Before we start a project...

*Layout and most of the content in following article contains details gathered from lecture conducted by Mr.Syed Rehan at APIIT Sri Lanka, on 11^th 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, 11^th 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].