5 big trends

The economy has officially crashed. All around the globe, unemployment rates are rising and money is scarce.

Every single business decision—and every single project—is anchored to predictions about what the economy will do next. Project managers are forced to make do with less time, smaller budgets and fewer people than ever before.

The 3rd annual PM Network Trends Report looks at the shifting landscape and outlines the five big business trends every project manager needs to deal with—or face the consequences.

Want more
trends?
Visit PMI.org/
features
for a look at how other
countries are dealing with
the economic crisis—
and what that means
for projects.

1 TREND
HYPER EFFICIENCY
In a business landscape where every dollar is scrutinized and schedules are compressed to accelerate ROI, project managers know this isn't the time for anything that might be construed as wasted effort.

“Economic pressure is the driving force to improve project efficiency,” says Boguslaw Bujak, an IT services executive manager and consultant based in Warsaw, Poland.

And that's not necessarily a bad thing.

Across Europe, he has observed the impact of greater competition and fewer projects, forces that have pushed project teams to rethink their approach and trim fat wherever possible.

“Without pressure, processes won't improve,” he says. “It's a good situation for project management, because it forces project leaders to expect more from their teams and from themselves.”

Mr. Bujak says he believes the heightened global competition has put greater emphasis on developing a strong project management structure to guide processes, measure outcomes and identify areas for improvement.

“In this market, customers expect much more, and the time to market is more important than it was even three years ago,” he adds. “Only companies that can find ways to incrementally increase their efficiencies while minimizing their risks will see long-term success.”

That usually means digging into project processes, though such action can't be a top-down mandate, says Giovanni Gelape, Lean Six Sigma manager for the European bank BNP Paribas in Sao Paulo, Brazil. Rather, the entire team should map the project scope and evaluate the value of each step in the process. Based on its analysis, the team can then identify tasks and deliverables crucial to achieving desired business results—and eliminate those that aren't vital or slow down the project's progress.

This, too, can help strengthen projects.

“Once the team understands the scope, it's easier for them to remove waste and add value to the process,” adds Danilo Gazel, process efficiency manager at Cetelem Serviços Ltd., a Sao Paulo-based consumer credit company that's part of BNP Paribas.

Last year, for example, Mr. Gazel worked with a team of BNP lawyers preparing documents for upcoming hearings. At the time, the team was facing a backlog of 600 cases. By reviewing the document-development process with the team, he was able to help pare down the number of queries required to complete each document by more than half. The process was also reorganized so that several steps could be completed in tandem to reduce lost time.

“By eliminating steps that weren't adding value to the process, we were able to get rid of the backlog in just three months without adding resources,” he says.

Mr. Gazel says some of the greatest gains can be achieved through streamlining sign-off procedures and by putting a single person in charge of all approval processes. “This one step can make projects faster, easier and less costly,” he says.

The push to hyper efficiency also has companies looking to make better use of all team members, says Richard Laermer, New York, New York, USA-based author of 2011: Trendspotting for the Next Decade [McGraw-Hill, 2008].

“Project managers need to involve the entire team in efficient decision-making because there is less time to get things done,” he says.

To do that, project leaders need to bolster morale and encourage the team to invest themselves in the project.

“In this economy, people feel like they are fighting for their lives, and you can't be efficient if you are afraid of losing your job,” Mr. Laermer explains. “Making people feel safe by creating a sense of ownership is an efficiency measure. They will be more focused and confident, and they will spend less time looking for other work.”

TAKEAWAY: Project managers must try to eliminate all unnecessary waste from projects.

2 TREND
TOTAL TRANSPARENCY
Conducting business in a bad economy raises the stakes for project managers. Fears about funding shortages and looming job cuts make everyone nervous, and those fears are increasing the demand for oversight and governance, particularly on big-ticket, long-term projects.

One of the more high-profile examples of the increasing demand for transparency comes from the oversight requirements built into the American Recovery and Reinvestment Act. The legislation includes training mandates for every state representative who will be in charge of overseeing stimulus spending in their respective states.

“States have a huge responsibility in partnering with us to ensure that dollars spent as part of the Recovery Act are spent wisely, with transparency and accountability,” U.S. Vice President Joe Biden said in a statement as the US$787 billion stimulus began to roll out.

Project managers should take heed.

Whether managing a federally funded billion-dollar program or a small in-house project, stakeholders in this economy expect accountability and transparency from beginning to end. And the best way to create that accountability is to be honest with your team, your company and your partners about project goals, progress and even obstacles.

During a bad economy, there is no time for secrecy and micromanagement, warns Mr. Laermer. “If you have each team member doing one little thing at a time, it adds unnecessary confusion to the process. But if you say ‘Here are the challenges we face,’ the whole team can make more informed decisions.”

In the past, people did their job as a chain of tasks and didn't see anything else, adds Mr. Gelape. But that doesn't work in a weak economy when every person on the team is expected to do more with less, and every project is expected to deliver. Team members have to see the big picture to get on board.

“They need to see why they are important to the process,” he says, adding that access to strategic project knowledge creates loyalty and commitment to the project. “They have to feel like they are part of the solution, part of the process that will transform the business.”

Team members also need to understand the metrics being used to judge the project so they can work more effectively toward those goals. Metrics can cover a wide variety of information, ranging from budget goals and deadlines to improved efficiencies, increased revenue streams or better use of resources.

All of those data, along with any other critical project knowledge, should be shared in progress meetings and through regular communication updates.

—Boguslaw Bujak, independent
consultant, Warsaw, Poland

—Richard Laermer, author,
New York, New York, USA

“Everyone needs to know where the project is and where it needs to be,” says Mr. Gazel.

Along with keeping teams on track, sharing project information and metrics with key stakeholders and customers can build loyalty and buy-in even if the project isn't a total success, says Jay Bolus, vice president of technical operations for McDonough Braungart Design Chemistry, a consulting and green business certification firm in Charlottesville, Virginia, USA.

“You have to have transparency on a project to prove what you've accomplished,” he says.

Mr. Bolus points to MechoShade Systems Inc., which makes solar shading systems. For years, the Long Island City, New York, USA-based company used a mix of chemicals and PVC in its product lines, which made the end-product toxic and difficult to recycle. To improve the environmental sustainability of the line, MechoShade launched a redesign project in 2007. The company was able to replace most of the offending material in the shades with a more environmentally friendly one, but it still had to include a toxic flame retardant to meet safety standards, Mr. Bolus says.

“Rather than hide the fact that they used this material, the project team created a set of metrics for every material used in the shades and categorized them according to their green, yellow or red material status. Then they made those metrics publicly available,” he says. “Their goal was to be open and honest about what they [had] accomplished so far, and to be honest about what they still wanted to accomplish, and that resonated with their customer base.”

Making project data publicly available streamlines the project management process and proves you have nothing to hide, Mr. Laermer says. But he warns that it also requires greater accountability and a higher level of certainty.

“If you are putting information out there, you need to stand behind it and be sure it's accurate,” he says. “Responsibility is a big part of trans-patency.”

There should also be opportunities for stakeholders, customers and team members to respond to project data by making suggestions and participating in the decision-making process to better outcomes.

“The best people to find improvements are not the project managers, it's the people doing the job who see what needs to be done every day,” says Mr. Gazel. “If you give them the chance, they will add value to the project.”

TAKEAWAY: Sharing project information breeds loyalty, streamlines project progress and improves the end-result.

3 TREND
POWER ALLIANCES
When money is tight, it only makes sense for companies and municipalities to seek out alliances that can lighten the financial load and reduce risks if projects go awry.

Sometimes they're public-private partnerships. The Virginia I-495 infrastructure project, for example, is a joint effort between the U.S. state's Department of Transportation, two U.S. construction giants and an Australian developer. In other cases, it's two private companies looking to leverage the expertise of global teams with local businesses. U.S.-based Methodist International Medical Center joined forces with Emaar Healthcare Group in the United Arab Emirates, for instance, for projects to build healthcare centers in the Middle East, North Africa and Turkey.

No matter how the players line up, partnerships are a popular way to spread risk and cut costs.

“There used to be more of an emphasis on outsourcing of manufacturing, but in a competitive market place, companies are beginning to see the business value of broad partnerships to increase operational efficiencies and reduce ramp-up risks,” says Borzu Sohrab, principal consultant for Crescent Biomedical, a Los Altos, California, USA-based consultancy. “Many companies have also found that they can reduce headcount and increase competencies through partnerships.”

He points to the project to develop a drug-eluting coronary stent launched by U.S.-based medical device manufacturer Boston Scientific and Canadian pharmaceutical company Angiotech. In this case Angiotech brought the intellectual property for the anti-clogging drug that would coat the stents, while Boston Scientific had the manufacturing expertise.

“They were able to leverage manufacturing competencies in a complementary manner,” Mr. Sohrab says, adding that device and pharmaceutical companies are developing more joint projects as they race to bring new products to market.

But partnerships can also backfire if careful due diligence is not conducted, warns Gene Smith, founding partner of Smith Brandon International Inc., a strategic management planning consultancy based in Washington, D.C., USA.

“There are a lot of inflated credentials right now,” she explains. “Whether it's across industry or across borders, it's all the same. There are huge issues involved with choosing partners.”

From verifying that companies actually exist to evaluating their financial, legal and regulatory issues, it takes a lot of scrutiny to ensure potential partners are legitimate and solvent for the long term.

Because of the recession, it can be particularly difficult to assess the financial stability of potential partners. Companies that may have been thriving 12 months ago when their last financial reviews were conducted are now struggling. Funding for projects may also have changed as governments rethink the value of investing funds in major undertakings or banks pull back credit lines.

“Credit issues are the biggest problem today,” Ms. Smith says.

One of the best ways to reduce risks and make a more calculated choice is to thoroughly research a company's leadership team, recent project success rate, and any cultural and political issues that may be occurring in their region or industry. After that, find out if the company is a good technical and cultural fit through face-to-face meetings and open dialog about what each party can bring to the project.

“Get to know your potential partner and be objective,” Ms. Smith says. “Ask a lot of questions and be prepared to offer your information in return.”

The “getting to know you” part of the process always takes longer than expected, but she urges companies to resist the temptation to skip ahead.

“Step back and be patient,” Ms. Smith says. “If you do your due diligence on the people, the politics and the finances, you can avoid having to ask yourself ‘Should we have known about that?' when problems arise down the line.”

TAKEAWAY: The right partner can reduce risks and improve delivery time, but the wrong one can lead to project failure.

4 TREND BIG JOB CUTS
These are dark days to be unemployed. For awhile, project managers seemed fairly bullet-proof in these recessionary times. But from construction in the United Arab Emirates to IT in the United States, industries once teeming with projects and opportunities are now drying up. The bleak economy is causing many companies to put projects on hold, and project managers have become prime candidates for layoffs.

Project managers in construction were among the first to feel the pinch, according to John Thorpe, managing director of Arras People, a project management recruiting firm in London, England.

“Construction was hit right at the beginning,” he says. “New building projects froze and people stopped buying. Even in places like Dubai, United Arab Emirates, which had been experiencing massive growth, the market is tightening up and the big global project management companies are letting people go.”

Also, a flood of project management practitioners with financial services backgrounds have been looking for work in recent months, Mr. Thorpe says.

They're not alone in their job anxieties, according to Project Management Benchmark Report 2009, an Arras survey of 1,200 U.K. project professionals conducted last December and January.

The report revealed that 16 percent of respondents anticipated major cuts in project management personnel in 2009, with 43 percent expecting staffing reductions at the very least.

Contractors are in equally bad shape, with 28 percent predicting their rates will fall in 2009. Nearly 70 percent reported a lack of opportunity as the biggest challenge in the coming year—compared with 52 percent a year ago.

But Mr. Thorpe is not completely pessimistic.

“The market for project managers right now is 60 percent of what it was in early 2008, which means there are still opportunities,” he says. “As in any period of time, there will be winners and there are losers.”

The winners will be the ones who can position their experiences and skill sets to attract the attention of hiring companies. “The jobs may be harder to find, but they are out there for the right people,” Mr. Thorpe says.

Because of economic uncertainties, the most experienced professionals are sticking where they feel safe. That's creating opportunities for interim and contract professionals while organizations look for the right candidates for permanent roles.

“A lot of people who may otherwise have been thinking about making a change are staying put because of the risk of changing jobs in a tough economy,” he says. “That means the quality of the talent pool may not be as good as it is in buoyant times.”

Mr. Thorpe predicts the public sector will be the place where the most opportunities will arise for project managers in the coming year, as many countries—including the United States, China, Peru and Australia—release money from massive stimulus packages for infrastructure projects.

“All of these projects require project managers,” he says. “The market hasn't dried up. For those with good skill sets, there are still going to be jobs.”

Mr. Thorpe urges project managers looking for work to pay close attention to their résumés and to focus on experience.

“Hiring companies today are not buying education, they are looking for a track record of success.”

And sometimes that track record has to be in a specific sector.

Eric Simonsen, PMP, was laid off in January after completing the first phase of a 10-year tech implementation project in Hawaii, USA, because the contract was canceled. The next month, he found the demand for project managers wasn't as strong as it was when he conducted a job search several years ago. “Companies want specific industry or technical experience rather than project management experience, which surprises me,” he says.

Mr. Simonsen says he specifically sought his Project Management Professional (PMP)^SM certification because it enhanced his flexibility in managing a variety of projects, and it gave him an edge in his former hometown of Austin, Texas, USA. “In Austin, if you applied for any IT project management job you had to be PMP® certified.”

Despite the change in demand, he's confident he'll secure a new job soon, in part because being unemployed in this economy is not the taboo it would be if business were booming. “I was laid off as a result of my industry going flat, and people understand that,” he says. “There are a lot of people with great skills who are unemployed right now.”

Mr. Simonsen says his project management experience also makes him deft at cutting costs and improving outcomes on projects, both highly valued skills right now.

“It's about finding ways to make projects more efficient, and using the least number of resources to deliver your project on or under budget,” he says. “Being efficient is a fundamental part of good project management and that gives me a competitive advantage in looking for work.”

TAKEAWAY: There are fewer jobs for project managers, but experience, the right certifications and a solid track record will put some candidates ahead of the pack.

5 TREND
ULTRA-NEARSOURCING
Although sending off work is a mainstay of doing business in a global economy, many companies are keeping their projects closer to home. Major U.S. companies are pushing projects in Mexico and stateside, while European companies are tapping talent pools to the east, and Latin American companies are looking to their nearby neighbors.

“Nearsourcing is becoming a huge trend,” says Mr. Laermer. “It's not about politics, it's about comfort.”

—Eric Simonsen, PMP

Some U.S. companies such as Novell, the global IT networking firm based in Provo, Utah, have found great success outsourcing projects to Mexico. The tactic is particularly effective for projects that require a lot of real-time interaction, says Dave Wilkes, engineering vice president at Novell.

“The benefits of nearsourcing outweigh the minor cost difference,” he says. On one project, his teams interact with one another every day and, when necessary, the company brings the Mexico team to Utah.

“We have a lot of collaboration on that project, and the level of interaction we've been able to achieve with that team is a big plus,” Mr. Wilkes says.

Nearsourcing is also about client demand, says Joe Dzaluk, vice president of global infrastructure and resource management for technology giant IBM, Armonk, New York, USA. The company recently made headlines when it announced plans to open service centers on its home turf: one in Dubuque, Iowa and the other in East Lansing, Michigan.

“To meet our clients’ needs, we invest in different places, including the United States,” Mr. Dzaluk says. “We have a large client base in the United States and they often want a local presence due to sensitive data and compliance issues.”

In the case of Dubuque, for example, the city offers competitive wages and a rich source of IT professionals who can handle high-level projects.

“It's not just a matter of choosing the cheapest location,” Mr. Dzaluk says. “You have to match the local skills to client needs.”

Many of the obstacles that come with pan-global projects are also eliminated when you nearsource, says Ronaldo Annes, outsourcing manager for Sonda Procwork Outsourcing Informática, Sao Paulo, Brazil.

“You get world-class service plus quality, shared cultural values and a similar mindset,” he says. “It requires less effort and less time [for] traveling.”

Brazil in particular is fast becoming an outsourcing destination of choice for Latin American and North American companies that want their projects in a similar time zone or culture, says Gene Chao, vice president of strategic services at Dimension Data Americas, a global IT services firm based in New York, New York, USA.

“In Brazil, there is a lot of talent [and] turnover is low,” he says.

Along with bringing projects closer to home, Mr. Chao also sees a trend toward shorter outsourcing contracts with deeper scrutiny of partners’ finances and technology roadmaps.

“Companies are apprehensive about making long-range deals right now,” Mr. Chao says. Typical contracts today are two to three years, rather than seven to 10.

“Shorter contracts are less risky and they give companies the flexibility to make changes in response to new innovations in the market,” he explains.

Despite the increasing popularity of nearsourcing, it's not a solution that can be applied across the board. Each project must be sourced based on its own needs, says Allie Young, research vice president at Gartner Inc., a research firm in Stamford, Connecticut, USA.

“If language and time zones are an issue, projects may benefit from nearshore locations, but if you are doing routine applications development, India is a mature, low-cost market with a huge resource base,” she says. “Companies need a rigorous process to prioritize what they are looking for in an offshore or nearshore destination. You can't just choose an outsource destination on cost alone.”

Whatever the location, project management strategies have to be just as rigorous as they would be if the project was conducted in house, warns Mr. Annes.

“As a project manager, nearsourcing is a great challenge, but it's also a privilege,” he says. “You have opportunities to implement services in border countries and manage cross-cultural teams. It's the chance to share your techniques, tools and knowledge with others, while learning about the business culture of local people.”

TAKEAWAY: Although bringing projects closer to home can ease the stress of outsourcing, it's not the right choice in every case. PM