Cutbacks and Scrutiny

Table of contents for Economy on PM

  1. Impact of the Economy on Project Management

Dollar Scrutiny

As can be expected, much of the feedback pointed towards a cutback in new investment and thus projects.  Another significant portion of the comments discussed another inevitable trend in hard times…increased scrutiny of current projects and focus on the dollars.

Cutbacks

  • North America – Although layoffs have occurred in the Canadian oil patch in recent weeks, the majority have been in the areas of field services and engineering as drilling rig counts have declined and major oil sands projects have been shelved or deferred. I have not yet heard of layoffs or contract cancellations affecting project managers or PM consultants. Granted, it’s still early in January and the price of oil continues to decline.However, it would appear that opportunities for PM positions, full time and contract, might be shrinking in number in the short term as companies rein in their spending projects and defend their budget resources. Government organizations are still hiring within their PMOs during this lull as they attempt to catch up with the industry after the past several years of rapid growth.
  • Europe – due to insecure times, no new projects are started, so the pipeline may dry up, which will cause problems in Q2/Q3
  • North America – Current projects uneffected, but projects in the planning stage(Customers planning stage) are slowing down while they sort our their corporate lifespan issues (auto industry).
  • India – Due to the slow down in the economic scene, it is expected that quite a few projects could be slowed down by the customer and further investments could be delayed/ shelved in certain cases.
  • North America – Working for an oil/gas company, the effects have been fairly stark. When projects were budgeted, it was assumed that oil would be at $60/barrel (this is when oil was $100+/barrel). Since now oil is well below that $60 mark, it has certainly impacted flexibility as far as resources are concerned. So where before we could bring together project members from across the world, we are now either using other means (video or tele conference) or in some instances decreasing the scope of the project and/or delaying the project.
  • Asia Multiple projects put on hold.
  • North America – With capital funding cut back to virtually nothing in my industry (forest products), many projects have been stopped or start dates pushed out indefinitely, so PM’s here are lucky to have jobs.
  • India – From my perspective, the biggest impact has not been the financial sector problems, but the dramatic drop in commodity prices. The majority of our clients are oil, gas mining and petrochemical, and they have shelved or at least put on hold about half their budgeted projects.I suspect there will be longer term problems, as the US stops outsourcing so much work and tries to put the people back home to work.

Financial Scrutiny

  • India – focus on forecasting
  • North America – Many companies reacted quickly and placed all projects on hold.  Since the first of the year, some have reviewed their finances, needs, and project lists and have started reviving needed projects.
  • Latin America – More prioritization on which projects are executed, more scrutiny on costs, training, travel, resource cutbacks make it difficult to appropriately staff projects, more focus on support projects as opposed to innovation projects
  • Europe – much more tight budget control, better prioritization between must-haves, nice to haves
  • North America – More controls.
  • Europe – The ‘return of the Business Case‘. All too often the returns of a project have been neglected or became less important during the project. Now a project has to ‘prove’ its viability. Furthermore new projects need a ROI within 6 to 9 months.

Photo attribution: skycaptaintwo

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2 thoughts on “Cutbacks and Scrutiny”

  1. Josh,

    great series of posts and research that went into it. It might not have been the largest of samples sizes, but compared to what else is out there, it’s immense. I congratulate you on putting the idea forward to start the conversation.

    If it helps other people, we have seen an interesting trend. We are seeing smaller companies (70-200) people who have grown up around a founder and have used creativity and hussle to reach a certain size, are suddenly seeing that there are great opportunities for them to take the next step. They want to initially implement processes and systems.

    These are great companies to work with where one’s experience can really have great effects and really grow the business. We got our lead into this area through through a reference, but people should look for the opportunities. They can be the most gratifying work experiences you’ve had.

    The recession/depression is going to hurt some companies and create huge opportunities for others. To steal an analogy from this years Davos:

    Two shoe salesmen arrive in Africa. One phones home: “This is a nightmare, no one here wears shoes. We’re ruined.” The other phones home: “You’re not going to believe this, it’s the greatest opportunity ever, no one here even wears shoes!”

  2. Great points Andrew. I’m contemplating whether or not to do a more rigorous survey with carefully crafted multiple choice questions, and gathering more demographic data in terms of industry, public vs private, the history and current project management environment involved, etc. There are so many variables to gather and control for if you really want to do it properly.

    Small business and entrepreneurship is the engine that drives an economy, and there are probably more opportunities during down times for creative firms and project managers.

    Josh Nankivel
    http://pmStudent.com

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