Economic recovery spreads beyond London as employment rises

11 December 2017 Consultancy.uk

Cities across the UK are faring relatively well in terms of employment figures, with the national unemployment rate currently sitting at a four decade low. According to a new study, economic recovery is spreading across the UK, beyond the regions of London and the South East.

A new PwC study explores in how far key cities around the UK are able to support and enable peoples’ well-being. The study, titled ‘Demos-PwC Good Growth for Cities Index’, looks at a more broad set of indicators than gross value added (GVA) of the respective cities, as there is increasing focus on economic indicators’ secondary position to wider social conditions.

The study itself weighs ten indicators based on the opinions of 2,000 respondents, with this year’s index weighted: jobs (15%), health (14%), income (12%), skills (12%), housing (10%), work-life balance (9%), income distribution (8%), transport (7%), environment (7%) and new business (6%).Good for growth citiesThe Index outcome is the result of the combination of the various elements, which are themselves derived from taking the mean score on a particular indicator and giving a city a score equivalent to the number of standard deviations it is away from the mean. A city with a +0.4 score, is then 0.4 standard deviations better than the mean in that indicator.

Top and bottom

The top scorer this year was Oxford, with a net +1.0 standard deviations from the mean across its indicators. Reading follows closely, while Southampton, Edinburgh and Bristol round off the top five. Reading has moved up one position since the previous analysis.

Sunderland has the worst relative score, driven down by low-income, poor health and lower housing ownership, followed closely by Swansea and Middlesbrough & Stockton, which suffer from a poor environmental scores.Average scores since 2013-2015

One key driver for improvement above the mean across the various cities compared to previous surveys, is improvement to the employment rate. Unemployment has reached lows last seen in the 1970s. However, while employment in the cities is up considerably, pain points remain. House price to earnings ratios have worsened, as has owned occupation. Infrastructure appears to be unable to overcome increasing commuter times, while health outcomes continue to see declines.

The report adds that, with employment at almost saturation, further improvements to the total index score can no longer be a result of increased employment levels. Other areas, such as housing affordability, as well as wider structural conditions, from low- real-wage growth to dealing with improvements to stress, infrastructure and other social goods are needed.

The analysis also considers the regions (and their respective cities) that have seen the most improvement, whether above average, average or below average results. Jobs-wise, only Cambridgeshire, Peterborough and the West of England have seen below-average index performances. Income wise, however, four regions notched below-average results, a similar number to heath, although the Sheffield City Region was the only region to have below average results in both. Score breakdownFive regions noted above average work-life-balance scores, including the Sheffield City region, as well as Manchester and Liverpool. Income distribution, according to this study, has also improved in the latest report, with eight of the nine regions considered performing above average.

Wider success factors

The relationship between city index scores and average incomes is relatively weak. While income does appear to impact such scores, the lack of major outliers suggests that cities with higher scores but lower incomes are supporting their people in different ways.

Commenting on the overall theme of this year’s index results, Paul Terrington, PwC Head of Regions, said, “We’ve seen broad-based improvements in our good growth index across the UK, driven in particularly by falling unemployment rates. Some areas in the North and Midlands that had lagged behind in the recovery from the financial crisis are now showing clear improvements in their index scores. The economic recovery is now spreading across the country rather than being focused on London and the South East.”

Income to city index scoresTerrington summarised, “However, we are also seeing the price of prosperity in terms of  growing pressures on scarce resources of housing, transport and skills. If UK cities are to sustain the relatively strong performance of recent years as we move through Brexit and beyond, it will be critical to address these challenges as part of cities’ growth strategies, rather than trying to fix the problems later when they become serious constraints on 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.”