The project environment is a large set of aspects that affect the course of the process and its success. In some cases, the project objectives, organizational decision and other elements may be incompatible with key environmental factors. There are several types of such aspects, united by the nature of influence in several groups. For each project, it is necessary to determine the direction and degree of influence of factors of the external and internal environment.
Definition
The project environment is an interconnected combination of factors of the external and internal environment that affect the success of its implementation. These elements need to be taken into account at all phases of the project life cycle - from the emergence of a fundamental idea to its closure.
Project environment components include the following key factors:
- economic;
- political;
- cultural;
- social;
- technological.
In the process of project development, the importance of individual elements may change. The influence of the environment on the project depends on its profile. Changes in some quantities, for example, economic ones (exchange rates, credit rates and others) can be extremely important for some projects and indifferent for others. For each program, its own unique set of factors of near and far environment is being developed.
Reasons for the allocation
The distinction between the design process directly on the project itself and the environment is to some extent conditional. The reasons for this are the following factors:
- the lability of the elements of the project and its general instability;
- the possibility of the transition of certain aspects from the external to the internal environment and in the opposite direction;
- part of the components is used outside the project.
The project environment is an integrated system. Its structural diagram is shown in the figure below.
Through the zone highlighted in bold, the transition and the relationship between the internal and external environment.
Classification
All environmental factors of the project are divided into 4 large groups: external, internal, distant and near.
Elements of the internal environment have a direct impact on the project, while the external environment often affects indirectly. In the framework of a manufacturing enterprise, the far environment includes politics, economics, ecology, culture, science and technology, laws and regulations, society, and infrastructure.
The immediate external elements are enterprise management, finance and sales, manufacturing conditions, material support with resources, raw materials, semi-finished products and equipment. The internal environment of the project will include leadership style, organization structure, members of the project team, economic and social conditions, information support and other elements.
External environment and management
The external environment of the project leaves a certain imprint on the organizational structure of the project. The more dynamic the changes in the external environment, the more flexible project management should be built. Conversely, with sufficient stability, the bureaucratic and mechanistic type of management becomes more efficient.
Each project has its own most optimal organizational structure, which can be adapted to varying degrees to external conditions. It also depends on the availability and quality of the rules established by the organization.
Far environment: political and legal factors
Experts note that the larger the created project, the stronger the influence of distant factors on it. The political and legal aspects of the external environment of the project include:
- the relationship between business and government;
- the political situation as a whole in the country and in the region;
- patent and environmental legislation;
- political system sustainability;
- rates, benefits and changes in the legislative norms governing the taxation system;
- financing from state and regional budgets;
- credit policy;
- crime level;
- features of antitrust regulation;
- conducting elections to federal and local governments;
- political situation in other states and relations with them.
These factors are primarily associated with the struggle of various political forces and groups in the state, at the regional level and in the area. For some organizations, government policies, government subsidies, and contracts may be critical to the implementation of the project. Other businesses may need to suspend program planning so as not to exceed legal requirements. Tax laws affect all types of business activities.
Technological factors
Technological aspects relate to the immediate surroundings of projects. They include activities that are associated with the emergence of new knowledge and ways of creating tangible and intangible values, as well as with their practical application. As a result, there are promising products, materials, technologies. These factors are the main driving force of technological and social progress.
Revolutionary innovations (for example, the introduction of computers, the Internet, cellular telephony, satellite television) not only create public goods, but can also pose a certain threat to projects. Thus, the idea being developed may turn out to be technically obsolete and will not withstand competition in the market in comparison with more advanced technologies. These risks must be considered when planning a project. Innovations appear quite quickly, so you need to analyze the situation and develop programs at the proper scientific and technical level.
Socio-cultural aspects
Socio-cultural factors are characterized by both direct and indirect influence of the environment on the project. They are based on social relationships and established cultural values. Various factors and national characteristics of people form the lifestyle and consumption, affect work and other areas of activity.
Cultural values create new trends in consumption. The main factors of socio-cultural type are the following indicators:
- fertility, mortality, and life expectancy;
- migration processes;
- attitude to the ruling power;
- population income level;
- consumer relations to the quality of products and services;
- lifestyle and historical traditions;
- educational standards;
- attitude to work and rest;
- Literacy Rate;
- religion;
- group international relations;
- consumer habits;
- attitude to the requirements of social need.
Features of social factors
The social environment of the project is a complex of factors that occupies a special position in project management. They can change imperceptibly and gradually. Therefore, the task of predicting them is especially relevant. To solve this problem, there are several methods:
- The method of collective open voting.
- Expert review. Creation of commissions to obtain a compromise solution.
- Questionnaire for drawing up a scale of values in an interested group of the population.
- Scenario forecasts developed by experts or project managers.
- The step-by-step obtaining of a generalized estimate (Delphi method) used in the development of large-scale programs.
Economic forces
The economic aspects of the project include the following aspects:
- the ratio of individual industries and industries in the national economy;
- the level of inflation in the country and the stability of the currency issued by the state;
- legal relations related to the possession, use and disposal of property;
- guarantee insurance system;
- banking system development;
- interest rate level;
- investment policy;
- economic growth rates;
- degree of freedom of entrepreneurial activity;
- market infrastructure (commodity, stock, currency exchanges; auctions and fairs, means of business communication, advertising agencies, audit companies, chambers of commerce);
- general condition of markets, raw materials and labor.
These factors have a decisive influence on the number of projects under development. The macroeconomic climate in the country as a whole determines the level of opportunities for the implementation of project undertakings.
Environmental and natural factors
The environmental environment of the project is one of the “distant” components. This group includes the following aspects:
- climatic conditions in the area (temperature, rainfall, seismic activity and other criteria);
- the availability and type of natural resources;
- development of transport communications and location;
- requirements of sanitary norms and legislation in the field of environmental protection;
- general state of ecological systems and trends in their changes.
Infrastructure
The main aspects of the infrastructure that make up the external environment of the project are:
- types of transport and communication;
- power supply;
- the availability of information systems;
- work of public utilities;
- sales system (set of counterparties or supplier units);
- logistics and supply of material and technical resources;
- production infrastructure.
Internal environment
A significant impact on the program implementation process is provided by the internal environment of the project. Project management, leadership style create a certain psychological climate in the team and the relationship between its members. Each of the participants has its own interests and motivation, requirements and level of competence. The success of the program depends on the teamwork in many ways.
The following factors influence the internal environment of the project:
- enterprise management (determination of goals and requirements for results, their adjustment by the organization’s departments);
- financial sphere (project budget), sources of financing;
- sales area (project requirements related to consumer preferences);
- production aspects - making recommendations on the use of equipment and loading sites, determining the appropriateness of applying certain technological processes, developing project requirements in accordance with the market of means of production (use of expensive tools, fixtures).
Project participants and management
The internal environment and the project participants include the following characteristics:
- accepted standards of interaction;
- distribution of managing and other role powers;
- team cohesion;
- ways of communication and coordination between participants.
The tasks of the project manager are:
- collection of complete requirements and assessment of the scope of this work;
- priority setting;
- ensuring interaction between participants;
- development of a forecast for the development of the environment;
- determination of leadership style that affects the performance and creative activity of the team.
The main interest of the participants is to profit from the project. A team can be formed both within the framework of one enterprise, and from representatives of different organizations. The latter option is typical for large regional or construction projects.
Project Environment: Examples
The following can be cited as examples of the influence of the environment on the implementation and effectiveness of programs:
- Internal environment - project management. The image of the external environment of the manager is formed primarily on the basis of his previous experience. A manager who previously worked in the financial field will pay more attention to financial indicators (discount rate, exchange rates and others) than to technological innovations. In order to solve this problem, participation in the project consultant is required.
- The influence of the external environment is a political situation. The South Stream international gas pipeline project was suspended in 2014 due to the fact that Bulgaria impeded work (at the insistence of the European Commission). As a result, the Russian government decided to completely abandon the implementation of this project. To prevent such problems, it is necessary to analyze the policies and philosophies of states related to business.
- The external environment is a threat to technological factors. The invention of optical discs for recording audio information led to the forced closure and reprofiling of large enterprises engaged in the mass production of phonograph records.
- Environmental factors - requirements for safety standards. Determining the general sanitary rules that must be followed in the manufacture of children's toys will affect their manufacturer and process.
- External environment - cultural values and religion. The project to build an Islamic center in an area dominated by the Orthodox population can cause active resistance among residents, which will impede the implementation of this idea.