, which when it was called saw May’s party some 20 points ahead in opinion polls, eventually brought about a shock result of a hung Parliament, with Jeremy Corbyn’s oppositional Labour Party performing far better than pollsters suggested, gaining its largest vote swing since 1945. While the Conservatives remained the largest minority in Parliament, forming a coalition with a majority of just two MPs, with hard-line Northern Irish Unionist party, the DUP.

Half of businesses lack confidence in governments Brexit strategy

Sliding confidence in Brexit talks

Since the deal to retain power, the government has come under increasing criticism for its approach to negotiations with the EU, which began shortly after the surprise electoral set-back. Now, a recent survey conducted by peer-to-peer finance platform Market Invoice found that 54% of 3,000 businesses polled said the government had lost its way in talks with Brussels and that Brexit Secretary David Davis lacked preparedness, while only 5% felt he was doing a good job.

The professional services firm also found nearly 60% of respondents felt securing the right trading arrangements with the EU was their top priority in Brexit talks, ahead of having access to EU workers at 18%. New figures released by the Office for National Statistics show Net migration to the UK has fallen by a quarter to 246,000 in a year meanwhile, as EU citizens vacate Britain ahead of Brexit, suggesting that this access will diminish substantially in the event of a Hard Brexit, favoured by the government, which would see Britain withdraw from the Single Market, ending free movement with EU nations. EU net migration was estimated at 127,000 in the 12 months leading to March 2017, down 51,000 on the previous year, while the figure for the rest of the world was down by 14,000 to 179,000. Maintaining stability in the sterling was meanwhile considered important by just 7%, reversing a KPMG study of businesses performed earlier in the year. In response to the falling pound however, the UK is projected to lose as many as 40,000 investment banking jobs post-Brexit.

The ambiguity of Brexit remains a key issue particularly in the business sector, with a 30% decrease in the profit pool across companies from various sectors, with the grocery, food and drink, and automotive industries being the most affected. The profit reduction will most likely be passed on to consumers. Conversely however, EY has released a new study surrounding the international investments made within the Eurozone, reporting a greater portion of upcoming projects which is said generate a quarter of a million jobs in order to pursue Europe’s perceived opportunities.

This seems to suggest the possibility of some of the benefits Brexit may provide, as businesses and policy makers will have to invest into the development of a stronger software industry in addition to the the growing services and talent. Yet, these plans have experienced a set back as a third of businesses have abandoned their plans for expansion with an equal amount of firms deciding against the introduction of new products into the market.

Quote - Anil Stocker, CEO of Market Invoice

A total of 20% of firms voted against further financial support spent on marketing, and aim to reduce it in the nearby future. A 54% majority of small businesses have not yet witnessed Brexit leaving a negative impact on the hiring plans, as only 2% are predicted to reduce exposure to EU nationals with a further 6% being more reluctant to hire from the bloc.    

Commenting on the findings, Market Invoice CEO Anil Stocker said, “Business leaders are clearly focused on ensuring they are prepared to do business before worrying about people issues. Anecdotal feedback from this survey is that businesses in the UK are getting on with it but are clearly unsettled which doesn’t make for a healthy business environment.”

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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.”