As the world gets more crowded and industrialized, project managers will need to account for the environmental aspects of their initiatives. Recent Project Management Institute conferences are flush with references to the environment. Articles about the environment abound in the PMI journal, PM Network. And, in the Summer of 2013, PMI published an important book of its kind, Project Management and Sustainable Development Principles. This increased awareness forces the project manager to take a hard look at the standard project management methodology and modify it in certain areas to be certain to account for this important social and business trend. There are real benefits to such a focus, and project managers need to look for ways to get more involved.
Definition of Terms
Definition of “Environmentalism”
What is environmentalism? If we look at the common Internet sources, they give the following answers:
Wikipedia (Environmentalism, n.d.) says it is “a broad philosophy, ideology and social movement regarding concerns for environmental conservation and improvement of the health of the environment,… [it] advocates the preservation, restoration and/or improvement of the natural environment, and may be referred to as a movement to control pollution or protect plant and animal diversity”
The Bing Online Dictionary (Environmentalism, n.d.) describes it as “concern for the environment: the movement, especially in politics and consumer affairs, that works toward protecting the natural world from harmful human activities”
And the American Heritage Dictionary (Environmentalism, n.d.)online describes it as “advocacy for or work toward protecting the natural environment from destruction or pollution”
Many people also use the term “green project” to describe an environment-related initiative. Although the term is colloquial and has political overtones, we shall take it at face value and use it occasionally in this paper.
Environmentalism vs. Sustainability
How does environmentalism differ from sustainability? Some people may see them as similar, but, in actuality, sustainability takes a broader view of our responsibilities.
If we return to Wikipedia, we find that sustainability “interfaces with economics through the social and environmental consequences of economic activity. Sustainability economics involves ecological economics where social aspects including cultural, health-related and monetary/financial aspects are integrated.”
At last year's 2012 PMI Global Congress – North America, Professor Arvinder P.S. Loomba shared a famous sustainability framework. Citing a 2006 paper from the World Conservation Union Council, Loomba shares the following model (Figure 1), commonly known as the three pillars of sustainable development:
Using this model, we can see that environmentalism is merely one part of sustainability. This paper cannot tackle all three areas, but will instead, concentrate on the environmental aspects. However, because environmental accountability is a subset of sustainability, we may sometimes use the terms interchangeably where appropriate.
Environmentalism on the Rise
The View of the American Public
Many explanations of environmental conscientiousness start with the famous 1993 McKinsey consulting study that questioned 400 CEOs. Ninety-two percent cited the environment as one of their top three priorities (Reinhardt & Vietor, 1996, pp. 1–53). But that study is now 20 years old. Did the recent economic turbulence cause a shift in priorities?
As we know, from December 2007 through June 2009, the United States experienced what we now call The Great Recession (NBER, n.d.). Housing prices dropped by nearly 30percent during this time (FRED, 2013, graph). Baby Boomers lost between 25 percent and 28 percent of their wealth, and Gen-Xers lost 45% (Pew Charitable Trust, 2013).
However, concern for the environment remains high. The Gallup organization polls Americans every Spring on the environment vs. the economy question. Despite the inherent fabricated tension by implying they are mutually exclusive, the American public continues to rate them at nearly the same priority.
That same poll asked about federal government priorities, and Americans overwhelmingly want more government action to protect the environment.
And, lastly, but most importantly, a recent poll shows overwhelming support of the environment, with 93 percent of respondents agreeing that “Americans have a moral obligation to future generations to leave a planet that is not polluted or damaged” (Beneson, 2013, p. ?).
The View of Project Management Publications
A quick perusal of the project management literature finds increasing mention of environmental concerns. In the project management publications, in just this year, we see mention of
- Energy-efficient housing, “Passive Building Gets Busy.” (PM Network, June 2013, p. 16)
- Energy-efficient re-development efforts that are “carbon-neutral and water-positive, [and] generate zero waste…” (Fretty, 2013, p. 57)
- Sustainable new development that uses “48 percent less energy and 89 percent less landfill waste,” (PM Network, January 2013, p. 72)
“Green” project managers were even mentioned as far back as December 2011, with the advocacy of “project managers and project management best practices [that] add value to those projects at virtually every stage… from planning and implementing environmental initiatives to tracking and reporting their results” (Alderton, 2011, p. 52).
Recent conferences, too, are showing signs of recognizing the importance of sustainability and environmentalism. Two conferences one year ago had themes explicitly looking to the future.
- PMI India National Conference 2012 theme: “Project Management for Sustainable Competitive Advantage”
- PM SUMMIT 2012 (Turkey) theme: “Best Practices on Global Sustainability”
As mentioned before, last year, Loomba (2012) shared his paper on sustainability-driven projects, stating that “managers all across industry now [need to] pay more attention to environmental… issues.”
All of recent thinking was cap stoned in the recent publication of a research-based book, Project Management and Sustainable Development Principles (Gareis, Huemann, Martinuzzi, Weninger, & Sedlacko, 2013). This book was the culmination of several years of research on how to fold sustainable development (SD) principles into project management. They state that SD impacts the project initiation and project management processes (Gareis et al., 2013, p. 7), and they describe three business cases to demonstrate application of the principles in real projects.
Incorporating Environmentalism into Project Management
Although projects are supposed to “attain its objective and then terminate” (Proejct Management Institute [PMI], 2004, p. 7), project managers need to remember that their projects exist in a company's broader framework, because projects are “often utilized as a means of achieving an organization's strategic plan” (PMI, 2004, p. 7).
Tharp (2012) wrote a whitepaper for the 2012 PMI Global Congress – EMEA where she argues that project management must operate within a strategic context that also balances economic viability, environmental soundness, and social responsibility (Figure 4).
Tharp (2012) goes on to successfully argue that “project managers are instrumental in achieving strategic goals, because they hold the path to execution” (p. 3).
Environmental projects fit the need to address the public's concerns around environmental improvement from our business leaders. The motivations may be economic, brand-related, or a combination of both. Companies from all industries are trying to find ways to use their green projects to improve their bottom line through either revenue enhancement or cost reduction.
This economic analysis is important. In the past, business decisions only followed the economic bottom line. Now, as we have seen previously, public (consumer) pressure is forcing companies to account for the environmental bottom line as well.
In benefit-cost analysis, there are two approaches. The standard method is to estimate all the impacts of an environmental initiative, both positive and negative, total them, and make a managerial decision. The costs will likely exceed benefits in the first few years as start-up costs such as construction, re-engineering, re-programming, and/or training are required. For example, a company may use this analysis when considering a new waste water system.
The second method is called “hypothetical valuation.” In this approach, the benefits and costs are not parsed and summed, but rather directly valued by the public in a direct manner. Basically, people are asked how much they would pay for the proposed impact. (Dorfman & Dorfman, 1993, p. 298) For example, a shoe manufacturer might ask how much extra people would pay if they knew their soles were made from recycled rubber. This method gives quick valuation to proposed environmental projects.
Additional factors beyond costs include reduction of risk, creation of goodwill, and following an internal, organizational ethical code (Reinhardt & Vietor, 1996, pp. 1–66). These factors will also play into the project manager's purview.
Environmental Aspects in a Business Project
A project with straight-forward business goals should also incorporate an environmental view. These projects will be managed with the project management methodology, but certain aspects need to be expanded to include the environmental viewpoint.
A quick digression on the responsibility of the project manager for the content of their project. Loomba (2012) explains the two competing viewpoints regarding the responsibility of the project manager:
- Project managers [should] not be concerned with the project content… Experts provide the right content… and the best manager for time, cost, human resources, and administration should be selected.
- Project managers [should] be leaders for the project content, people, time, cost, and finance, integrating all aspects of their projects.
But there is a middle ground. Loomba (2012) proposes, and I agree, that the project manager is responsible for ensuring the optimal outcome for ALL project stakeholders, including “customers, the performing organization, and the public” (PMI, 2004, p. 8). Only by understanding the goals and objectives of the project, can the project manager appropriately manage the scope, costs, risks, and procurement knowledge areas. See Figure 5 for a graphical representation.
The PMBOK® Guide (PMI, 2004) defines Scope Management as “the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully” (p. 103). But, as we saw above, the project work may have consequences outside of our own organizational or local boundaries, consequences that must be accounted for.
Project managers need to look beyond the given project scope to see if there are environmental considerations. This work occurs most prominently in the project initiation phase when the initial scope of work is being determined. The key Project Management Processes here are Scope Definition and Create WBS. For example, “green considerations” could include:
- What are the impacts of this project?
- What are the timelines of these impacts?
- Do we need additional workstreams accounting for these impacts?
- Are there additional scoping elements to include that will account for environmental viewpoints?
As an example, Gareis et al. (2013) cite the ecological considerations of a wind farm project in Romania. Although the large majority of the considerations were economic, by applying a holistic viewpoint, “the regional consequences for the communities were considered in the definition of the project objectives” (p. 107). Examples include impacts to land, roads, and wildlife, and considerations of ecologic technologies and materials (p. 108). The wind farm moved forward with several of these initiatives, including modifying the construction practices to minimize environmental impact, and using more environmentally-friendly construction materials (p. 110).
The PMBOK® Guide (PMI, 2004) defines Cost Management as “the processes involved in planning, estimating, budgeting, and controlling costs so the project can be completed within the approved budget” (p. 157).
Project managers need to account for costs associated with environmental concerns. These costs are to be appropriately included in the two Project Management Processes of Cost Estimating and Cost Budgeting. For example, environmental costs could include:
- Estimating regulatory or legislative costs – What is the cost of compliance? What is the cost of over-compliance? What time horizon do we use? What discount rate do we use to calculate future benefits and costs?
- Estimating design and production costs – What are the cost advantages and disadvantages of ‘green design’? What are the perceived and real marketing implications (consumer perceptions) of these choices?
The budgeting work packages must holistically account for environmental activities and establish the budget baseline appropriately.
For example, Gareis et al. (2013) cite the construction of a hospital in Vienna. The hospital complex proactively followed sustainable development principles, some of which resulted in environmental considerations. These included technical decisions around their heating and cooling system, the rainwater management system, and energy efficiency (p. 88). Without planning for these decisions up front, and performing the appropriate cost analyses, the baseline budget could have not been set.
The PMBOK® Guide (PMI, 2004) defines Risk Management as “the processes concerned with risk management planning, identification, analysis, responses, and monitoring and control on a project… to increase the probability and impact of positive events and decrease the probability and impact of events adverse to the project” (p. 237).
Risk management is a huge concern for project managers due to the potential negative impact of the poor environmental planning. Therefore, all the Project Management Processes in Risk Management (Planning, Identification, Quantitative Analysis, Qualitative Analysis, Response Planning, and Monitoring and Control) are appropriate. For example, environmental considerations in risk management may include:
- Regulatory/Legislative Risk – Could the government change the rules in the future? What are the implications for design and production projects?
- Technology – Are there advances in technology that will change the way we interact with the environment?
- Project Risk – Is the timeline appropriate given the environmental aspects of the project? Are we allowing too little or too much time to assess the impacts?
- Post-Project Risks – Are our environmental and economic calculations sound?
- Consumer Risk – Do we understand the environmental impact of our projects? Does this initiative truly improve our standing in the community?
As an example, Gareis et al. (2013) relates the project case of a wind farm in Brazil. Among the risks cited, is an ecological risk associated with lessons learned from the pilot project (p. 132). These learnings were seen as negative risks – items that may have adverse impacts to the project. In this case, the environmental aspects were rolled into the health, safety, and environment (HSE) plan with an HSE Coordinator. In addition, Siemens, the wind farm supplier, had a local sustainability office with three employees who could help oversee environmental risks for the project (p. 122).
The PMBOK® Guide (PMI, 2004) defines Procurement Management as “the processes to purchase or acquire the products, services, or results needed from outside the project team to perform the work” (p. 269). The project management processes most impacted by environmental aspects are the Plan Purchases and Acquisitions, Request Seller Responses, and Select Sellers.
Project managers need to look beyond the “normal” procurement processes to see if there are environmental considerations. These aspects could be in the form of inputs or outputs to the process, and a workstream to account for these thoughts is appropriate. For example, “green considerations” could include:
- Raw materials – Where are the materials sourced? How are they procured? What is the waste from using this material? What happens to the material when your project/product has completed its life cycle (can it be re-used)?
- Supplier selection – what is the environmental profile of your suppliers? What are their priorities and trade-offs? Does business with them subject you to environmental risk?
As an example, several American technology companies now look at their energy suppliers as a key opportunity to reduce their environmental impact. Microsoft, who operates data centers around the world, cites its green energy program (1.1 billion kilowatt-hours of green power purchased)—and its engineering design work (new modular data centers that consume 50 percent less power than traditional data centers) (Microsoft, 2012, p. 53) Google, who also operates data centers touts that 34 percent of its purchased power is from renewable sources (Google, 2013) Boeing, the aerospace company, is working with key suppliers on the next generation of aircraft. Part of this effort is the biofuels investigation that will help airlines meet their future carbon emissions goals (Boeing, 2013).
Today's project managers are on the cusp of a paradigm shift. No longer can advancing the economic bottom line be the only goal of projects. Public opinion requires a broader and longer-term view of our actions as it impacts the environment. Recent project management literature shows incorporating sustainable development and environmental aspects is an important task. Doing so benefits ALL project stakeholders – the customer, the performing organization, and the public. Alderton (2011) quotes Mr. Khalifa Hassan: “for project managers, a green career path is not an option anymore – it's a requirement.”
Note of Appreciation
Sir Isaac Newton famously said, “If I have seen further than others, it is by standing upon the shoulders of giants.” To that end, I am deeply indebted to the work of Prof Arvinder Loomba from San Jose State University whose presentation I attended in person at the 2012 Global Congress – North America, and to Ms. Jennifer Tharp of Mastodon Consulting whose 2012 Global Congress – EMEA presentation is a masterpiece of strategic clarity. Both of them inspired me to tackle this topic.