*Layout and most of the content in following article contains details gathered from lecture conducted by Mr.Syed Rehan at APIIT Sri Lanka, on 11th July.
Mr.Syed Rehan explained that we should consider and analyse the business case, project sponsors and strategy prior to starting of a project.Introductory lecture started with a
video-preview about the construction project of ‘Palm Islands’ in Dubai.
Students
are asked to answer following comprehension questions:
(Golden Rule: always think the logic behind the
requirement, when writing a business case!)
Q1.)
Why the project
is needed? (The business case/economical and social problems which causes the
need)
a) To establish the very high living standard
required/expected by people. (Otherwise there can be a reasonable effect on
growth of political disturbances)
b) Oil resources are deflating. This directly affects
the amount of income and in turn; the living standard of people.
c) Lower living standard, results in social anarchy
(favoring the abolition of government!).
PEST Analysis
PEST (also
referred to as STEP) is a great method to identify reasons behind
requirements, which is defined as an “analysis framework of macro-environmental
factors” by (Peng & Nunes, 2009).
Ward and Rivani (2005) defines PEST analysis
as following,
“The
PEST analysis is a framework used in the assessment of the external environment
in which a company operates or intends to operate; it thus provides a satellite
view”
According the research by (Peng & Nunes, 2009), PEST analysis at most of the times used for
either analyzing position of a particular organization(/industry/business
environment) or to analyze the viability of general management solutions in a
business environment. In this case, the later is considered. PEST analysis
considers four dimensions each factor is included as explained by Syed (2012):
(i) Political :
·
Should consider
political requirements internally as well as externally.
·
Political
stability
a. Political Parties (Golden Rule:
Be unbiased on this. This is business/money; leave behind your
personal opinion!)
i.
Which is the
strongest one out there? (Always majority can set rules and policies from
parliament hence economic variable is maintained)
ii. How stable is the government?
b. Trade agreements (country to country links)
e.g. SARC/EU.
c. Tax rates (higher the tax, higher impact on
project) e.g. EPF/ETF
d. Laws (e.g. Immigrant law – can employ
foreigners? or just locals?)
(ii) Economical :
·
Foreign exchange
rate (devalued currency has a positive impact on economy, if the currency has
been overvalued and returning to equilibrium)
·
Inflation Rate (beware
of higher inflation rates, e.g. Brazil)
·
Unemployment
(Higher the unemployment higher the resources, hence reduced labor cost )
·
GDP (Gross
Domestic Product) and GNP (Gross National Product) – represent size and
strength of the economy. In GDP, product is produced within the country where
in GNP, product produced by all nationals of a country (within or outside of a
country).
(iii) Social:
·
Life Style
a. Directly results in urge for new products
(Even farmers are tech savvy)
b. Urban and Rural Population (Percentage of
people live on city and rural areas – directly affects requirements e.g.
Italian restraints won’t be favored by rural people. On the other hand, retired
portion absorb money from government(pension))
·
Gender Balance
·
Age
division/distribution (e.g. Sri Lanka has an aging population. 60% working
population is more likely to retire in near future. This results in positive
expectations on higher employment rate in future. )
(iv) Technological
·
Infrastructure
(Roads, Transportation, Electricity...etc)
·
Communication
infrastructure (e.g. Sri Lanka’s telecom infrastructure is the best in the
region)
·
Digital Divide
(Everything is digitizing nowadays, many phones...) – linked with urban/rural
population distribution.
When analyzing each dimension, each factor should be classified depending on the polarity of its impact.
Following table “Drivers of the PEST
model dimensions” by (Ward and Rivani, 2005) summarizes above factors :
Political (incl. Legal)
|
Economic
|
Social
|
Technological
|
Environmental regulations
and protection
|
Economic growth
|
Income distribution
|
Government research
spending
|
Tax policies
|
Interest rates &
monetary policies
|
Demographics,
Population growth rates,
Age distribution
|
Industry focus on
technological effort
|
International trade
regulations and restrictions
|
Government spending
|
Labor / social mobility
|
New inventions and
development
|
Contract enforcement law
Consumer
protection
|
Unemployment policy
|
Lifestyle changes
|
Rate of technology
transfer
|
Employment laws
|
Taxation
|
Work/career and leisure
attitudes
Entrepreneurial spirit
|
Life cycle and speed of
technological
obsolescence
|
Government organization /
attitude
|
Exchange rates
|
Education
|
Energy use and costs
|
Competition regulation
|
Inflation rates
|
Fashion, hypes
|
(Changes in) Information
Technology
|
Political
Stability
|
Stage of the business
cycle
|
Health consciousness &
welfare, feelings on
safety
|
(Changes in) Internet
|
Safety regulations
|
Consumer confidence
|
Living conditions
|
(Changes in) Mobile
Technology
|
Table 1 - Drivers of the PEST model dimensions
Case Studies and Examples:
A detailed Case study can be found on the research paper by
(Peng & Nunes, 2009, pp.231–235). This is a detailed example of how PEST
analysis should be done.
You can download and read it from here:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1417274&
I find following video 'interesting' and comprehensive! This video contains a PEST analysis on 3D animation industry (which is my favorite by the way! :) ) have a look :
Details under following questions will be added on next posts.
Q2.)
Who is the
Project Sponsor/Client?
a) Sponsor is very important in order for a
project to be successful.
b) Sponsor must have a clear and focused
vision and dedication towards the project.
c) On Project Manager’s / developer’s
perspective, they should be aware of the financial stability of the project. (E.g.
If client becomes bankrupt, you won’t get paid!)
Q3.) What was the strategy or approach for the project?
a) Deliverable list approach (More on this in the
next posts)
References:
·
Peng,
G.C. & Nunes, M. (2009). Using PEST analysis as a tool for refining and
focusing contexts for information systems research. [Online]. Available
from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1417274. [Accessed: 12
July 2012].
·
Syed, R. (2012)
Introduction to Project Management, CE00348-3. [Lecture Notes] Project Management.
APIIT Sri Lanka, L4-CR3, 11th July.
·
Ward, D. & Rivani, E. (2005). An
Overview of Strategy Development Models and the Ward-Rivani Model. Economics
Working Papers, June. p.pp. 1–24. Available from: http://129.3.20.41/eps/get/papers/0506/0506002.pdf [Accessed: 14 July 2012].
