Cost vs value: the issue at the heart of The Golden Thread report
Cost containment is the top concern raised in the landmark APM and PwC study. How will this affect future project managers?
Professionalism, so-called ‘soft skills’ and the profile of the project management discipline all run through The Golden Thread, a major study into the impact of project management on the UK economy. The study, a collaboration between APM and PwC, was released earlier this year in central London.
While The Golden Thread highlights the maturity of project management and its growing value, it was also a reminder that some concerns around projects haven’t gone away.
Delivering against these challenges is a crucial way for project management to continue growing the real value it creates to the economy. Reminder: the study calculates that project management contributes between £148bn and £165bn of gross value added (GVA) to UK GDP.
According to the 438 businesses surveyed for the report, the biggest challenges they face are related to uncertainty around government policy (56 per cent agree it’s caused problems). In second place? Cost pressures and cost containment cited by 39 per cent. Cost issues are expected to endure in the medium term – financial management clearly remains an important skill for project managers.
The study also looked into the different skills that will be required by project professionals in the future. It’s terrific to see leadership and management skills ranking high. Digital skills are seen as vital too with 82 per cent calling them 'important'.
However, top of the list of future skills – with 55 per cent of respondents saying it’s 'very important' – is ‘budgeting, cost control and financial management’.
So is project management becoming financial management?
No. Cost control and good financial management have become hygiene factors – must-haves that are more acute at a time of government austerity, business disruption and economic uncertainty.
In fact, financial discipline is creating firm foundations for other points on the ‘iron triangle’ to flourish, says Jonathan Stewart, UK managing director at construction consultancy Gleeds, in the report. “At last we are seeing a shift towards quality,” he said. “I’m starting to see tenders come in with cost excluded from the evaluation criteria.”
There is, it appears, an expectation among project sponsors that strong cost control will be baked into projects. And this, in turn, explains why future project managers will need to retain great financial disciplines. As the report puts it: we can expect “an increased focus on value over cost.”