Bain: Investing in health creates competitive advantage

23 February 2015 Consultancy.uk

Healthy populations can create competitive advantages for economies, a newly released report by Bain & Company and the World Economic Forum shows. While unhealthy people put a strain on economies, healthy people result in higher productivity and lower healthcare costs. According to the researchers, economies should increase the number of ‘Healthy Life Years’ of their population by investing wisely while taking into account the 9 key inflection points that can impact an individual’s health.

Non-communicable diseases
Non-communicable diseases (NCDs), also known as chronic diseases, are diseases that are not passed on from person to person. There are 4 main types of NCDs: cardiovascular diseases, cancers, chronic respiratory diseases and diabetes. Unhealthy lifestyles, including the use of tobacco, physical inactivity, the harmful use of alcohol and unhealthy diets, increase the risk of an NCD.

Every year, non-communicable diseases kill 38 million people and sicken many more, putting a strain on the global economy. According to the World Economic Forum (WEF) and Harvard School of Public Health, the cumulative output lost between 2012 and 2030 as a result of NCDs and mental disorders could be as high as $47 trillion.

Investing in health creates competitive advantage

Consulting firm Bain & Company, in cooperation with the WEF, recently released a new report titled ‘Maximising Healthy Life Years: Investments that pay off’. In this report, the researchers find that in this time of slow economic growth and increased competition, “healthy individuals and healthy populations can create a competitive advantage through increased productivity, reduced healthcare costs and overall higher levels of well-being.”

To create these healthy individuals and populations, economies can no longer see health as a ‘cost’, but rather as an ‘investment’. Countries should invest in maximising the number of ‘Healthy Life Years’, described as “a year of physical, mental and social well-being; not just the absence of disease or infirmity.” By living these healthy years, individuals nurture ‘virtuous cycles of health’ – recurring cycles of events increase the beneficial effect of the next – that fuel health and growth, the researchers state.

Healthy Life Years as a Source for Continuous Economic Growth

Investing in preventing rather than healing
In their report, the researchers indicate that economies that focus on the well-being and prevention of illnesses will realise a greater return on their investment than economies focussing on health care and treatment. Economies should therefore increase their investments in creating healthier populations. “The benefits of investing to create a healthy population vastly outweigh the investment made. Such investments need to be part of any population health strategy,” explains Arnaud Bernaert, Senior Director Global Health and Healthcare at the WEF.  

To identify areas for concrete investments to maximise healthy life years and to realise high returns on these investments requires, according to the researchers, the understanding of nine key inflection points when “health can change for better or worse.” These include health enabling environments, healthy pregnancies, balanced nutrition in childhood, adequate vaccinations, adequate social engagement, minimum level of education/health literacy, healthy body weight, sense of self-efficacy, and high compliance rate with treatment.

Focus on maximising healthy life years as a key goal

Although the economic returns that stem from investments in healthy populations are high, investing in health still lags behind investing in healthcare. According to the researchers this is the result from three key issues:

  • The potential disconnect between investors and beneficiaries: This can be problematic when investor and beneficiary are not the same.
  • The role of different stakeholders: Creating a healthy population is still seen as a public sector obligation.
  • Lack of understanding of various investment opportunities: Private investors may not immediately see the positive returns of a healthy population.

In conclusion, Norbert Hueltenschmidt, Partner at Bain & Company partner and co-author of the report, says: “The goal of this report is to encourage economies and companies to start to think differently about the return on investment in healthy populations. The overall social and economic benefits are undeniable. Getting more stakeholders involved in creating greater traction for health investments and demonstrating the various investment opportunities and related returns will help to fuel the virtuous cycle of health and maximise Healthy Life Years.”

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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.”