Project Management Institute

No Cause For Alarm

The European Union Is Showing Some Cracks, But Project Professionals Aren't Rattled

BY KATE ROCKWOOD

PORTRAITS BY EMMANUEL FRADIN

Sylvain Costy, PMP, Gfi Informatique, Paris, France

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A pro-European Union demonstrator in London, England

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PHOTO BY TOLGA AKMEN/AFP/GETTY IMAGES

This year, the 60th anniversary of the European Union (EU), has generated an abundance of headline-grabbing worries. There's Brexit and what Britain's looming departure from the EU might mean for the countries that remain. The Syrian refugee crisis continues to send a stream of asylum seekers flooding into Germany, Sweden and Hungary in particular. And terror attacks in the hearts of Paris, London and Barcelona have underscored continued vulnerabilities.

But in spite of the uncertain environment, EU project managers say initiatives are marching forward. “None of the recent bad news seems to be having a practical impact on project work—especially in the finance sector, where plenty of projects are still being planned and executed,” says Daniel G. Glasow, PMP, program manager, DXC Technology, Hamburg, Germany. “At most project-intensive organizations, there's a wait-and-see attitude about how Brexit and the next two years unfold. The hope is that it might not be as bad as feared.”

Soldiers patrol near European Parliament offices after the terror threat level was raised in Brussels, Belgium.

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ISTOCKPHOTO

That same hesitant optimism and sense of resilience can be found across the EU. There might be new and growing risks, but for project professionals, risk management is familiar territory.

“Europeans are optimistic, and there's a widespread belief that the situation will improve over the next couple of years,” says Sylvain Costy, PMP, enterprise resource planning project director, Gfi Informatique, Paris, France. “France has suffered a lot from recent events, including terror attacks, but it hasn't created hesitation when it comes to project portfolios.”

Indeed, megaprojects are pushing forward across the continent (see “Mapped Ambitions,” page 60). They include what might be the world's largest infrastructure program: the multi-decade, EU-funded effort to build out the Trans-European Transport Network, which spans roads, railways, airports, seaports and traffic management systems. (It will cost at least €500 billion.) And executives at European organizations are optimistic about the region's business outlook, according to a May 2017 McKinsey survey. They expected more than 2 percent revenue growth on average in 2018—and 20 percent of organizations expected growth above 5 percent.

IBM's internet of things division headquarters in Munich, Germany

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PHOTO BY MATTHIAS BALK/DPA/ALAMY LIVE NEWS

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“There's a wait-and-see attitude about how Brexit and the next two years unfold. The hope is that it might not be as bad as feared.”

—Daniel G. Glasow, PMP, DXC Technology, Hamburg, Germany

Still, there's no question that Europe's challenges and uncertainties are impacting calculations in the C-suite. The McKinsey report revealed reluctance among executives to greenlight project investments because of a range of risks including rising populism and anti-globalization sentiment, and fears about the future direction of the EU. Nearly half (47 percent) of surveyed organizations said they were building cash reserves in preparation for future crises.

ON THE BRIGHT SIDE

But Thomas Zimmermann, PMI-ACP, PMP, project portfolio manager, Karl Storz GmbH, Tuttlingen, Germany, doesn't see today's European risk landscape as anything extraordinary. Some might perceive the interconnectedness of EU countries as amplifying risks to project portfolios there, but that's not the case, he says. Running a multi-country project or program naturally includes more complexities and risks than a local initiative—but that's true whether one's project spans the EU or the world.

In today's digital economy, interconnectedness is intrinsic. It's increasingly rare to find large-scale projects that don't have some multi-country component, whether in terms of procurement or distributed teams. “Terror attacks are a global problem, not just an EU problem,” says Mr. Zimmermann. “It's a risk that could impact every project.”

Britain's looming departure from the EU might bring changes for some projects—shifting regulations to comply with and new paperwork and procedures for finding vendors and staffing initiatives. But change and upheaval are two very different things. “Generally speaking, these aren't tumultuous times. The concerns about the shape and direction of the EU seem to me totally overblown, at least when it comes to our IT projects,” says Christian Schmittknecht, PMP, Novartis, Basel, Switzerland. He believes templates exist for how the EU might tailor its relationship to Britain after the departure, such as its bilateral treaties with Switzerland that allow Swiss organizations to participate in the union's single market.

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“Europeans are optimistic, and there's a widespread belief that the situation will improve over the next couple of years.”

—Sylvain Costy, PMP

Just in Case

In a climate of insecurity, contingency funds are serving a clear purpose.

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“The terrorism variable is becoming a strong, deep factor in the risk management process across the EU.”

—Marco de Santis, PMP, TIM HR Services, Rome, Italy

Security threats hanging over Europe have affected many project budgets in one very specific way: how contingency funds are used.

“They are supposed to be used to manage unidentified risks—‘unknown unknowns.’ But in the past, most organizations considered these funds as a basket to cover a project's inefficiencies,” says Marco de Santis, PMP, project manager, TIM HR Services, Rome, Italy. And because organizations approached them as a margin of error, contingency funds were sometimes removed as a cost-savings measure, says Johanna Johansson, PMP, head of the project management office, NCC Sweden, Stockholm, Sweden.

In the past three to five years, however, that's changed, according to Mr. de Santis and Ms. Johansson. As terrorist threats and attacks have increased, contingency funds are more commonly calculated and held for their traditional purpose. “The terrorism variable is becoming a strong, deep factor in the risk management process across the EU,” Mr. de Santis says.

Tributes to the victims of terror attacks in Barcelona, Spain

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PHOTO BY JAVIER SORIANO/AFP/GETTY IMAGES

Construction sites in Paris, France

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PHOTO BY LUDOVIC MARIN/AFP/GETTY IMAGES

“France has suffered a lot from recent events, including terror attacks, but it hasn't created hesitation when it comes to project portfolios.”

—Sylvain Costy, PMP

Participants at Google Developer Days in Krakow, Poland

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PHOTO BY ARTUR WIDAK/NURPHOTO VIA GETTY IMAGES

Moreover, the Brexit process will require “a huge number of experienced project professionals,” says Mr. Zimmermann. “Project and program management skills—as well as business analyst skills—will be in high demand, whatever happens.” In the long term, however, U.K. project managers might have less mobility around career choices.

A LOCAL LENS

Project professionals helming initiatives that involve the U.K. are rightly focused on Brexit's implications. But for others in Europe, the local political and business climate is top of mind. In France, the national elections in May and June brought a new president and party to power—and that's driving an uptick in business confidence and project investments, according to Mr. Costy. “We're in a special political wave at the moment, and a lot of people have high hopes and trust with the new government,” he says.

Antonio Dalvit, PMP, IT project manager, PMI Global Executive Council member GE Healthcare, Padova, Italy, says his projects haven't felt any impact from the EU political situation.

Project execution has clipped along at the usual rate. But following the wave of terror attacks in London and Paris, he has seen one thing change. “We pay more attention when we travel; we're more cautious,” he says. For example, when his team goes to Malta, they take pains to communicate more frequently with their home office.

Perhaps the relatively local focus of many project risk registers belies a greater truth: The EU comprises individual countries with distinct cultures and concerns—it's not a melting pot homogenizing the continent. “We're happy about the open borders, because it's much easier to do business and run projects from a financial and administrative perspective,” says Michal Raczka, PMI-ACP, PMP, IT director, mBank, Warsaw, Poland. “But nations are still nations. The EU has not changed national identity.”

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“Project managers are a little apprehensive. … But … business is good and people are busy with projects.”

—Blaze Goraj, PMP, Poznan, Poland

Poland is a prime example of local talent meeting international needs. As the country has emerged as an IT hub during the last 10 years, awash in tech startups serving clients across the EU, more project talent is staying in the country. Tech giants such as IBM and Google, as well as firms like JPMorgan Chase, GlaxoSmithKline and Goldman Sachs, have opened offices there.

“In the past, young project managers had to leave home to find work, but the past few years have really changed that,” says Blaze Goraj, PMP, a freelance project manager in Poznan, Poland. The mood is cautiously optimistic. “On the one hand, project managers are a little apprehensive—that Brexit will mean lost opportunities, that no country is safe from terrorism. But on the other, business is good and people are busy with projects,” he says. “So we don't worry too much right now.”

Mapped Ambitions

Ten big and bold initiatives underway in the European Union.

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Rendering of Canary Wharf Crossrail station

ENGLAND

Crossrail

This £15 billion rail project is remaking London's transportation network. Launched in 2009 and slated for completion in 2019, it will deliver a new east-west line to ease residents’ commuting headaches. The project has garnered positive attention for smart engineering within congested urban areas, but it's also faced stakeholder challenges in the form of union protests and backlashes by residents.

NETHERLANDS

European Commission Quantum Technology Flagship

Launched last year in the Netherlands, this €1 billion program backed by the European Commission aims to develop quantum communication and computing technologies. (Quantum systems promise to be faster and more secure than existing binary code-based digital technologies.) Project proponents hope the 10-year initiative will put Europe at the forefront of the coming quantum revolution.

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SWITZERLAND

Ceneri Base Tunnel

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This twin-track tunnel, slated for completion in 2020, marks the third and final installment in the massive US$24 billion New Rail Link through the Alps (NRLA) infrastructure project. The NRLA already includes the world's longest and deepest rail tunnel, the Gotthard Base Tunnel, which opened last year. The 15.4-kilometer (9.6-mile) Ceneri tunnel is expected to cost US$3.7 billion.

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ENGLAND

Hornsea Project One Wind Farm

This more than US$200 million energy project is on track to be the world's largest wind farm once complete in 2020. It boasts some impressive numbers: 174 wind turbines, each 623 feet (190 meters) tall, will spread across approximately 157 square miles (407 square kilometers) and power up to 1 million homes.

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Proposed plan for Offenbach Harbor near Frankfurt, Germany

SWITZERLAND

Human Brain Project

This €1 billion project was born after neuroscientist Henry Markram presented his idea during a 2009 TED Talk to build a complete model of the human brain on a supercomputer. The European Commission provided funding in 2013, but two years later the project was halted while the team revamped its schedule and budget. Relaunched this year with a reduced scope, the project has become an example in scientific circles of the need to integrate project management into scientific initiatives.

SWEDEN

Stockholm Bypass

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This US$3.5 billion expressway expansion project will deliver a series of underground tunnels, all designed to reduce congestion around Stockholm, Sweden. After being approved by the Swedish government in 2009, the project was halted in 2014 due to a political shake-up. Major construction got underway in 2015 and is slated to finish in 2025.

FINLAND

Olkiluoto Nuclear Power Plant

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Initially scheduled as a four-year project, this massive power plant in western Finland has struggled with project delays. The holdup? Legal battles between main contractors Areva and Siemens and sponsor Teollisuuden Voima Oyj, the Finnish power company. The original budget of €3.2 billion has more than doubled to €8.5 billion.

GERMANY

Offenbach Harbor

A former industrial corridor near Frankfurt, Germany, the Offenbach Harbor area is being transformed by developers into a new city district. The project has been shortlisted ahead of its 2020 completion for the prestigious DGNB (German Sustainable Building Council) gold award, which recognizes sustainability.

ITALY-FRANCE

TGV High Speed Rail Link

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This €26 billion high-speed rail project has been besieged by protests since plans became public in the 1990s. The 57-kilometer (35-mile) tunnel underneath the Alps, set for completion in 2028, would cut transportation times in half while easing congestion on mountain roads. But stakeholders in both France and Italy fear the project's environmental impact; the Italian army was called in to secure its end of the tunnel during protests.

VARIOUS COUNTRIES INCLUDING ROMANIA, BULGARIA, CROATIA

Rewilding Europe

Launched in 2011 as a private-public partnership with sponsors including Toyota and the World Wide Fund for Nature (WWF), this sprawling project aims to reintroduce grazing animals and reshape the local landscape of 10 select areas spanning at least 10 countries and more than 1 million hectares (2.5 million acres). So far, available investment capital is at €6.5 million. PM

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