Concepts
Monitoring the external business environment is a crucial element of effectively managing a project’s scope and backlog. Making continual assessments can aid in identifying potential impacts that could affect a project’s timeline or outcome. This integral process can be linked to a critical area of knowledge for the Project Management Professional (PMP) examination, specifically the aspect of Project Environment Management.
The external business environment can consist of numerous factors, such as the economic climate, competition, regulatory changes, technological advancements, or social parameters. These factors can greatly sway the progress of your project and may lead to adjustments in the project’s scope or an increase in backlog related tasks.
Impact of the External Environment: An Example
Let’s take an example. Suppose your project is developing a mobile app offering online grocery shopping. While the project is in progress, a new regulation requiring enhanced data protection for online transactions is enacted. This external change in the regulatory environment will impact your project scope as you may need to incorporate additional features into the app to ensure compliance. Such a shift can lead to an increase in the project’s backlog, affecting the overall project timeline and resources.
Benefits of Continual Review of The External Business Environment
Continual review of the external business environment helps you to:
- Anticipate changes: By staying aware of the external environment, you can proactively anticipate potential changes and adjust your project plans accordingly.
- Adjust project scope: Upon identification of a significant environmental change, you may need to modify the project scope to accommodate new requirements or constraints.
- Manage backlog effectively: Regular monitoring allows you to better strategize the handling of backlog tasks influenced by the changes in the business environment.
Impact on Project Management Elements: Scope and Backlog
Regular monitoring and assessment of the external business environment can be directly linked to two elements of the Project Management Plan: Scope and Backlog Management.
| Scope Management | Backlog Management | |
|---|---|---|
| Definition | It refers to defining and controlling what is included and not included in the project. | It refers to prioritizing and organizing pending tasks or pieces of work waiting to be done. |
| Effect of Change | Change in business environment can lead to change in requirements, affecting the project scope. | Increase in backlog tasks due to added requirements or changes in existing tasks. |
| Response | Alter the project plan to accommodate new scope and objectives. | Reclassify and reorganize the direction and priorities of the backlog. |
A Practical Example
Consider another example: you’re managing a project of setting up a solar power plant. Halfway through the project, there is a significant technological advancement in solar panels with significantly better efficiency. This external change prompts you to modify the project scope to include these new panels. Consequently, the backlog items related to previous panels’ installation get altered, leading to reorganization and prioritization of the backlog.
Conclusion
To conclude, a deep understanding and regular review of the external business environment is essential to remain agile and adaptable as a project manager. By doing so, you’re better equipped to manage changes in project scope and the resulting backlog alterations, maintaining control over your project’s progress. This skill is fundamental to being a successful project manager and is certainly an area of focus for PMP certification aspirants.
Answer the Questions in Comment Section
True or False: A project manager is responsible for continually reviewing the external business environment for impacts on the project’s scope/backlog.
- True
- False
Answer: True
Explanation: Continually reviewing the external business environment allows the project manager to proactively manage factors that may affect the project’s scope or backlog such as changes in the economy, technology, or competitor actions.
Which of the following could impact a project’s scope/backlog? (Multiple select)
- A. Economic shifts
- B. Technological advancements
- C. New laws or regulations
- D. Weather changes
Answer: A, B, C
Explanation: External shifts in the economy, technology, or new regulations may all impact a project’s scope/backlog. Weather changes, while they can affect some projects, do not generally impact the project’s scope/backlog.
True or False: Changes to the project scope can occur without changes to the project backlog.
- True
- False
Answer: False
Explanation: Alterations to the project scope, depending on their nature and extent, typically requires adjustments to the project backlog in order to realign with the revised scope.
Post project initiation, is it necessary to review the external business environment for impacts on project scope/backlog?
- Yes
- No
Answer: Yes
Explanation: Monitoring the external business environment regularly can help the project manager anticipate and plan for factors that may affect the project scope/backlog.
Is the external business environment the only factor that influences the project scope/backlog? (Single Select)
- A. Yes
- B. No
Answer: B
Explanation: While the external business environment does impact the project scope/backlog, internal factors such as team dynamics, resources, and organizational changes can also affect it.
Does ignoring the review of the external business environment help in preserving the initial project scope/backlog?
- Yes
- No
Answer: No
Explanation: Ignoring the review of the external business environment can actually lead to unexpected changes in the project scope/backlog due to unanticipated external factors.
True or False: The backlog is a live document that keeps changing due to changes in the business environment.
- True
- False
Answer: True
Explanation: The backlog often changes as a result of changes in the external environment, as well as alterations in project requirements or internal resource availability.
Can competitor actions impact the scope/backlog of your project?
- Yes
- No
Answer: Yes
Explanation: Competitor actions can indirectly influence project scope/backlog, particularly if they introduce innovative processes or products that may cause a shift in market expectations or demands.
Should a project manager wait for the end of the project to address changes in the external business environment?
- Yes
- No
Answer: No
Explanation: A project manager should proactively monitor and address changes in the external business environment throughout the project lifecycle.
True or False: Technological advancements in the external environment will always cause changes in the project scope/backlog.
- True
- False
Answer: False
Explanation: While they often can, technological advancements do not always result in changes to the project scope/backlog. The impact is dependent on how relevant or applicable the advancements are to the project.
Can governmental policy changes impact the project scope/backlog?
- Yes
- No
Answer: Yes
Explanation: Governmental policy changes, particularly those related to industry regulations and compliance, can significantly impact the project’s scope/backlog.
True or False: The project scope/backlog is static and not influenced by changes in the external business environment.
- True
- False
Answer: False
Explanation: The project scope/backlog is dynamic and can be affected by various factors in the external business environment such as economic shifts, technology changes, and regulatory updates.
The importance of continually reviewing the external business environment cannot be overstated. It helps in managing risks and adapting project scope accordingly.
Can anyone recommend any tools or frameworks for effectively monitoring the external business environment?
Great blog post, thanks for sharing!
We recently had a project affected by regulatory changes. Constantly monitoring the business environment helped us respond quickly.
Can external business environment factors influence the completion date of a project?
Appreciate the detailed insights!
I think this blog post is too elementary. It could have delved deeper into specific strategies for managing external risks.
Great insights on the continuous review process!