PwC: CEO confidence in business growth drops slightly

25 January 2016 Consultancy.uk

Confidence of CEOs globally regarding business growth has dropped slightly from 39% in 2015 to 35% in 2016, PwC's 19th annual CEO confidence survey highlights. Geopolitical concerns as well as regional economic disruption are of chief concern among CEOs, while continued regulatory pressure and potential key skill shortages are also affecting levels of CEO poise.

Seven years on from the financial crisis, uncertain times still hold across the global economy. In this year's PwC CEO Survey, titled 'Redefining business success in a changing world', the consulting firm explores global CEO sentiment to a range of factors affecting their confidence, as well as a number of key themes related to the changing social and technological environment. According to the survey, CEOs are worried.

PwC's research for the report involved interviews with 1,409 CEOs from 83 countries. The surveyed CEOs have been selected on the basis of providing a fair representation of all the major regions and industries in the world. The interviews were for the most part (60%) conducted online, with 26% through the telephone and 14% by post. Of the companies surveyed, 38% have revenues of between $100 million and $1 billion and 28% have revenues of up to $100 million; 60% of companies are privately owned and 38% of companies are listed on at least one stock exchange.

CEO uncertainty
The survey highlights that the number of CEOs very confident in business growth prospects has been tracking downwards, from 48% in 2011 to today's 35%. In addition, the percentage of CEOs confident that global economic growth will improve has also seriously deteriorated in recent years, from a high of 44% in 2014 to 27% this year. There are a number of factors affecting CEO confidence. China remains a key player in the growth plans of many of the CEOs surveyed, yet its recent stock market wobble, its debt-laden local governments and its faltering manufacturing sector continue to spook investors and rattle a number of industries. The commodity sector in particular is under pressure from the slowdown, as among others oil prices have nosedived - throwing many oil producer economies into turmoil. 

Whereas the global growth picture remains uncertain, the companies individually are more confident about their own prospects for revenue growth in the coming year, although it too has fallen somewhat on recent years. Just over a third (35%) of CEOs say that they are 'very confident' about short-term business growth compared to 39% last year. The CEOs tend to cite the US and China as their main vehicles for the growth, and to a lesser extend Germany and the UK.


Global trends
Looking at global trends of CEO concerns for the coming years little has changed since last year. Over-regulation comes in at number one, with extreme concern voiced by around 40% of CEOs and somewhat concerned by a further 39%. This is followed by geopolitical uncertainty, about which 74% of respondents is at least somewhat concerned. Exchange rate volatility comes in at number three at 73% at least somewhat concerned and the availability of key skills at number four with 72%. Government response to fiscal deficit and debt burden rounds off the top five with 71% of CEOs citing it as a concern.

Up and coming
In terms of concerns rising the fastest in recent years, bribery and corruption is up from 41% in 2013 to 55% this year, while lack of trust in business - following major business frauds including the Libor rigging scandal, the VW emission fraud and horse meat additions - has increased from 37% in 2013 to 55% today. Social instability too has, since its addition to the ranking in 2015, seen an increase, now at 65%, while consumer spending and behaviour is seen as a risk by 60% of those surveyed, up from 49% in 2013.


Regional outlook
The research shows that there are considerable regional variations. In the Middle East geopolitical uncertainty is almost a ubiquitous concern among those surveyed with 94% at least somewhat concerned. In the African region exchange rate volatility comes in at 87%, while the Central and Eastern Europe continue to be plagued by regional geopolitical concerns. Latin America respondents remain concerned about exchange rate volatility at 85% and North American respondents report increasing tax burdens as their top concern. Over-regulation is cited by Western European respondents as the greatest concern, while exchange rate volatility and the availability of key skills comes joint first in the Asia Pacific region at 81% of respondents highlighting it as at least somewhat concerning.

Industry outlook

Respondents from different industries also highlight different concerns affecting their specific industries. The energy sector for instance cites geopolitical uncertainty as its biggest concern at 89%, while the concern is the lowest for the healthcare sector. Over-regulation is the biggest concern for the insurance industry at 94% of respondents, while the least concerning for business services and the tech and manufacturing industry. The availability of key skills is a major concern for the entertainment and media industry at 88% of respondents, and is of least concern in the mining industry. Social instability would hit the hospitality and leisure industry the hardest, while asset management finds this of the least concern. The high speed change in technology is of considerable concern to the banking and capital markets, at 81% and of least concern to mining at 31%.

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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.”