Economic Changes That Affects Project Management

1.0 INTRODUCTION

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Economic Changes That Affects Project Management I. Introduction All over the world, economies are undergoing an economic adjustment process. This process is described by many different names like structural adjustment, globalization, export oriented industrialization, and sometimes simply economic development. If economic change is not in favor for project managers, resources for projects are expected to do more with less, so the project manager is expected to better manage those resources to achieve success. In such tight environments, the project managers skills in leadership are more important than ever and the methodology chosen has a major impact on how resources are managed. It is probably true that today, more contract and temporary positions in project management exist in proportion to full-time positions. Professionals that once had traditional, full-time, stable roles may be forced into contracting, which can be less secure. However, this can also provide many people the opportunity to broaden their experience and build a stronger resume, as well as gain more autonomy in their work-life balance. A related effect is a greater emphasis on portfolio planning of projects (for whatever industry the organization is in: construction, oil and gas, pharmaceutical, NGO, IT, etc.). This has created a positive opportunity for those professionals skilled in portfolio management practices. But there are economic changes that have great advantage for project managers or what they call economic improvement/development but require more experience. There will be an increased interest in credentials and certifications to complement experience. Competition for jobs is fierce, and experience remains as vital as ever. Many professionals are adding credentials and/or certifications to their resume to make themselves more appealing in a tight job market, and in response to more and more job advertisements asking for a minimum of credentials from interested applicants. This change is having several effects on the profession. As more professionals seek credentials and certifications, project management has become a career option open to more people. The ripple effect is providing a positive impact on the wider economy, with the economic multiplier effect of more employment in training, preparation and exam administration to support this up skilling need. Several government and not for profit organizations offer financial assistance for job training, which provides

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Economic Changes That Affects Project Management underemployed/unemployed with educational opportunities, while further extending the benefits to the training providers. Some changes to the methodology of project management. Thresholds for change controls and performance metrics are tighter. Competent project professionals are striving; those at the lower end of the talent pool will find it a challenging environment in which to operate. Objectives The objectives of the research are: 1. To know the different strategies of project managers in times of economic financial crisis. 2. To know the positive and negative effects of economic crisis in project management. 3. To learn what are the advantages and disadvantages of different strategies used in Project Management. 4. To know the different effects of economic crisis in good or bad way. 5. To learn the best solution in managing projects in times of economic crisis.

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Economic Changes That Affects Project Management

2.0 RELATED ISSUES

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Economic Changes That Affects Project Management II. Study of Discussions from Other Authors Changes in careers arise from a result of many factors, including advances in technology, responses to changing markets and the wider economic environment, alterations in demographic trends, and customer driven demand, to name just a few. As well as industrydriven advancements, major shifts in the global economy and global events can have a profound, structural effect on a multitude of professions. Major global changes bring about a realization that We cannot continue to do what we have always done. The full impact of the global financial crisis on all aspects of the economy may take years, or even decades to fully understand. It is arguably true that the crisis has left its mark on attitudes towards the project management profession as it has on many other professions. Some changes have been challenging at an individual level, such as the struggle for many to maintain gainful employment. Other changes have spurred positive adjustments to the way the profession operates, such as fostering a drive for advanced project management processes and a general realization of the importance of project management to controlling outcomes with scarce resources. Global economic downturn has been a catalyst for organizations to rethink their processes. The approach to project management plus program and portfolio management has, for many organizations, been part of this overall rethink. In many cases, the outcome has led to project management being recognized as a valuable way to provide security and control of initiatives undertaken. This has led to opportunities and also some challenges for those of us in the career. (Gary Hamilton, Gareth Byatt, and Jeff Hodgkinson) Its true that we cannot do what we always do because everything will change in just a matter of time. So the experts of project management must go with the flow in these changes as well as project managers because it is up to them if the project will fail or to success. Their approach to a specific challenge matters in times of financial crisis. Kerzners prediction that executives will be facing increasingly complex challenges the next decade, became reality sooner than forecasted. These challenges will be the result of Project Management Research 5 | Page

Economic Changes That Affects Project Management high escalation factor accompanied by a mild recession (Kerzner, 2009, p. 1). The challenges are of catastrophic portions. The economic crisis plagued the entire planet (Buti & Szekely, 2009) and shook all economies worldwide (Cevorova et al., 2010). The impact on enterprise (Kislingerova & Krause, 2010) affects all aspects of business. The authors identify impacts being production volume, sales, turnover, profit, employment rate, debts, investment, bank loans, new product introduction, and advertising. Management must function under more challenging and uncertain situations (Geraldi et al., 2008). The close link between strategy and Project Management needs to be kept vital (Meskendahl, 2010). Ironically, the economic crisis and Project Management share certain characteristics. Both are unique, high risk, and temporary. Crisis is a natural stage within the economic cycle. However, the circumstances leading to the current crisis left few enterprises prepared to cope with the severe conditions within their respective life-cycles. There is an evident gap in knowledge and literature available on Project Management during periods of substantial economic downturn. One reason is the difficulty in managing projects under crisis and the strides taken by enterprises and Project Management methodologies to avoid such potential situations. In addition, a crisis of this magnitude has not been witnessed in the history of modern Project Management (Hruzova, 2010b Kerzner, 2009). Lastly, the crisis continues and reverberates globally. The downturn is still very fresh, more or less unexpected (Buti & Szekely, 2009), all-embracing, more or less unpredictable. Economic crisis is a worst downturn for every project, and can lead to failure. It may also lead to confusion in your team or members. Traditionally, farsighted leaders have used times like these to prepare their organization to sprint past their less nimble competitors, But the fact is that todays executives have never before had to manage through a crisis of this scale, and they may unconsciously project their own doubts and discomfort onto their employees. In Europe, when the financial crisis emerged, project managers talk with their team to generate a high value, act with high ethical standards, and adopt a new long term view on their job. Leading organizations across sectors and geographic borders have been steadily embracing project management as a way to control spending and improve project results. Project Management Research 6 | Page

Economic Changes That Affects Project Management When the recession began, this practice became even more important. Executives discovered that following to project management methods and strategies reduced risks, cut costs and improved success rates, all vital to surviving the economic crisis. More than half of the executives in the Economist Intelligence Unit report said following a project management practices became more important since the recession began. Compared to 2008, respondents reported: 1. Investing more time in project planning and due diligence (40 percent) 2. Conducting more frequent project reviews to assess risks, overall value (37 percent) 3. Measuring quantitative and qualitative project outcomes more frequently (38 percent) milestones and

40 39.5 39 38.5 38 37.5 37 36.5 36 35.5 Practices Investing Conducting Measuring

Many companies admitted that the economic crisis underscored their project management limitations and forced them to do better, the report says. With little room for error and fewer resources to rely on, project management expertise and oversight is helping organizations streamline their delivery process, cut costs and sidestep risks, enabling them to ride out the recession and implement stronger project management practices for the future. Project Management Research 7 | Page

Economic Changes That Affects Project Management Good project management discipline stopped us from spending money on projects that fail, says Ron Kasabian, general manager at global IT giant Intel, Folsom, California, USA. Tighter budgets and fewer resources mean less money for the innovative projects that help move the company forward. Getting the most out of those available assets, then, becomes paramount. Resources are precious, and weve got to be sure we are spending them in the best and most efficient way possible, he says. When project failure rates decrease, Intel gets the biggest benefit out of IT, which in turn improves Intels ability to remain competitive. Companies are also discovering that as their project management strategy matures, the business value derived from it also increases. To increase that value and ensure strategic alignment across the project portfolio, executives at many global organizations are creating formal project management offices (PMOs). Implementing project management across the organization helps create a strategic value chain that gives companies an edge on their competitors, particularly in high-risk sectors and markets. Being able to deliver projects on time and within budget often determines whether a company will get the next job or whether its new product hits the market. Ninety percent of global senior executives ranked project management methods as either critical or somewhat important to their ability to deliver successful projects and remain competitive. Smart, strategic organizations will realize that the down economy is the time to invest in project management training, best practices deployment in order to optimize performance. Organizations need to develop a talent management strategy incorporating recruiting and retaining talent to improve business performance. Keeping projects on track and on budget can counter ill effects of the down economy. The pressures for Project Managers to "get it done yesterday" are ever increasing, particularly with tightening budgets in the downward increase economy. Project managers need to be up to speed deploying best practices in their project selection, work more closely with the business, know when to say no to projects that won't deliver solid ROI and which to green light. They need to understand the business implications and what that means for projects, and how they can drive organizational change through effective project or project-portfolio management. It is important for us all to be prepared for continued change. Louis Pasteur once said that "chance helps the prepared mind. H.G. Wells is quoted as saying: Adapt or perish, now as Project Management Research 8 | Page

Economic Changes That Affects Project Management ever, is nature's inexorable imperative. We must prepare ourselves for continued change by constantly honing our processes, developing professionally, and being willing to adapt. Those individuals and organizations that are prepared and that embrace the opportunities presented are the ones that are set to continually strengthen their position. We must overcome a deep and painful crisis. Organizations have to decide how and when to cut expenses and if necessary reduce personnel. Even in this difficult environment we can increase Project Management adoption if we understand exactly Top Management needs and create an indispensable tool for them. To win this challenge we must involve personnel with proven experience in Project Management and adopt maximum flexibility in order to present innovative proposals and to apply Project Management tools and methodologies in a highly effective way. Our target must be to cover critical Organizations needs in a very short period of time. Producing results quickly and with low cost, will help us create the basis from where to start and step-by-step, with consecutive successes, increase the Organizations Project Management orientation. We must pay attention not to abandon Project Management standards application, but apply them in a way to fulfil customers immediate needs. Any Organization, especially during this difficult period, perceives the necessity to produce changes in its processes. To address change, Organization must set Strategic Goals and prepare detailed Strategic application plans, which must be based on sound data, taking into account Time. Then Strategy must turn into practice. This means continuous data collection and elaboration, in other words correct and reliable and up to date Information. During the present economic crisis, organizations are not carrying out all their planned activities and are limiting themselves to those that are essential. Therefore, organizations are more interested in working in accordance with standards (PMBOK), procedures and best practices. This is based on their belief that organized and efficient work will help them ensure the success of the projects that they chose to carry out, as part of the effective management of their organizational group.

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Economic Changes That Affects Project Management Globalization of Project Management The globalization of project management profession has been promoted strongly by leaders of various professional project management associations worldwide, e.g., PMI and the International Project Management Association (IPMA) have signed a Memorandum of Understanding in October 2008 at the PMI Global Congress in Denver, Colorado, USA to collaborate on promoting the profession of project management globally. In pursuing their objectives, the two organizations will seek opportunities to increase the supply of qualified, educated professionals to fill expected vacancies in the profession. The organizations will also explore future opportunities to improve the quality of academic research on the project management profession and its application. Global project management forums have been held worldwide, where professional leaders have met and discussed initiatives. While such professional cooperation is critical to advancing the project management profession around the world, a broader model is needed to understand the relationship of the profession to current, volatile economic, industrial, political, social, cultural, technological issues and changing conditions. Hence, the relationship of this profession to academic, governmental, and industrial organizations must be better understood as well as the effect on the profession of significant events and trends around the world be considered and addressed, in terms of short-term impacts and long-term strategic issues. The purpose of this paper is to examine recent events and trends that have affected or may have an impact on the project management profession on a global basis. How significant that impact is will be drawn and an assessment made as to the global implication of project management associated with the current, global economic crisis. During 2008 and early 2009, many significant events occurred worldwide, particularly the rapid-fire ones since September 2008, have sorely weakened the world economy, several with potential long-term implications to the global project management profession. The impact of these events has resulted in the current trending within the globalization of the project management profession. After a full year of recession in the U.S. caused by the financial crisis that began with junk mortgages in this country leading to the meltdown in U.S. housing values, its economic downturn was actually accelerating late in 2008. The U.S. economy, originally

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Economic Changes That Affects Project Management estimated to have declined at a 3.8 percent annual rate during the fourth quarter, actually plummeted at a 6.2 percent pace and has shed 5.2 million jobs, with more than half of that number lost in the last five months alone starting in November 2008. Consumers confidence was shaken and had capitulated to despair, reflecting reaction to last falls bankruptcy of a U.S. giant investment bank, Lehman Brothers Holdings Inc., and the financial and stock-market panic that followed. Chinas economy had its weakest growth in 2008 since the epidemic of Severe Acute Respiratory Syndrome, or SARS, shook Asia five years ago. The recession, starting in December 2008, will be fairly deep and the recovery is expected to be slow. The current economic crisis has been global in nature, resulting in a global recession that has been on-going for more than one year, causing severe downturns in North America, Europe, Japan and China. G-20 financial chiefs met in London in March, 2009 to deal with the global financial crisis in preparation for their Leaders Summit in London in early April, 2009 resulting in a G20s $1.1 trillion injection into the world economy to stimulate growth and global trade in order to battle against the global recession and pursuit global economic recovery. The G-20 represents more than 80 percent of the global economy. This was unprecedented and historic. Global stimulus packages address technical challenges associated with projects, particularly those associated with clean energy (low-carbon), infrastructures and climate change. Many of these projects, among others, will actually see the light of day in 2009 and the potential will be vast when the recovery is expected to start early in 2010. The shortage of skilled project managers worldwide to effectively run these projects/portfolios is still severe as project resources must be allocated carefully, judicially and prudently to reflect todays increasing demands for greater corporate accountability, higher productivity, shorter schedule and lower costs. (Dr. Nghi M. Nguyen, 2009) The economic down turn that begun in 2008 had touched everyone. We have seen rising unemployment, salary reduction and a decrease in other benefits during the past three years. The idioms such as budget cut, work force reduction, head count reduction were the most frequently heard idioms in most of the work environments. During these years, most of the organizations around the globe have implemented projects to improve productivity, to

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Economic Changes That Affects Project Management reduce cost and focused more on quality instead of concentrating more on innovation. Lets see how it impacted Project Management. ESI International, one of the leading providers of project management services has conducted a survey to identify the impacts of economic crises on Project Management. They have approached project managers, program managers, PMO Managers, Line of Business Heads and their supervisors from Industry sectors including Financial Services, Information Technology, Pharmaceuticals, Health Care, Telecommunications, manufacturing and

Energy/Utility companies in the US. Below highlights the summary of the survey results:
Manufacturing 45 40 35 30 25 20 15 10 5 0 Project Managers Financial Service Information Technology Telecommunication Healh Care

1. 44% of survey respondents from the manufacturing industry said that at least half of their projects had been terminated. 2. 34% of survey respondents from the Financial Service industry said that that at least half of their projects had been terminated 3. 26% of survey respondents from the Information Technology industry said that that at least half of their projects had been terminated 4. 24.8% of respondents from the Telecommunication industry said that that at least half of their projects had been terminated Project Management Research 12 | Page

Economic Changes That Affects Project Management 5. 17% of respondents from the Pharmaceuticals/Health Care industry said that that at least half of their projects had been terminated. Regardless of the industry, almost all projects that were not eliminated suffered some resource reductions; however, resource reduction was not greatly affected by project size, besides the size of the project didnt offer high variance in terms of scope reduction. Effects on Economic Development In national economy, various sectors provide different goods and services. As the agriculture sector provides agricultural products and the education sector provides educational services, the construction sector provides constructions in co-operation with public control and management systems, financial organisations etc. In national economy, constructions required by all kinds of investments have caused a great demand in construction sector. Furthermore, direct or indirect inputs (such as cement) and outputs (such as furniture and furnishings) of the construction sector affect the related sectors and sub-sectors. For example, in Europes development period (1953), its observed that the value added portion in construction sector was 54% and it reached to 73% when the mentioned inputs and outputs are included. Its obvious that the construction sector is the most effective sector for national politics of economy especially for the employment, income distribution and conjecture. Besides, in the mentioned period, the ratio of the investments in construction sector to whole investments is about 50-60%. Thus, its true that not only the construction sector gives form to the economy, but also it determines the productivity of investments and accordingly the rate of development by means of cost. (Sorgu, 1994) Project is a process that is only complete when the owner is convinced that all that was imagined at the very beginning has come true. This process has many parties like owner, contractor, architect, engineer and phases like feasibility, design, bidding, construction etc. However, construction projects are specific and unique and do not repeat themselves. In the last five decades a technology that satisfies the special demands of the construction has been developed on a scientific basis. This technology is based on the use of labour, machinery, materials and income-expenditure in an efficient way and to limit the external effects in order Project Management Research 13 | Page

Economic Changes That Affects Project Management to realise the project in optimum time and with minimum cost. This concept called project management, presents a key to solve the specific problems in this sector. Selection of a technology, management of time, cost, quality, risk, work safety, communication (correspondence, documents and archive) and personnel are the components of the project management which assumes money, time, resource and human as variable parameters (Kuruoglu and Sorguc, 2000). In todays world, because of the increase in dimensions and complexity in construct ion projects, teamwork and interdisciplinary contributions is a must in project management. The manager should steer right persons towards right positions in a right way in accordance with the work analysis and obligations defined. Moreover, he should be successful in quality, cost and time management. Because of these obligations the manager becomes the key person in project management. Every organisation is affected by change, especially during times of economic volatility. However, project managers tasked with leading change initiatives are all too aware of the alarming failure rates that can occur. The critical missing piece is largely the failure to take into account how change affects an organisation's people. According to a study by Price Water house Coopers, research shows that nearly 75 percent of all organisational change programmes fail because they don't create the necessary groundswell of support among employees. "Do more with less, and deliver it faster," proclaim the organizational leaders dealing with the effects the 'new economy'. A project manager's nightmare, the times are quickly changing, and the need to make a full glass of orange juice out of a quarter-sized orange is becoming an unfortunate reality. We've discussed the predicted impacts of the economic downturn on enterprise telephony, but have not explored how future projects and deployments are expected to succeed or fail under these new financial times. In my opinion, the threat of project 'scope creep' is becoming a silent and everemerging problem. Dealing with anxious organizational leaders, the potential of having little-to-

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Economic Changes That Affects Project Management no implementation budget in the near future is sending project managers and implementers into a tailspin. I honestly believe that projects aren't being scaled down, however, scaled up. Why? Especially in the areas of enterprise communications, corporations and organizations alike are in the midst of multi-year deployments and upgrades. Long-term and relaxed projects obviously take time, but their slow speed can mean more accurate, thoughtout results. Now, as budgets are tightened, and 5-10 year projections are indicating a need for significant cuts, projects are being accelerated to dangerous speeds. Time simply equals money: money and liquidity that organizations simply do not have. Projects are being combined, and schedules are shortened. Multi-system integration, true convergence, is being seen from the executive level as a cost saving tool. What many forget, however, is that implementations of such technologies and strategies take time and money, too. A dangerous chicken-and-egg problem is developing, and there doesn't seem to be a clear answer in the near future. Project management has evolved over many centuries as a means for organizations to deal with change. It was not until the 1950s that the literature began to reflect the evolving theory and practice of this discipline. The proposed book draws from the collective experience of project management leaders from around the world to develop a project management based scenario for the year 2025. In the developing countries, the fundamental social issue of the country is the key economic sector for company management and organisation management. These concerns have affected the performance of the economic system in this sector. The performance economic system includes having a good management, executing the overall planning and administrating the systems. Besides, organisations in developing countries may face constraint from the dual nature of the economies, inexperienced in administration and management and lack of overall planning mechanism. However, Negandhi and Prasad, (1971) stated that the reasons behind these are largely due to the culture bound, insufficient technology system and communications that reflects to the national interest and problems. The challenge and problems become worse with the multifarious and the often unsolved political systems. This is Project Management Research 15 | Page

Economic Changes That Affects Project Management because the developing countries and nations had experiment with different kind of systems in the attempt to discover suitable model for governance to manage. The following literature research discuss comprehensively on the factors such as culture and people's factor, technology challenges and communications difficulties that may bring effect in project management. Much has been said, written and discussed about the intensity, scope and duration of the global economic crisis that we are currently experiencing. What all the opinions and thoughts have in common is this, the unknown outweighs the known, experts know too little, and the opinion that this is the beginning of the end might turn out to be correct, as might the opinion that the worst is yet to come. Organizations prefer to be certain that their resources are managed efficiently and purposefully and that projects are carried out according to plan in terms of the timetables, quality and the deliverables promised to the various interested parties. They also want to be certain that the organization is not exposed to unnecessary high risks. This is the project managers finest hour. Now is the time when he or she, must display leadership, open and clear communications, high level of trust, accountability and commitment, transparency and proper risk management. Currently, at a time when money is scarce and financing projects and operations becomes more and more problematic and difficult, there is an ever-increasing need for talented and efficient project managers who will guarantee the projects success. The need for specialization and unique skills for successful project management is expected to increase the demand for outstanding project managers. At a discussion held by the PMI global organization on the unique project management issues characterizing the current situation, the following picture emerged: 1. The cost of money and project financing are becoming more and more complex and difficult to obtain. 2. Projects that have already begun are being performed under a far more stringent control regime. 3. New projects are being postponed, rejected or cancelled. Since money and financing are becoming more and more costly in todays reality, project managers credentials and capabilities must be both outstanding and emphasized. Project Management Research 16 | Page

Economic Changes That Affects Project Management Project managers must get their work done on time, accurately, within the timeframes that they committed themselves to, and must focus on the deliverables that they committed themselves to. As far as new initiatives and business developments are concerned, or any other new activity that was not performed in the past, the question that project managers should ask is: Are you sure you know how to do it properly? Organizations are being exposed to limited resources and want to make sure that their resources are managed efficiently and the various tasks are being performed properly.

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Economic Changes That Affects Project Management

3.0 FINDINGS/ANALYSIS

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Economic Changes That Affects Project Management III. Findings/Analysis The risk of sudden economic change in project management is not measurable, crises in projects are inevitable. Yet, the destructive consequences of many crises can be reduced through the effective use of planning tools from emergency management. Risk analyses, contingency plans, logic charts, and table top exercises help in planning for crises and managing them when they occur. The primary strategy for managing crises in projects is to think through the project before the project is begun and to practice using these tools and their outputs. Project managers can't always foresee every contingency when planning and managing their projects. Many spurious events affecting project milestones and resource allocations can surface once the project is under way. Experienced project managers find crises, miscommunications, mistakes, oversights, and disasters must be managed as part of successful project management. Project managers need effective tools to plan for and anticipate these crises. These are tools project managers may not use every day, yet they need these tools to serve them in time of emergency. The ideas and information in this paper will help project managers identify the appropriate crisis planning tools and how to use them. The project manager's experience, training, and skills should allow the understanding and use of these emergency management tools to support quicker and better decision making. Managing crises better means mitigating and preparing for crises so we can reduce their occurrence and manage the consequences better if crises do occur. Based on the authors' experience in emergency management for the public and private sectors and several experiences shared in the literature, we recommend ways of planning for crises in projects. The availability of accurate, real-time information is not enough to mitigate crises in project management. Good implementation of risk analysis helps to plan and properly prepare for crises in projects and take steps to reduce the occurrences of crises. Engineering analyses support this process of risk analysis and make up the quantitative portion of mitigation. Cause-and-effect analyses make up the qualitative portion of mitigation and help us assess the systematic effects both forward and backward.

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Economic Changes That Affects Project Management Crisis management must be prepared in times of economic changes, by definition, is perplexing, constantly changing, full of uncertainties, and challenging to any manager, especially the project manager. Crisis planning logically parallels the uncertain nature of crisis management. Although there is no simple solution to the complex problems posed by crises, here are our recommendations: 1. Even for small projects, assign the job of developing at least a two-page risk analysis and contingency plan before the project begins. This is similar to a company appointing a manager of business interruption planning. 2. Assign the job of producing a notification sequence. 3. Use logic charts to design procedures that won't go awry during a crisis. 4. Use tabletop exercises, because few people will look at a logic chart or even a procedure when a crisis occurs. Project managers will depend on what they've practiced, and this underscores the need and value of tabletops. 5. Conduct these tabletop exercises quarterly to ensure readiness and to update procedures and responsibilities. 6. Establish authority for crisis management before the crisis. The project manager isn't always the best emergency manager, so choose the person who has greatest knowledge of the operational issues associated with the crisis. 7. Use emergency planning processes in projects, including risk analysis and contingency planning. 8. Design effective, accurate, and timely feedback systems to provide early warning signs of failure and impending crises. A structured management process can help in focusing attention on regular tracking of relevant and critical indicators to surface the little problems before they become big ones. Become sensitive to indicators of impending project failure. Pay special attention to untracked indicators, because these are the most likely to cause trouble. Develop antennae and know when the project is going wrong. 9. Choose a project manager indigenous to the country where the project is being conducted. An indigenous project manager will be sensitive to the social and political aspects of the project and its peripheral issues and will catch more problems while they're small or otherwise undetectable to the outsider. Project Management Research 20 | Page

Economic Changes That Affects Project Management 10. Be mindful of the social and political consequences of crises or events. Critics, or stakeholders, bear significant influence on project success regardless of what the indicators of cost, schedule, and quality show. Learn how to satisfy stakeholders (Mallak, Patzak & Kurstedt, 1991). Identify one spokesperson as a liaison with the public and prepare a procedure for quick dissemination of information to all affected parties. 11. Adopt a systems view and separate the crisis from the origin of the crisis. Consider the basic performance principles and problem analysis techniques popularized in total quality management programs. Look forward and backward to assess the potential overall effects of the crisis. Making time and resources available to those in charge of crisis planning is essential; otherwise these critical tasks will be subordinated to the day-to-day activities, a vicious circle that can increase the likelihood of a larger crisis going undetected until it's too late. The regular and proper use and testing of risk analyses, contingency plans, logic charts, and table top exercises should surface the information, discussion of decisions and actions, and mitigation techniques that may reduce the occurrence and impact of crises in projects.

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Economic Changes That Affects Project Management The Bad News for Project Management There is no doubt that the project management profession is not immune from suffering along with other industries, professions and sectors of the economy. The negative effects of the economic downturn on the project management field are obvious they were as follows: 1. Cancellations and delays of projects, and entire programs. 2. Lost contacts (projects), due to lost customers, bankruptcies or market conditions that lead to low projects involvement. 3. Project downsizing, due to budget cut or scope reductions. 4. Deferred or cancelled capital investment. 5. Reduces budgets for employee development, training, and professional activities. 6. Reduces budgets for consultants, contractors and outsourcing. 7. More unemployed project managers, leading to more competition and reduces salaries for project management job. 8. Increased price sensitivity related to Project management related products and services. Many projects have been cancelled, rescheduled or not started due to the lack of credit or investment. In other cases, projects and project management teams will be affected by the financial condition of the owners, customers or employers. In many cases, open market economic conditions will have negative impacts, for example, the failures of contractors, pricing and logistics problems, human resource problems in many countries, transportation problems and other factors.

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Economic Changes That Affects Project Management The Good News Project Management will be part of the Solution An unexpected but welcome consequence of economic crisis will undoubtedly be continued and rapid growth in the project management profession. For example, the economic crisis provides an opportunity for our government to seriously reconsider some approaches to how it conducts its affairs. It is only in a crisis situation as we currently have, that there is serious debate about reform of the delivery of our public services. Such strategic investments

will need to be planned, directed and managed as portfolios,

programs, and projects. These will call for professional project management, serious complete with

project

management

governance and oversight. Both real progress and accountability will be required. It is also

foreseen that Ireland PM and Economy picture 1. Industries and organizations will become more project-oriented as firms avoid large investments and long term commitments to larger staffs and operational overheard experience. 2. More professional workers will be required to move from project to project within industries, as fewer employers offer long term employments or benefits. 3. Customers, investors and taxpayers will demand responsible management and accountability related to programs and projects. 4. Organizations will become slimmer, flatter, and more cost conscious, leading to a renewed emphasis on efficiency and productivity.

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Economic Changes That Affects Project Management 5. Professional project management provides the most cost effective and productive approach to managing programs and projects, this is why Project Management methodologies were developed in the first place. Not only with more project management be needed during the economic recovery, on projects funded by government and for restructuring industry, but more organizations in more industries will become more project-oriented. There is an ever increasing awareness within the organizations that the best utilization of finite and limited resources is through the application of effective project management under the leadership of competent project managers.

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Economic Changes That Affects Project Management If everyone's thinking alike, someone isnt thinking. - Innovation/ Technology/ Business/ Training/ Nonprofit NPO Taking into account the current situation in the market, it seems that the definition of project success requires collaboration, smarter resource management, on -the-job training, customised project approaches, but also new project tools, like never before. In brief: 1. Resources remain in short supply; so in order to make the best possible use of their resources, the companies may invest in on-the-job training, methodology development and tool use. 2. For complex and virtual projects, the companies may try to reduce transportation costs, and invest to an application that has web based access and has tools to create, save and distribute project info. 3. As far as planning, requirements, and team communication, are regarded; the companies may follow custom made methodologies to do what works for them. 4. Although Project Management Offices (PMOs) agree on the importance of learning transfer, theyll probably adopt on-the-job training, due to cutting costs. 5. It would also be the moment when PMOs will be asked if their work has had a positive quantitative effect on the business regarding the reduction of the project problems, the effective use of resources and the faster time to market if not, adjustments will be required. 6. The need for project management basics, mainly risk management, will probably continue, as a way to deal with difficult situations and reduce loss. 7. Project success will be determined by the end customer, who will ask the project to exceed its time and cost estimates. 8. Due to the fact project management is an important factor; human resources (HR) professionals will try to find high potential project managers, who have technical abilities, but also business and interpersonal skills. These are some of the basic Project Management trends that seem to arise due to current situation, so the companies should find ways to adjust accordingly (Marilena Koliavasili). Project Management Research 25 | Page

Economic Changes That Affects Project Management In searching what are the effects of economic changes in Project Management, the researcher learns that the Project management itself can also change the economy, Project Management, of course, is no cure-all for the crisis. Nevertheless it can make a decisive contribution in leading an individual company, and hence little by little the country out of the crisis. For example, Project Management helps to set up processes, to clarify roles and responsibilities and create transparency and reliability in planning. The right projects are suitably prioritized, methods of working become more efficient and hence costs are saved. Given the increasing internationalization of Spanish companies, Project Management can also be successfully introduced, because it helps to achieve smooth cooperation with business partners. Combined with the ability to improvise and the flexibility of the project managers, which is considerably greater than, project management can become a competitive advantage. An essential prerequisite is that the rules and principles of Project Management are tuned to requirements, in order to be effective.

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Economic Changes That Affects Project Management Project agreements can't be carved in stone. During a crisis, documentation is even more important than normal. Think of your project agreement as living and breathing and ready to change with the pulse of the times. The more people there are who know it, understand it and act on it, the more life there is in it. If you are the only one who knows the plan, it will suffocate. Change becomes a minute-by-minute reality during volatile times, so communicating those changes to people as quickly and effectively as you can is critical. Don't be afraid of change. The only fear is silence and not communicating the immediate goals and tasks to your team. A crisis can bind a team. Even in the best working conditions, team dynamics are a challenge. In a crisis, emotions intensify. The good news is that in a crisis, people discover a shared purpose, which gives them a place to funnel that emotion. The project manager should give people a clear goal that they can be committed to, opportunities to interact, and the freedom to talk openly about how they're feeling and what they are experiencing. These steps will do a lot to relieve stress. Every morning, map out a clear path of what can be done that day. You may need to establish new team guidelines and protocols that make sense in the crisis even though they were irrelevant in normal times.

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