Economy must adapt to make for more equal future of work

01 February 2018 Consultancy.uk

Automation is encroaching on all forms of work at a rapid rate, however, as it stands, little is understood of the impact technology may actually have on the world of work in the long run. In new analyses released at the World Economic Forum, three key indicators, the change of pace of technology, peoples’ capacity to reskill and labour mobility, have been considered, top map out numerous possibilities for tomorrow’s world.

The future of work is increasingly in doubt, with technology trends suggesting that masses of both high and low-skilled workers could become redundant in the coming years. The effect and pace of automation and digitalisation on the work is already impacting numerous industries – from manufacturing and retail, to food and drink, but the worst could still be to come. Last year, some reports suggested that as few as 19% of jobs which became fully automated would be replaced with new roles in other aspects of business – amid a global realignment of labour relations.

Without a radical restructuring of the economy – including solutions such as a universal basic income, to provide society respite from either mass unemployment, or drastically reduced living standards and wages – the world risks realising a wide range of dystopias. New analysis released at the 2018 Davos summit, in collaboration with strategic partner Boston Consulting Group, explores the future of work, examining three variables – the pace of the rollout of technology, the rate of reskilling of workers, and labour mobility. The analysis does not look at the future of economics, nor at changes to company structures, taxation or deeper changes to human society as such – areas which must be properly examined to build a comprehensive picture of the future of work – however, among the findings, the document still reveals several troubling, potential outcomes. 

In practice, the multiple scenarios described in the white paper are likely to play out simultaneously. However, in no circumstance are these outcomes a foregone conclusion. The authors stated, “We have currently a window of opportunity for taking action, provided we collaborate on and coordinate these actions. It is imperative that governments, businesses, academic institutions and individuals consider how to proactively shape a new, positive future of work—one that we want rather than one created through inertia.”

Work autarkies and mass movement.

Worst case scenarios

The first scenario, Work Autarkies, projects slow technological development, focused largely on replacing low-skilled labour. According to the study, a lack of development of new skills for the displaced workforce, and a lack of labour mobility due to looking internally for labour, mean that companies are likely to find it difficult to attain the high-level skills they require for maximal growth. This scenario is perhaps the closest to the current state of play in the global economy, with companies in the ageing populations of the West particularly concerned with a growing talent shortage, while generally dragging their feet when it comes to upskilling staff they already have.

A second, similarly recognisable, scenario sees higher levels of mobility, but slower technological development and skill development. Those who have participated in the growing gig economy will understand the significance of this, as a growing ‘precariat’ of workers see their wage bargaining power eroded by the impermanence of their employment. The effect is that lower skilled workers increasingly compete with one another for jobs, as part of a global low-skilled labour pool, for which they move into regions with demand, while high skilled labour floods markets, similarly driving down high skilled wages. This scenario, while presently recognisable, does also rely on the continued, or in many cases now, increased capacity for labour to move across borders – something which, even in the free movement zone of the EU, is becoming less and less popular with national governments.

Robot replacement

Another scenario featured in the World Economic Forum document, considers what may happen if workforces are hollowed out almost completely, as robots take over almost all aspects of work. The result of this would almost certainly be considerable unrest, as mass unemployment arises. To offset the negative impact on societies, which remains the basis of human life, companies’ profits are redistributed to meet the need of societies. Interestingly, this was something echoed by the Labour Party Shadow Chancellor John McDonnell, who used his attendance at the 2018 economic summit to warn of a “political and social avalanche,” unless the global economic rules are rewritten in coming years, while referring to the global elite gathered in the Swiss ski resort as the “Davos few”.

Robot replacement and polarised world

Furthering this, the report also warned of a potentially polarised world, in which rapid technological development reduces the need for much of labour, resulting in increased unemployment, while the jobs that do remain are competed for by a highly skilled individuals, living in a few megacities. The effect of high mobility and low labour requirements is mass inequality, with most of the world returning to subsistence farming, with “a few serving the mega-rich.”

The report was more hopeful about another potential outcome: that of empowered entrepreneurs. While this option anticipates a global closing of borders, as the flow of talent is restricted – something which, again, is already on the cards in post-Brexit Europe – the paper expects this would lead to entrepreneurs increasingly turning to local markets, creating new services and products in the process – while accessing the global market through online platforms when necessary. While technological development will have been steady, making a number of jobs redundant in low-skill markets, a higher level of education will have created a more skilled workforce which can sell its labour to these now-localised entrepreneurs. However, the report does not cover what this may do to wages – as restricted labour movement could either lead to a workforce more capable of demanding boosted wages, or a closed shop, where employers are able to cut pay and conditions in the knowledge they have a captive workforce to pick from.

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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.”