Confidence of UK SME businesses slips in third quarter

02 December 2015 Consultancy.uk

UK SME confidence has dipped slightly in the last quarter, although it still remains high compared to a year ago. The government can help improve business confidence however, with among others clearer information regarding export and green-efficiency incentives.

A new survey by Smith & Williamson, which involved 151 participants from UK SMEs, finds that almost a third of SMEs are feeling pressure from external factors, leading them to delay their investment plans. Business confidence has fallen five points from the Q2 2015 measurement of 119.4. Relative to the baseline however, set in Q2 2014, confidence remains relatively firm at 114.4. One consequence of the loss of confidence is that belief in the Government’s promise to support private enterprise fell 10%, to 70%.

The biggest issues faced by SMEs is the continued instability and fallout from European politics, mainly the situation in Greece but also the prospect of the potential of the UK’s 2016 referendum on EU relations. Further issues cited by businesses as lowering their confidence are the planned ‘National Living Wage’ laws, less-friendly dividend tax rules, and a less generous annual investment allowance.

Confidence of UK SMEs

Global macro-economic conditions too remain dicey, with the prospect of interest rate hikes in the US (and the UK), the recent turmoil on the Chinese stock exchange, as well macro-slowdown in general impacting sentiment, says Guy Rigby, Head of Entrepreneurial Services at Smith & Williamson.

Export
The research further highlights that the vast majority (87%) of SMEs respond that the government is not doing enough to support export activity. One central issue is the lack of transparent access to information and government services. While gov.uk websites are well regarded and trusted, the export page is said to be “difficult to navigate, untidy and complicated.” The improvement of the website into a reliable information portal is a simple step the government could make, according to the report.

Another issue stressed by the respondents is that many are unaware of research and development (R&D) credits and/or subsidies that could help them export. Improvements to working together should be helpful to further boost businesses to trade internationally.

Export factors

Going Green
The survey also finds that SME’s are not taking full advantage of their 100% capital allowances available to them for certain energy-efficient equipment. The whole notion of going green is not being taken seriously by more than half of SMEs. Only 8% believe strongly in investing in more energy efficient business practice, even while the world’s eyes have been turned to the issue at COP21. The Bank of England Governor Mark Carney also warned companies recently that climate change may already be too big to tackle, with the “current generation” having “little incentive” to do so.

The HMRC is seeking to create more tax efficient incentives to help companies invest in energy efficient equipment, while redressing how companies are informed about the potential tax benefits of such investments – including the 100% capital allowances available to them for certain energy-efficient equipment.

Crowd funding consideration

Crowd funding
The business advisors also consider the changes affecting the financing side of SME development, finding that the alternative finance market, with crowd funding becoming increasingly important, is being considered by over 90% of participants. The possibilities of the market have been quick to percolate through to SMEs. Rigby adds that a “recent Government consultation surrounding the use of crowdfunded investments in ISAs highlights that this is being considered as an increasingly important way of raising funds.”

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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.”