Evaluate and address external business environment changes for impact on scope

Understanding the external business environment and its potential changes is essential for any project manager, especially those studying for the Project Management Professional (PMP) exam. Factors such as economic trends, legal changes, social attitudes, and technological advancements can significantly influence a project, altering its scope, and even its overall success.

I. Evaluating External Business Environment Changes

The first step towards addressing external business environment changes is to understand and evaluate them effectively.

A. PESTLE Analysis

A commonly used tool is the PESTLE analysis, which evaluates Political, Economic, Sociocultural, Technological, Legal, and Environmental factors.

• Political: These include government policies, regulations, and political stability. For instance, a change in government might result in new regulations affecting your project.
• Economic: Fluctuating exchange rates, inflation rates, and economic growth rates can impact your project’s budget, cost, and time.
• Sociocultural: Changes in society’s values, attitudes, and lifestyle choices can influence the demand for a project’s deliverables. For example, a growing trend towards eco-friendly products can affect a product development project.
• Technological: Technological advancements can either create opportunities (like new tools or platforms) or threats (like obsolete technologies) to your project.
• Legal: Changes in employment law, health and safety regulations, or industry-specific legal requirements can directly affect your project’s processes and scope.
• Environmental: This involves physical and environmental factors such as weather, geographic location, and climate change.

B. SWOT Analysis

Another key tool for evaluating external changes is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, which helps understand how external changes can present new opportunities and threats to your project.

II. Addressing External Business Environment Changes

Once the external changes are evaluated, project managers must address them effectively to mitigate their adverse effects on the project’s scope.

A. Strategic Planning

By integrating the observed changes into the strategic planning process. For instance, uncertainties in the market can be planned for by including risk-mitigation strategies or contingency plans in your overall project plan.

B. Scope Management

Execute effective scope management. If the external change significantly affects the project, you may need to re-evaluate and redefine your project’s scope. This might involve changing the project’s deliverables, objectives, or even the project plan itself.

For example, consider the implementation of a new data privacy law, like the General Data Protection Regulation (GDPR) in the EU. Organizations running IT projects had to adjust their project scopes to incorporate the requirements stipulated in this new law, which significantly affected their data handling processes.

C. Communication

Communicate the external changes and their impact on the project to all the relevant stakeholders. This includes the project team, sponsor, customers, and even suppliers. Informing the stakeholders of the changes helps them understand the new project direction and sets proper expectations.

For instance, if you’re working on a construction project and a new environmental regulation comes into play, impacting your project scope and timeline, communicating this to your stakeholders will ensure they understand the reasons behind the changes.

In conclusion, monitoring and responding to external business environment changes are essential skills for aspirants of the Project Management Professional (PMP) exam. Ignoring these changes could derail a project, causing it to exceed its budget, run over the schedule, or fail to achieve its objectives.

Project management isn’t just about managing logistics and hoping the project team is following the schedule. It also involves strategic analysis, proactive risk management, clear communication, and comprehensive planning. Thus, as project management professionals, understanding and addressing these influences should remain at the forefront of our approaches to managing successful projects.