1. FAST FRIENDS
Trend Alert: The global economic meltdown is expanding the nature of public-private partnerships (PPPs), as governments find themselves struggling to maintain budgets while meeting civic obligations. To shore up spending gaps without slashing programs and personnel, governments are increasingly looking to the private sector to create partnerships that go beyond traditional infrastructure projects, according to a 2013 Deloitte report.
Recent projects range from community housing, sports facilities and schools to airports, prisons and hospitals. The promise remains the same—greater efficiency through shared risk—even as the types of PPP projects evolve.
The complicated nature of PPPs requires project managers adept at management and diplomacy. Managing multiple stakeholders is a top characteristic of complexity in these projects, according to PMI's 2013 Pulse of the ProfessionTM In-Depth Report: Navigating Complexity. That doesn't mean PPP partnerships require project managers with a unique skill set, but they do call for the experience necessary to demonstrate leadership, communication and sponsorship engagement.
Just as the types of PPP projects are expanding, so too is their public visibility. Consider the widely publicized Mayors Challenge, led by Bloomberg Philanthropies, which invited U.S. city leaders to submit project plans to solve national challenges, awarding private funds to the boldest project ideas. More than 300 cities submitted project plans, and this year Bloomberg Philanthropies is hosting a European challenge, offering a €5 million prize. “The Mayors Challenge represents the kind of creative problem-solving and flexible funding that can help European cities innovate,” Hanna Gronkiewicz-Waltz, mayor of Warsaw, Poland, said in a statement. “It offers resources, not just prize money but peer support too, for developing ideas into practical solutions.”
Project Spotlight: In India, PPPs have been driving innovation in healthcare and education, says Sumit Barua, PMP, PPP expert at Asian Development Bank (ADB) in New Delhi, India. The reasons? India's health spending, only about 4 percent of GDP, is significantly lower than that of other countries in the Organisation for Economic Cooperation and Development. The country's healthcare delivery is hampered by poor accessibility in rural and remote areas, a diminished number of healthcare professionals and failing infrastructure.
“The governments, particularly in developing economies, are finding it difficult to provide quality and cost-effective public service in social sectors due to old or traditional business processes, inbuilt inefficiencies, lack of trained and dedicated manpower, and budgetary constraints,” says Mr. Barua. “Private partnerships bridge the gap of service delivery.”
ADB focused on the government of Uttarakhand in northern India, where infant and maternal mortality rates are already lower than the national averages. They pursued 15 PPP projects that helped bring technology and manpower to Uttarakhand's most vulnerable population.
The projects included deploying 13 mobile health vans equipped with ultrasound and X-ray technology, opening a cardiac center and two diagnostic centers, and building a state-of-the-art MRI machine at Doon Hospital in Dehradun. ADB created a “PPP Cell” to develop and manage these projects. Project development stages include concept and structuring, value-for-money analysis, preparing the expressions of interest/requests for proposals, facilitating the bidding and approval process, and monitoring the partnership upon completion. Participation rates among local residents increased every year for each project; meanwhile, the lessons learned from Uttarakhand are being hailed as a model for bringing basic services to citizens across India.
“PPP in education and health is a logical progression from more traditional infrastructure, as people expect improvements in quality and availability of these services and government looks for efficient means to deliver the same,” Mr. Barua says.
“The governments, particularly in developing economies, are finding it difficult to provide quality and cost-effective public service in social sectors due to old or traditional business processes, inbuilt inefficiencies, lack of trained and dedicated manpower, and budgetary constraints. Private partnerships bridge the gap of service delivery.”
—Sumit Barua, PMP, Asian Development Bank, New Delhi, India
2. REAL-TIME STRATEGY
Trend Alert: The static strategy plan revisited on an annual basis is a thing of the past. Organizations are now tapping sophisticated data sets and refined analytics to adjust project strategy—and seize opportunity—on the fly.
Managers who understand how to implement strategic adjustments in real time and outmaneuver the competition are in great demand: According to PMI's Pulse of the Profession™ In-Depth Report: Organizational Agility, organizational leaders report they feel less agile today. Yet research shows that highly agile organizations have a 60 percent higher project success rate, giving them the competitive edge.
“Organizations struggle with translating strategy formulation into strategy implementation. Technology can be very helpful, but you have to know what questions to ask and be able to sift the relevant from the irrelevant data,” says Debra Evans, principal and practice leader at management consulting firm Kepner-Tregoe, Princeton, New Jersey, USA.
In a 2012 Oracle survey, 93 percent of senior executives said their organizations were losing revenue opportunities by not taking full advantage of data they collect. Nearly half the respondents said the ability to translate information into actionable insight is the most important area of focus for the future.
Project Spotlight: At luxury retailer Burberry, senior executives accelerated the identification of emerging trends around the organization's products by combining enterprise information such as SAP data with intelligence gleaned from social media sites Facebook and Twitter, as well as employee communication over social media platform Salesforce Chatter. The “Burberry Chat” initiative lets the retailer make swift adjustments throughout its supply chain, including changes to product development. When sales teams in stores noticed that some larger male customers were unhappy with the fit of one style of suit, headquarters heard about it through this communications network and launched a new product-development project in response.
“Organizations struggle with translating strategy formulation into strategy implementation. Technology can be very helpful, but you have to know what questions to ask and be able to sift the relevant from the irrelevant data.”
—Debra Evans, Kepner-Tregoe, Princeton, New Jersey, USA
Luxury retailer Burberry uses the social media platform Salesforce Chatter to help identify emerging trends around its products.
3. YOUTH QUAKE
Trend Alert: For the first time in modern history, four generations are now working alongside each other, as older workers delay retirement and a surging youth demographic moves into the corporate world. In project management, waves of young professionals are now joining the workforce—a trend unlikely to diminish as the demand for qualified project managers rises.
According to PMI's 2013 Project Management Talent Gap Report, 15.7 million new project management roles will be added globally by 2020 across seven project-intensive sectors: finance, manufacturing, business services, oil and gas, construction, utilities and information services. In China, where the average age is 35, more than 8 million new project management positions are expected by 2020. In India, where the average age is 26, 4 million will be added, according to PMI's report.
In São Paulo, Brazil, Daniela Morais Henriques, PMI-RMP, PMP, works with some 30 young project managers. She's seen a shift from project managers getting early experience in a support role before earning their Project Management Professional (PMP)® credential to younger managers becoming certified earlier and bringing that knowledge to the table from the beginning, a show of career confidence that clients appreciate.
“Before, younger project managers were not leading the project, and right now they are,” says Ms. Morais Henriques, Latin America projects, change management and quality leader for GE, a PMI Global Executive Council member. “We were less aggressive before, but now we see that younger people want to be challenged.”
“Before, younger project managers were not leading the project, and right now they are. We were less aggressive before, but now we see that younger people want to be challenged.”
—Daniela Morais Henriques, PMI-RMP, PMP, GE, Sao Paulo, Brazil
Another shift she's witnessed in the past decade is in career backgrounds: While many project managers used to come in with IT experience, younger professionals today have demonstrated experience in a wider range of sectors, including business, engineering and economics.
Project Spotlight: When an Australian IT company decided to phase out 19-year-old technology in a multimillion-dollar, nine-month project, executives didn't hold Chintan Shah's age against him. The 31-year-old project manager was tasked with the rollout of new customer-relationship management, logistics and reporting systems integrated with an ERP system. “I believe demonstrating confidence and high personal expectations are challenges for any young project manager,” says Mr. Shah, PMP. Mid-project corporate reorganization posed unexpected challenges. While some roles became redundant and some key vendors couldn't meet their delivery deadlines, Mr. Shah maintained the momentum of the existing team and restructured the project to deliver on time and within budget. Even Mr. Shah's role was redundant, but he was asked to carry the project through until it was deployment-ready.
4. CONSTANT COMMUNICATION
Trend Alert: As the speed of business accelerates, the need for smart, strong communication to internal and external stakeholders is greater than ever. Real-time streaming and social media are not only new means of communication, they've sparked new project models, encouraging a shift from top-down communiqués to dialogue across the organization.
There is no going back: There could be more than 50 billion Internet-connected devices globally by 2020, according to the 2012 World Economic Forum report Risk and Responsibility in a Hyperconnected World—Pathways to Global Cyber Resilience. Total data traffic generated by mobile devices is also projected to surpass that of wired devices by 2015. That state of hyperconnectivity allows for more information sharing and collaboration—but can also create more misunderstandings.
Effective communication flow impacts every aspect of a project. According to PMI's 2013 Pulse of the Profession™ In-Depth Report: The Essential Role of Communications, highly effective communicators are five times more likely than minimally effective communicators to be high performers (finishing 80 percent of their projects on time, on budget and with the original business intent).
While US$135 million is at risk for every US$1 billion spent on a project, the report found that more than half of that risk stems from ineffective communications. Of the project managers surveyed in the report, 55 percent felt that effective communication to all stakeholders is the most critical success factor in project management.
Highly effective communicators are five times more likely than minimally effective communicators to be high performers (finishing 80 percent of their projects on time, on budget and with the original business intent).
Source: Pulse of the Profession™ In-Depth Report: The Essential Role of Communications, PMI, 2013
For Ms. Morais Henriques, using conferencing technologies to communicate face-to-face with her global teams minimizes the risk of misunderstanding. Early in a project, her team also establishes a communication plan that defines the methods and frequency they will use to share information. “Communication plans should vary based on the project's complexity and how long it takes,” she says. “If you have a 40-day project, you may need daily interaction, but if you have an 18-month project, you might establish a weekly set of meetings dedicated with multiple work streams.”
5. TALENT IN MOTION
As the global economic crisis lifts, job seekers are suddenly on the move—and organizations are fighting to attract and retain the best talent. Forty-four percent of executives from surveyed global companies consider global talent an important executive-level issue, but only 30 percent believe they have sufficient capabilities for managing that talent, according to a 2013 Deloitte survey.
According to PMI's 2013 Pulse of the Profession™ In-Depth Study: Talent Management, 71 percent of CEOs see human capital as a key source of sustained economic value. Failure to fill the anticipated 15.7 million new project management roles worldwide by 2020 would risk US$344 billion in GDP, according to the PMI report.
To find project management all-stars, organizations are looking beyond their own borders. The mushrooming of IT hubs in various regions of India has pushed organizations to recruit the best talent no matter where people are located, says Shilpa Gnaneshwar, PMP, project manager for GE Aviation, a PMI Global Executive Council member, in Bangalore, India. “Companies overall have conceded to the fact that prospective employees can come from any part of the country or world, and so they provide benefits including relocation expenses, flexible working hours or work-from-home options,” she says. “Companies also accommodate existing employee requests for transfers or travel based on business or personal needs, pushing boundaries and hoping to retain good talent.”
The added expense of recruiting far-flung talent is seen as a worthwhile investment. “Managers have come to understand the importance of recruitment adaptability and how it opens a larger area for in-house innovation and also pushes company growth,” says Ms. Gnaneshwar.
6. ESSENTIAL EFFICIENCY
Trend Alert: The global economic downturn drove home the point for many organizations that energy efficiency isn't a feel-good opportunity—it's a bottom-line necessity that prudent investors are watching. In fact, more than half of S&P 500 companies now issue sustainability reports—and the trend is expected to continue rising, according to Deloitte. “Investors now see a project's carbon footprint as a big risk, and if it's huge, they're not going to invest,” says Michael Lumbley, independent energy consultant, the Butler Firm, Austin, Texas, USA.
For every compelling consumer tech project launched by Apple, Google and eBay, for instance, there's a behind-the-scenes internal effort to minimize the company's energy demands. Data centers with high utility needs have begun projects to generate on-site power, such as natural gas turbines. “Utility costs are of particular concern to these types of organizations,” says Mr. Lumbley. “The point of co-generation projects is you can make your own power on-site and create efficiencies up to 80 percent.”
Annual investment in the renewable energy market may reach US$630 billion by 2030.
A 2013 Bloomberg report found that annual investment in the renewable energy market is expected to reach US$630 billion by 2030, more than three times that of 2012. Growing cost efficiencies in wind and solar technologies are driving the trend, the report found, along with emerging clean-energy technologies such as hydro, geothermal and biomass.
Based on global investments, the United States, China, Germany and the United Kingdom are the most attractive markets for renewable energy projects, according to a 2013 report by Ernst & Young.
Yet spotting a project opportunity doesn't immediately precede a clear path forward. Many next-generation renewable-energy projects are saddled with uncertainty, making them more complex. In fact, ambiguity of project features was a prevailing characteristic of complexity in projects, according to PMI's 2013 Pulse of the Profession™ In-Depth Report: Navigating Complexity.
Delaying these projects until other organizations figure out the new technologies isn't the answer since that can lead to lost opportunities—using strong project management skills to navigate the ambiguity is.
Project Spotlight: LEGO and its privately owned parent company, Kirkbi, are helping fund a 77-turbine wind farm off the German coast slated for completion in 2015. The US$534 million project, which entered the construction phase in 2013, will generate enough renewable energy to meet 100 percent of the company's needs by 2020. Once complete, the project will allow the company to use the WindMade eco-label on its products.
7. RISING MARKETS
The BRIC countries (Brazil, Russia, India and China) have been hot spots for multinational companies for the past decade. But as growth slows there, organizations are shifting projects to a new tier of emerging markets, including Indonesia, Malaysia, Nigeria, Chile, Panama, the Philippines, Turkey and Vietnam.
GDP growth in these countries has caught up with and even surpassed that of some of the BRIC nations, spawning new project possibilities. Yet organizations looking to enter these markets for the first time will face stiff homegrown competition.
Organizations are responding to new challenges, especially entering new markets, by employing change management to better adapt to new market conditions, relying on more collaborative risk management strategies and increasing the use of standardized project, program and portfolio practices.
Source: Pulse of the Profession™ In-Depth Report: Organizational Agility, PMI, 2012
Companies in those markets are benefiting from the ability to respond quickly to local needs with innovations such as specialty product lines that require fewer and lower-scale production facilities.
Businesses headquartered in these countries are penetrating their own markets and expanding aggressively into others. The Efes Beverage Group in Istanbul, Turkey, for instance, partners with larger beverage companies, such as Heineken, that are looking to get a toehold in Turkey. Efes leveraged product and business models perfected in its home country to hedge risks before entering new markets, including Africa and Eastern Europe. It further minimized risks by acquiring breweries in neighboring countries that already have a sales lead. Efes now operates 16 breweries in six countries, exporting its flagship brand to 74 countries.
As reported in PMI's 2012 Pulse of the Profession™ In-Depth Report: Organizational Agility, organizations are responding to new challenges, especially entering new markets, by employing change management to better adapt to new market conditions, relying on more collaborative risk management strategies and increasing the use of standardized project, program and portfolio practices.
The payoff is agility in responding to difficult and challenging market conditions. According to the report, 45 percent of organizations reported increased success with new initiatives over the last two to three years; however, 60 percent of the organizations that did report success proved to have done so because of a higher level of organizational agility—definitely a core factor to edge out the competition. PM
PM NETWORK JANUARY 2014 WWW.PMI.ORG
JANUARY 2014 PM NETWORK