{"id":78,"date":"2022-01-04T21:10:24","date_gmt":"2022-01-04T21:10:24","guid":{"rendered":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/chapter\/3-2-project-environment\/"},"modified":"2025-01-03T02:25:51","modified_gmt":"2025-01-03T02:25:51","slug":"3-2-project-environment","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/chapter\/3-2-project-environment\/","title":{"rendered":"3.2 Project Environment"},"content":{"raw":"When the business case and the project charter, and later, the project management plan and its subcomponents, are prepared, the project environment surrounding the project should be examined thoroughly to delineate the factors that may have a negative or positive impact on the project activities and its outcomes. In PMBOK Guide 6th Edition, this environment comprises enterprise environmental factors (EEFs) and organizational process assets (OPAs). PMBOK Guide 7th edition refers to them as the project environment. The project environment comprises two components, internal and external, described in detail below.\r\n<h2>3.2.1 Internal Environment<\/h2>\r\nThe internal environment in which a project is developed consists of the factors that are internal to the organization but outside the project itself. These factors include elements such as organizational culture, structure, and governance, as well as security and safety measures. Other tangible elements include geographic location as well as distribution of facilities and resources, infrastructure, IT software and hardware, resource availability, and employee capability. The internal environment also includes organizational process assets, which are processes, policies, and procedures, as well as organizational knowledge bases (e.g., financial data, historical information, lessons learned, and project files from previous projects)[footnote]Project Management Institute. (2017). A guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute.[\/footnote].\r\n\r\nConsider the project charter example above. While we are creating the business case and preparing the project charter and project management plans, it would be wise to incorporate all the factors that may affect the mobile app and website optimization project. We should enumerate the main properties of our grocery store chain, some of which are provided below:\r\n<ul>\r\n \t<li>Strategic objectives, mission, and vision<\/li>\r\n \t<li>Organizational values and beliefs<\/li>\r\n \t<li>Cultural norms that influence the relationships among coworkers<\/li>\r\n \t<li>Code of conduct<\/li>\r\n \t<li>The number of employees<\/li>\r\n \t<li>Geographic locations and the size of the stores<\/li>\r\n \t<li>Variety of the products and services sold<\/li>\r\n \t<li>Financial situation<\/li>\r\n<\/ul>\r\nWe should also consider the organizational structure of the headquarters and all the branches. This also helps us identify internal and external stakeholders affected by our project and who may affect our project. Additionally, this helps us identify the dependencies among the departmental units and internal resources that might need to be utilized to complete the project. Reporting structure inside the organization could influence our project\u2019s decision-making and change request processes. When our project needs to utilize hardware and software tools to facilitate the activities, we can obtain them in an expedited way directly from the assets of our organization, which also saves the budget. When we need human resources, materials, and equipment, since we have already delineated the organizational structure with the tasks and responsibilities of each unit, we can benefit from the agreements already made with approved providers and subcontractors. Another advantage of listing all the capabilities of our organizations would be when we establish the project team. If our organization employs business or systems analysts, developers, user interface designers, or testers, we can ask their managers or executive-level managers above these managers to provide these qualified employees with specialized knowledge for our project. This may also reduce the external risks we may face if we hire them from outside our organization. In the \u201c<a href=\"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/chapter\/3-3-organizational-dimensions-and-the-structure\/\">3.3 Organizational Dimensions and the Structure<\/a>\u201d section, we will elaborate on the organizational structure.\r\n<h2><strong>3.2.2 <\/strong><strong>External Environment<\/strong><\/h2>\r\nA project\u2019s external environment consists of the factors that exist outside of the organization. It includes market conditions, social and cultural influences and issues, legal restrictions, commercial databases, academic research, government or industry standards, financial considerations, and physical environmental elements[footnote]Project Management Institute. (2021). A guide to the Project Management Body of Knowledge (PMBOK guide) (7th ed.). Project Management Institute.[\/footnote].\r\n\r\nFigure 3.2.1 illustrates types of general macro environments and forces that are interrelated and affect organizations: sociocultural, technological, economic, government and political, natural disasters, and human-induced problems that affect industries and organizations. Macro environment refers to the outermost layer of elements in a firm\u2019s external environment that can impact a business but are generally beyond the firm\u2019s direct control, such as the economy and political activity. This environment can also affect projects conducted by organizations. For example, economic forces generally include elements such as exchange rates and wages, employment statistics, and related factors such as inflation, recessions, and other negative and positive shocks. Additional factors include hiring and unemployment, employee benefits, and factors affecting organizational operating costs, revenues, and profits, all of which are affected by global, national, regional, and local economies. Politics and governmental policies, international wars, natural disasters, technological inventions, and sociocultural forces could directly affect our organization and the projects or may interact with other forces, such as economic forces.\r\n<div><\/div>\r\n\r\n[caption id=\"attachment_76\" align=\"aligncenter\" width=\"812\"]<img src=\"https:\/\/pressbooks.ulib.csuohio.edu\/project-management-navigating-the-complexity\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2.jpg\" alt=\"Figure 3.2: Macro Forces and Environments (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)\" width=\"812\" height=\"464\" class=\" wp-image-76\" \/> Figure 3.2.1: Macro Forces and Environments (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)[\/caption]\r\n\r\nBesides the macro environment, as explained above and illustrated in Figure 3.2.1, the micro environment is another external environment element that refers to the middle layer of elements in a firm\u2019s external environment, primarily concerned with a firm\u2019s industry situation. Harvard strategy professor Michael Porter developed an analysis tool to evaluate a firm\u2019s micro environment. Porter\u2019s Five Forces is a tool used to examine different micro-environmental groups in order to understand the impact each group has on a firm in an industry (Figure 3.2.2). In this textbook, we will not explain each factor (See the reference link[footnote]Principles of Management. (2019). Retrieved from <a href=\"https:\/\/openstax.org\/books\/principles-management\/pages\/8-4-a-firms-micro-environment-porters-five-forces?query=micro%20environment&amp;target=%7B%22type%22%3A%22search%22%2C%22index%22%3A0%7D#fs-idm537041840\">https:\/\/openstax.org\/books\/principles-management\/pages\/8-4-a-firms-micro-environment-porters-five-forces?query=micro%20environment&amp;target=%7B%22type%22%3A%22search%22%2C%22index%22%3A0%7D#fs-idm537041840<\/a>[\/footnote]). However, these five factors, industry rivalry, the threat of new entrants, threat of substitutes, supplier power, and buyer power, could have a substantial influence on a project. Therefore, we should consider these external factors while assessing the factors that may affect our project from outside the organization.\r\n<div>\r\n\r\n[caption id=\"attachment_77\" align=\"aligncenter\" width=\"482\"]<img src=\"https:\/\/pressbooks.ulib.csuohio.edu\/project-management-navigating-the-complexity\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3.jpg\" alt=\"Figure 3.3: Porter\u2019s Five Forces Model of Industry Competition (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)\" width=\"482\" height=\"481\" class=\" wp-image-77\" \/> Figure 3.2.2: Porter\u2019s Five Forces Model of Industry Competition (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)[\/caption]\r\n\r\n<\/div>\r\n<div>\r\n\r\nIt is important to keep these external factors in mind when preparing for and managing a project since many, if not most, of these external factors and any changes in these factors may have negative or positive impacts on projects. They could lead to risks that may put the project activities and deliverables, as well as the overall project, in jeopardy.\r\n\r\n<\/div>","rendered":"<p>When the business case and the project charter, and later, the project management plan and its subcomponents, are prepared, the project environment surrounding the project should be examined thoroughly to delineate the factors that may have a negative or positive impact on the project activities and its outcomes. In PMBOK Guide 6th Edition, this environment comprises enterprise environmental factors (EEFs) and organizational process assets (OPAs). PMBOK Guide 7th edition refers to them as the project environment. The project environment comprises two components, internal and external, described in detail below.<\/p>\n<h2>3.2.1 Internal Environment<\/h2>\n<p>The internal environment in which a project is developed consists of the factors that are internal to the organization but outside the project itself. These factors include elements such as organizational culture, structure, and governance, as well as security and safety measures. Other tangible elements include geographic location as well as distribution of facilities and resources, infrastructure, IT software and hardware, resource availability, and employee capability. The internal environment also includes organizational process assets, which are processes, policies, and procedures, as well as organizational knowledge bases (e.g., financial data, historical information, lessons learned, and project files from previous projects)<a class=\"footnote\" title=\"Project Management Institute. (2017). A guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute.\" id=\"return-footnote-78-1\" href=\"#footnote-78-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a>.<\/p>\n<p>Consider the project charter example above. While we are creating the business case and preparing the project charter and project management plans, it would be wise to incorporate all the factors that may affect the mobile app and website optimization project. We should enumerate the main properties of our grocery store chain, some of which are provided below:<\/p>\n<ul>\n<li>Strategic objectives, mission, and vision<\/li>\n<li>Organizational values and beliefs<\/li>\n<li>Cultural norms that influence the relationships among coworkers<\/li>\n<li>Code of conduct<\/li>\n<li>The number of employees<\/li>\n<li>Geographic locations and the size of the stores<\/li>\n<li>Variety of the products and services sold<\/li>\n<li>Financial situation<\/li>\n<\/ul>\n<p>We should also consider the organizational structure of the headquarters and all the branches. This also helps us identify internal and external stakeholders affected by our project and who may affect our project. Additionally, this helps us identify the dependencies among the departmental units and internal resources that might need to be utilized to complete the project. Reporting structure inside the organization could influence our project\u2019s decision-making and change request processes. When our project needs to utilize hardware and software tools to facilitate the activities, we can obtain them in an expedited way directly from the assets of our organization, which also saves the budget. When we need human resources, materials, and equipment, since we have already delineated the organizational structure with the tasks and responsibilities of each unit, we can benefit from the agreements already made with approved providers and subcontractors. Another advantage of listing all the capabilities of our organizations would be when we establish the project team. If our organization employs business or systems analysts, developers, user interface designers, or testers, we can ask their managers or executive-level managers above these managers to provide these qualified employees with specialized knowledge for our project. This may also reduce the external risks we may face if we hire them from outside our organization. In the \u201c<a href=\"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/chapter\/3-3-organizational-dimensions-and-the-structure\/\">3.3 Organizational Dimensions and the Structure<\/a>\u201d section, we will elaborate on the organizational structure.<\/p>\n<h2><strong>3.2.2 <\/strong><strong>External Environment<\/strong><\/h2>\n<p>A project\u2019s external environment consists of the factors that exist outside of the organization. It includes market conditions, social and cultural influences and issues, legal restrictions, commercial databases, academic research, government or industry standards, financial considerations, and physical environmental elements<a class=\"footnote\" title=\"Project Management Institute. (2021). A guide to the Project Management Body of Knowledge (PMBOK guide) (7th ed.). Project Management Institute.\" id=\"return-footnote-78-2\" href=\"#footnote-78-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a>.<\/p>\n<p>Figure 3.2.1 illustrates types of general macro environments and forces that are interrelated and affect organizations: sociocultural, technological, economic, government and political, natural disasters, and human-induced problems that affect industries and organizations. Macro environment refers to the outermost layer of elements in a firm\u2019s external environment that can impact a business but are generally beyond the firm\u2019s direct control, such as the economy and political activity. This environment can also affect projects conducted by organizations. For example, economic forces generally include elements such as exchange rates and wages, employment statistics, and related factors such as inflation, recessions, and other negative and positive shocks. Additional factors include hiring and unemployment, employee benefits, and factors affecting organizational operating costs, revenues, and profits, all of which are affected by global, national, regional, and local economies. Politics and governmental policies, international wars, natural disasters, technological inventions, and sociocultural forces could directly affect our organization and the projects or may interact with other forces, such as economic forces.<\/p>\n<div><\/div>\n<figure id=\"attachment_76\" aria-describedby=\"caption-attachment-76\" style=\"width: 812px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/pressbooks.ulib.csuohio.edu\/project-management-navigating-the-complexity\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2.jpg\" alt=\"Figure 3.2: Macro Forces and Environments (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)\" width=\"812\" height=\"464\" class=\"wp-image-76\" srcset=\"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2.jpg 1906w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-300x171.jpg 300w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-1024x585.jpg 1024w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-768x439.jpg 768w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-1536x878.jpg 1536w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-65x37.jpg 65w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-225x129.jpg 225w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2022\/01\/Figure-3.2-350x200.jpg 350w\" sizes=\"auto, (max-width: 812px) 100vw, 812px\" \/><figcaption id=\"caption-attachment-76\" class=\"wp-caption-text\">Figure 3.2.1: Macro Forces and Environments (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)<\/figcaption><\/figure>\n<p>Besides the macro environment, as explained above and illustrated in Figure 3.2.1, the micro environment is another external environment element that refers to the middle layer of elements in a firm\u2019s external environment, primarily concerned with a firm\u2019s industry situation. Harvard strategy professor Michael Porter developed an analysis tool to evaluate a firm\u2019s micro environment. Porter\u2019s Five Forces is a tool used to examine different micro-environmental groups in order to understand the impact each group has on a firm in an industry (Figure 3.2.2). In this textbook, we will not explain each factor (See the reference link<a class=\"footnote\" title=\"Principles of Management. (2019). Retrieved from https:\/\/openstax.org\/books\/principles-management\/pages\/8-4-a-firms-micro-environment-porters-five-forces?query=micro%20environment&amp;target=%7B%22type%22%3A%22search%22%2C%22index%22%3A0%7D#fs-idm537041840\" id=\"return-footnote-78-3\" href=\"#footnote-78-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a>). However, these five factors, industry rivalry, the threat of new entrants, threat of substitutes, supplier power, and buyer power, could have a substantial influence on a project. Therefore, we should consider these external factors while assessing the factors that may affect our project from outside the organization.<\/p>\n<div>\n<figure id=\"attachment_77\" aria-describedby=\"caption-attachment-77\" style=\"width: 482px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/pressbooks.ulib.csuohio.edu\/project-management-navigating-the-complexity\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3.jpg\" alt=\"Figure 3.3: Porter\u2019s Five Forces Model of Industry Competition (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)\" width=\"482\" height=\"481\" class=\"wp-image-77\" srcset=\"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3.jpg 1074w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-300x300.jpg 300w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-1024x1024.jpg 1024w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-150x150.jpg 150w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-768x767.jpg 768w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-65x65.jpg 65w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-225x225.jpg 225w, https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-content\/uploads\/sites\/183\/2024\/07\/Figure-3.3-350x350.jpg 350w\" sizes=\"auto, (max-width: 482px) 100vw, 482px\" \/><figcaption id=\"caption-attachment-77\" class=\"wp-caption-text\">Figure 3.2.2: Porter\u2019s Five Forces Model of Industry Competition (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)<\/figcaption><\/figure>\n<\/div>\n<div>\n<p>It is important to keep these external factors in mind when preparing for and managing a project since many, if not most, of these external factors and any changes in these factors may have negative or positive impacts on projects. They could lead to risks that may put the project activities and deliverables, as well as the overall project, in jeopardy.<\/p>\n<\/div>\n<hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-78-1\">Project Management Institute. (2017). A guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute. <a href=\"#return-footnote-78-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-78-2\">Project Management Institute. (2021). A guide to the Project Management Body of Knowledge (PMBOK guide) (7th ed.). Project Management Institute. <a href=\"#return-footnote-78-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-78-3\">Principles of Management. (2019). Retrieved from <a href=\"https:\/\/openstax.org\/books\/principles-management\/pages\/8-4-a-firms-micro-environment-porters-five-forces?query=micro%20environment&amp;target=%7B%22type%22%3A%22search%22%2C%22index%22%3A0%7D#fs-idm537041840\">https:\/\/openstax.org\/books\/principles-management\/pages\/8-4-a-firms-micro-environment-porters-five-forces?query=micro%20environment&amp;target=%7B%22type%22%3A%22search%22%2C%22index%22%3A0%7D#fs-idm537041840<\/a> <a href=\"#return-footnote-78-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":3,"menu_order":3,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-78","chapter","type-chapter","status-publish","hentry"],"part":70,"_links":{"self":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapters\/78","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":5,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapters\/78\/revisions"}],"predecessor-version":[{"id":1056,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapters\/78\/revisions\/1056"}],"part":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/parts\/70"}],"metadata":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapters\/78\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/wp\/v2\/media?parent=78"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/pressbooks\/v2\/chapter-type?post=78"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/wp\/v2\/contributor?post=78"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/projectmanagement2ndedition\/wp-json\/wp\/v2\/license?post=78"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}