Best practice modelling can add 479 billion to UK economy

18 April 2016 Consultancy.uk

The UK currently has a relatively vibrant economy. Yet the potential exists for it to add an additional £479 billion to its GDP by supporting all of its regions to reach the G7 average economic output per hour. Improving exports, stimulating businesses to upskill their talent as well as improved value alignment with a new generation, are all key factors that stand at the heart of the UK’s long term success story.

In a new article that explores the growth potential of the UK, Grant Thornton leverages analysis by Centre for Economics and Business Research, as well as data from, among others, the Office of National Statistics (ONS), Department for Business, Innovation and Skills (BIS) and a YouGov survey (1,000+ senior decision makers) to delve into areas where the UK economy could improve.

Growth potential
According to the research, much of the UK has considerable potential to add additional gross value added (GVA) to the UK economy – if it manages to reach the same level of economic output as the G7 average (excluding the UK). The total value of the untapped potential derived from best practice modelling, is placed, by the firm, at a staggering additional £479 billion by 2025.

Sacha Romanovitch, CEO of Grant Thornton UK, says: “Today’s research has revealed significant potential across the UK. We believe that addressing at root some of the UK’s fundamental social and economic challenges collaboratively can create vibrant cities and communities across the UK, where businesses and people can flourish.”

Exporting value and building skills
One area that provides a source of considerable added value is export. As it stands, the UK lags considerably behind Germany in terms of exports as a % of GDP, with a score of 28% versus 45%. Increasing focus on improving the export potential of the country to that of the level of Germany, has the potential to add £84 billion to the country’s economic output. The study finds that many organisations do not currently consider the potential benefits of expanding their operations into overseas market. One area in the UK doing particularly well in this area is the West Midlands. 

An additional area in which considerable value may be won for the UK is if businesses invested in the development of staff – rather than bemoaning that talent either lacks necessary skills or are scarce in the first place. Businesses see, according to Grant Thornton, 70% of their future success dependent on attracting the right talent, and they therefore are advised to reconsider how future talent is developed. The article highlights that 54% of business believe that retention and development of their current staff is important to their growth – suggesting also that more can be done within businesses themselves to train and develop the potential of talent already on board – particularly within the female segment.

Changing mindset
By 2020 around half of all workers will be millennials; currently millennials make up around a third of the workforce. A recent study highlights that millennials have different, and more firmly set, values than previous generations. Millennials choose employers whose values reflect their own – a concept reinforced by the finding that, globally, 56% of Millennials have “ruled out ever working for a particular organisation because of its values or standard of conduct.” The article cites research by the Edelman Trust Barometer, which shows that business’ contribution to the greater good has become a leading value for trust in that business. The survey further found that 27% of businesses place importance on having a positive impact on their local community or wider society and 39% of businesses view transparency and good governance as a necessary part of success. 

The research highlights that for a number of businesses, around 15% of those surveyed, the source of their success boils down to four main essentials: their impact on society, on the environment, the development of their employees and making profits. 88% of those businesses were found to be in a better position to grow in the next 12 months, compared to 66% for all businesses.

Other major areas where best practice modelling – bringing the UK economy up the top-tier average – could add significant GVA include infrastructure management, healthcare and public sector efficiency.

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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.”