The ocean produces 2.5 trillion annual economic value

31 August 2015 Consultancy.uk

The bounty of the ocean produces $2.5 trillion in gross marine product per year, a roughly 10% return on its asset value of $23 trillion. However, because of overexploitation as well as wider environmental effects, the asset base is being slowly destroyed. Humanity is at a cross roads, according to a recent WWF and BCG report on the future sustainability of this natural ecosystem.

The ocean produces half the oxygen we breathe, and absorbs 30% of the anthropogenic emissions of carbon dioxide (CO2) and around 93% of the added heat arising from human-driven changes to the atmosphere. The ocean produces around 20% of the protein for around 3 billion people worldwide. It is one of the most bio diverse areas of the planet, supporting a huge variety of life – from single-celled organisms to the planet’s largest creature, the blue whale – with much of the biodiversity still undocumented.

In their ‘Reviving the Ocean Economy: the case for action’ report, the World Wildlife Fund and the Boston Consulting Group quantify the value of the ocean. The analysis looks at the direct goods and services that the ocean produces and supports, the negative effects human action has on this assets, as well as a number of strategies to safeguards its healthy future availability.

Global ocean asset value

In the analysis, the contribution of tourism, fishing, energy, shipping, biotechnology and many other sectors are considered. These sectors support millions of jobs and a ‘gross marine product’ which totals at least $2.5 trillion. When ranked among national GDPs, the ocean represents the world’s seventh largest economy, falling between the UK at $2.9 trillion and Brazil at $2.2 trillion. The research further looks at the ocean in terms of its assets, which are quantified to be a total of $24 trillion dollars. Of this, $6.9 trillion comes from fisheries, mangroves, coral reefs and sea grass; $5.2 from shipping; $7.8 trillion from coastlines; and $4.3 trillion from carbon absorption.

Capital destruction
While the oceans are a huge natural resource that provides untold economic and cultural benefits, the way in which we treat its bounty as well as the larger CO2 system, is placing increased pressure on the ocean’s resources.

One effect highlighted by the report is that of fossil fuels and deforestation. During the period 1880 to 2012, the Earth’s average surface temperature has increased 0.85°, of which 93% has been absorbed by the upper layers of the ocean. The consequence of this change is that sea surface temperature has increased in the world’s three ocean basins by 0.31°C to 0.65°C over the past 50 years. These changes in ocean temperature affect different ecosystems in different ways, including decreases in surface nutrients; effects on weather patterns; effects on sea levels; altering the timing of key life history events such as the migratory behaviour of turtles, fish and invertebrates.

Declining ocean life

As it stands, marine ecosystems are heavily exploited and degraded from human activity Of the global fish-stocks, 61% of the fish-stocks are fully exploited and 29% overexploited, almost a third of sea grasses have been lost and 50% of the world’s coral has disappeared. 

The authors conclude: “The analysis presented here shows that 70 per cent of the annual value of ocean activity is dependent on the health of the ocean. For all of the reasons outlined above, we find humanity at a crossroads. If we continue on this pathway of polluting, over-exploiting, warming, acidifying, and destroying habitats, we will squander the ocean’s considerable “shared wealth” fund over the next couple of decades. By this point, the science tells us that oceans will no longer be able to provide the healthy dividend that currently supports hundreds of millions of people.”

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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.”