Cora CEO Philip Martin examines what organizations need to do in order to deliver projects in a more sustainable and environmentally friendly manner.
The recent COP26 conference in Glasgow has brought climate change to the forefront of all our minds. Whether it’s at a government, business, or individual level in the way we lead our personal lives, we have to become better at managing our carbon footprints. When it comes to the economy, we have to be savvier in how we manage projects. We need to consider more carefully a project’s environmental impact. Projects must be done in a more sustainable manner.
There is widespread consensus in the project management industry about the need to properly tackle the issue. According to a recent report by the Association for Project Management (APM), for example, it found that it’s cropping up regularly with its members: “We see a lot more tenders for projects asking about the climate impact, your policies and your attitudes to minimizing climate impacts.”
According to Science Direct, sustainable project management (SPM) is defined as: “the planning, monitoring and controlling of project delivery and support processes, with consideration of the environmental, economic and social aspects of the life-cycle of the project’s resources, processes, deliverables, and effects, aimed at realizing benefits for stakeholders, and performed in a transparent, fair and ethical way that includes proactive stakeholder participation.”
What are the priorities when it comes to SPM? At a macro level, there are obvious questions you should ask yourself before you kick off a project. Did you carry out an environmental study before project initiation? Are you implementing a recycling policy? Are you introducing renewable energy resources to offset the impact of emissions? Are materials like Portland cement and steel – which are heavy on carbon emissions – at the heart of your project? Maybe you can source more environmentally sound materials – whether they’re re-used or recycled materials – for your projects.
Now let’s strip it down to its lowest level. Up to now, we’ve been looking at carbon reduction in terms of energy only – in terms of energy consumption by each industry, by households, by farming. Under the Climate Action Plan, we need to start looking at what’s called embedded carbon, i.e., the amount of carbon consumed to produce the product. Society as a whole should be moving away from high-embedded carbon products.
Sure, managing carbon footprints across the economy is a complicated challenge. You will hear a lot of lip-service, much of it glorified PR exercises. Essentially, though, it’s about controlling, managing, and ultimately changing the way you work. Project controls can do that. Good project controls will look at costs. It will put metrics on the right items and give focus to the right areas to tackle.
In order to understand what your carbon footprint is, you need to start measuring things. You need to have key performance indicators (KPIs) in place, i.e., the ability to standardize certain sets of metrics, adjusted based on industry type. You need to get a handle on your project costs. You can do this quickly by analyzing your project codes to see if materials or skillsets are going up in price.
As you forecast your project, you can link costs to particular items that are cost-coded in your finance system (e.g., SAP, JD Edwards, etc.). With this capability, now you’re starting to get an idea of costs from a project today with a similar project from maybe two or three years ago. You can see cost trends. That allows you to put OKRs (objectives and key results) around particular carbon footprint items.
How much paper are you buying? What are your electricity costs? If you’re a pharmaceutical company, for example, and you have a new product coming down the line, how will you produce that product? How much will it cost? How much energy from non-renewable sources will you use? How much non-sustainable materials will be used in the production of it per annum? These will all be related to your forecasts. Now you’re starting to build in sustainability into the R&D outlook for the next 10-20 years of your pipeline.
Concrete, for example, is one of the top three highest materials for embedded carbon. So, when you’re scenario planning, if a proper carbon accounting tool is built-in, then obviously embedded carbon has to be taken into account in comparing options. A simple example is house building, which is typically a 50-50 mix between timber frame and concrete blocks.
There are standardized sustainability calculators, according to industry sector, that measure carbon footprints, e.g. the MSCI ESG ratings and the S&P global sustainability ratings. Both approaches look at ESG (environmental, social, and governance) risk management rather than general sustainability – so the risks associated with different ESG metrics vary depending on the firm’s industry, but they provide useful guidelines and very granular detail if you drill down by sector.
In the UK, for instance, a carbon-accounting tool has been developed for water utilities. It looks at both embedded carbon and each utility provider’s operational energy consumption to establish their carbon footprint. Irish Water, the national water utility operator, for instance, is the second-largest electricity consumer in Ireland.
Future inputs
Another item to consider is when it comes to your strategic project management. When you’re selecting your project portfolio, you want to gather a clear inventory on each project – all the pieces of data that you need to collect on that project to allow you to make decisions on it.
Traditionally, depending on organizational structure, there are lots of factors at play driving a company’s strategy. They might include compliance, risk, return on investment (ROI), net present value (NPR), and so on.
Now they will also include sustainability factors – your electricity spend, your maintenance spend, the carbon footprint of the project. What will the running costs be on a project? Where will those expenditure items come from?
Different sectors have different ways of measuring sustainability and the carbon footprint of each project. Portfolio managers now need to think about how they will consistently measure or evaluate a project before selecting it into their portfolio.
You’ve got to get buy-in with your SPM initiatives or you’re doomed. You’ve got to sell the benefits to your project teams. According to the Project Management Institute, for example: “To integrate sustainability successfully on your project, you will need your initial project team on board, meaning you need to provide team training and learning on sustainability.
“This team learning is a fundamental requirement for successful integration of sustainability in a project. From the many case studies available, the team leaders/project managers experience more commitment and engagement in their project and a higher performing team when sustainability is an underlying purpose for the team.”
Let’s be real here, too. A lot of this – whether we like it or not – is down to goodwill in a particular company and its senior management getting behind these initiatives. There are countries that want to make a greener world. There are other countries that don’t care about it.
If, however, you can start standardizing the metrics in a vertical in one country – a country that does care – then there’s a strong possibility that those metrics will become standardized in that vertical worldwide. It can and it will happen. If we look behind us, for example, we can see how change becomes embedded in the way our business processes operate.
In the early stage of projects, for example, there was never risk analysis done on projects. Now people standardize on risk analysis: impact multiplied by probability gives you a score. That’s a standardized way of doing a simple risk assessment across the board. There’s also obviously additional information you can store about risk for, say, military-type projects where more sophisticated risk mitigation methods are being applied. That is progress.
Benefits realization – understanding the benefits you get from a project – is another example. Ten or 15 years ago, there was no such thing as benefits realization. Now it’s becoming a global requirement for building and selecting your portfolios. Within the Benefits Realization feature of Cora PPM, for example, you can track the sustainability factors on a project – you can decide, “OK, if we go with this project, here’s our targets”; you can track progress. Now you’re starting to see if sustainability targets are being met the whole way through a project lifecycle.
Listening to debates about climate change can be overwhelming sometimes, but already you can see how industry can tackle this problem with piecemeal changes when it comes to our efficient management of projects. We have a lot of the tools – and capabilities – already in our hands. We just need to find the motivation to implement those changes. I’ve no doubt we’ll rise to the challenge.
