Discussion
The project delivery sector is a very important one in context of the Australian economy as it generates a significant amount of revenue for the Australian economy by delivering various types of projects which suits different types of client and customer demands. The project delivery sector is currently experiencing stable growth and development owing to the advantages and facilities offered by the government and also due to its adaptability with its external environment. But going by the current trends it can be forecasted that there will be various problematic trends in the future which will affect project delivery in Australia and therefore the project delivery sector needs to adopt strategies accordingly in order to cope up with the problematic future trends so that it does not harm their businesses. This report focuses on the current external environment analysis of Australia and the various potential problematic trends which would affect the future of project delivery in Australia.
Political Environment- The political environment of Australia is stable in nature and therefore it acts as a safe destination for investors. As opined by Molla and Cuthbert (2015) Australia’s political and regulatory environment is open, stable and progressive in nature which provides investors with a high level of certainty and confidence. The transparency and effectiveness of the Government of Australia is highly rated by investors and also by the general public. The strength of Australia as an ideal investment destination can be attributed to the political system of the country which has been accessed as being highly effective in response to economic challenges and policy direction. The country also boasts of an open, transparent and efficient legal framework. As opined by Pickering and Mitchell (2017) Australia is one of the most vital markets for MNC’s in the Asia-Pacific region as it provides a stable political and business environment, it hosts a growing economy, provides a skilled, well-educated and multi-lingual workforce, maintains strategic time zone and a competitive time base. The above mentioned factors help in providing a sophisticated market and the ideal environment which enables various MNC’s to drive innovation and growth.
Economic Environment- The economic environment of Australia is stable and growing in nature. The strong economic growth rate of Australia is greater than most of the countries in the Asia Pacific region. According to Natoli and Zuhair (2013) there is a low level of risk which is associated with the Australian economy as it boasts of a consistently strong GDP growth, interest rates, increasing exchange rates, greater levels of employment and a lower inflation rate. As opined by Photphisutthiphong and Weder (2016) in the main cities of Australia such as Melbourne, Sydney, Brisbane, Adelaide etc. the level of un-employment is relatively low and the country wide unemployment figure is close to 5% overall. Australia receives a large number of applications each year from those individuals who wishes to immigrate to the country in order to enjoy the high standard of living and the overall opportunities the country offers to each individual. As stated by Perlich (2014) the cost of living in various large cities of Australia such as Melbourne, Sydney, Brisbane, Adelaide, Perth etc. is relatively lesser than that of the major expensive cities of the world. All the major cities of Australia are ranked among the Top 30 cities in the world in context of quality of life. As stated by Barraket, Douglas, Eversole, Mason, McNeill and Morgan (2017) the currency exchange rate in Australia against leading currencies of the world such as dollars, sterling, Euros and pounds are very favourable which make property investment an attractive option for foreign investors in the country who fear of losing greater amount of money in context of exchange transaction against Australian dollars. The cost competitiveness offered by Australia has led to a number of foreign companies using Australia as their headquarters for Asian operations.
Current External Environment of Project delivery sector in Australia
Social Factors- According to Fabiansson (2018) Australia is considered to be one of the best countries in the world to live-in in context of wealth, health, education and quality of life. In comparison to other major economies of the world, Australia has a relatively lower population of about 22.9 million. The average life expectancy among the male in the country is 80 years, while the average life expectancy among the females in the country is 84 years. According to Alston (2015) the main concern in the Australian society is currently due to the presence of greater number of retirees and fewer individuals of working age in the country which has created a challenge for business organization across the country in terms of filing vacant positions being caused by the retirement of the ageing population. Australia is considered one of the most multicultural and multiracial countries in the world as it boast of people from various cultures and races around the world. Australia has an important heritage from its indigenous people who were believed to have migrated from Asia many years before the arrival of the British. Australia had adopted a policy of mass migration after World War 2 however migration is a politically sensitive issue in Australia.
Technological Factors- Australia is one of the technologically advanced countries in the world and is well known for adopting new technologies at a faster rate than most of the developed countries of the world. Australia has witnessed an enormous technological growth over the last few years and the worth of technology is expected to grow by 4% in 2018 to $63 million and it is estimated to grow to 65 million dollars by 2019. As stated by Hall and Wylie (2014) the domestic companies of the country are heavily investing in technological advancements in order to meet the growing demands of their customers. Computer Equipment, software, technology consultancy services, cloud technology and artificial intelligence are expected to drive the investments which will result in more innovation design of products and services. According to Kulkarni (2014) there are two government research and development organizations in Australia which support majority of the government research and development projects of the country. The first organization namely CSIRO (Commonwealth Scientific and Industrial Research Organization) is an independent government agency which supports research and development in the fields of physical and biological sciences. The second organization named DSTO (The Defence Science and Technology Organization) supports military research and development by providing scientific and technological support to the Australian Defence Force and Department of Defence.
Environmental Factors-Australia is considered one of the most beautiful countries of the world with breath-taking beaches, mountains and forests. Australia is also considered as a country with rich bio-diversity reserve. As opined by Greasley, McLaughlin, Hanley and Oxley (2017) recent studies have revealed that there are more than 1 million species of plants and animals which are found in the country and it is one of the reasons that the country attracts thousands of visitors each year. As opined by Hu and Liu (2017) there are certain environmental challenges which are faced by Australia such as climate change. As stated by Vince (2015) another challenge which the country faces is that it is the driest inhabited continent in the world. A recent Senate enquiry conducted in Australia also revealed that climate change is one of the current and existential national security risks to the country. As opined by Greiner (2014) there are various potential negative outcomes which are associated with climate change in Australia in the form of spread of infectious disease, water insecurity and conflicts among various regions over food, land and water.
Political Environment
Legal Factors- As stated by Hunter (2014) in order to promote fair trading among both businesses and consumers, Australia has several laws and legislations in place in the form of Fair Trading Laws, Competition laws and Consumer Laws. The Fair Work Act 2009 is the main piece of legislation in Australia which governs the employment procedure of the country. As opined by Wilson and Spoehr (2015) there are also various anti-discrimination laws in the country in the form of Age Discrimination Act 2004, Australian Human rights Commission Act 1986, Disability Discrimination Act 1992, Racial Discrimination Act 1975 and Sex Discrimination Act 1984 which prevents discrimination in the workplaces of the country. There are also legislations regarding Equal Opportunity which have been implemented across various state governments in order to provide equal opportunities of growth for all individuals of the country.
The Problematic Trends for the future of Project Delivery in Australia are as follows:
Ageing workforce of the country and shortage of skills among the workforce affecting the infrastructure of productivity- As stated by Fischbach (2015) the ageing workforce of Australia is currently able to cope up with the physical demands of the onsite jobs in the country somehow but in the future when the requirements of the onsite jobs in the country will increase the ageing workforce will not be able to cope up with the demands of the onsite jobs of the country. The mature tradies of the country remain in constant demand for their abilities but with their ageing comes exhaustion and other health implications which prevent them from performing their jobs successfully. The amount of skill shortages in the Australian labour market is prevalent among the new generation of employees and apprentices of the country. According to report by Farsight, in context of the construction industry it was stated that there were only limited male and female who perceived construction jobs as desirable which led to massive skill shortages in the industry and high wages among the employees and which exacerbated the chronic affordability crisis. The current models of training and up-skilling which are being practiced in the country currently are flawed in nature and while the technology continues to develop, the construction industry continues to rely mostly on manual labour. The pressure in the construction industry has resulted in increasing strain among the workers of the industry.
Growing competition from Asian Economies- According to Ashcraft (2014) the emerging Asian economies such as India and China along with their high population growth and rapid urbanization have created an unmatched need for speed in various sectors which remains responsible for delivering projects. In context of the construction sector it can be observed that Asia has developed accelerated pre-fabrication system in order to cope up with the infrastructural demands. Australia may be pushed towards more cost effective developmental solutions in the form of cheap import of prefabricated buildings and infrastructural components from various Asian countries. In their report in context of the construction sector, McKinsey Global Institute stated that, Asian countries such as China, spends more on economic infrastructure annually larger than the combined spending of Northern America and Western Europe. Construction estimating software has a basic goal of speeding up the early stages of development in the construction sector and infrastructure in Australia can benefit hugely from the adoption of such software such as the construction estimation software in order to speed up the growth and development of the construction sector, which is one of the major sectors concerned with project delivery.
Economic Environment
Poor Investment Planning in Australian Infrastructure- United States based, Project Management Institute in their research found out that Australia fared worse than the global average in investment planning as 108 million dollars are wasted for every billion dollar spent in Australia in the development of Australian Infrastructure. According to the report of The Productivity Commission, it was suggested that Australia needs to improve their finance within public infrastructure, manage and align the incentives and examine potential risks during contract negotiation process. As stated by Cole (2017) the growth in the deficit of infrastructure demands better planning for investment and also requires efficient allocation of resources through the application of effective planning software. The report The Productivity Commission also stated that the recent estimate of the gap between the required infrastructure and the existing infrastructure is 300 billion dollar which highlights the poor investment planning in Australian infrastructure, in terms of project deliveries.
Increase in unpredictable and severe weather conditions- There has been an increase in extreme weather conditions throughout Australia which also includes heatwaves and storms, particularly in different tropical regions of the country which significantly affects the construction sector, which is one of the key sectors related to project delivery. The environmental impacts are estimated to increase in frequency and severity which will cause setback to various infrastructural projects all over the country. The average temperature of Australia is expected to rise throughout the year which will mostly affect the construction sector of the country. The increase in extreme weather conditions and the in-consistency of the weather conditions has directly impacted on the rate of productivity and absenteeism of the workers of the sector. The lack of effective construction estimation software among the construction sector has resulted in more complexities for the sector as the absence of such software prevents the consideration of costs during the budgeting and early stages of proposal which are related with extreme weather events. As the construction industry is majorly dependent on physical outdoor labour, various research and development are required to develop and implement innovative ventures in order to mitigate the risks which are associated with rise in intensifying and extreme weather conditions, but in reality it is not carried out in a satisfactory manner which would help in alleviating the risks associated with it. Various promising solutions such as automation, wearable technology, robotics and employee monitoring must be implemented by the construction sector in order to ensure the safety of workers while operating in extreme weather conditions in order to deliver projects.
Rising Un-affordability among the common people- There has been a rising Un-affordability among the common people in context of the construction sector, which is one of the vital sectors related to project deliverables. According to a survey carried out by Demographia in 2017, it deemed Australian Housing extremely unaffordable. The survey stated that Sydney has occupied the second place in the world in terms of unaffordable major housing marketing behind Hong Kong and Melbourne was ranked sixth in the same list. As stated by Roberge (2013) in terms of Australia it can be noticed that the Average household size is declining at a fast rate while the population goes on increasing, which forces the common people to look for more cheap and affordable alternatives for housing. In terms of Australia it is also noticed that inflation continues to affect the construction sector with ever increasing cost sensitivities surrounding the new project developments in Australia and regarding the maintenance of infrastructure in Australia.
Social Factors
Over-dependence on technology- The project delivery sector has been becoming over-dependent on technology as various technological advancements are being implemented in the project delivery industry in order to increase its effectiveness. Various emerging technology such as wearable technology, cloud technology, Internet of Things and Artificial Intelligence are being used in project delivery in order to enhance client satisfaction and to increase the productivity of the sector. As stated by Moynihan and Harsh (2016) the over dependence on technology has led to reduction of human labour and human supervision which has resulted in the reduction of human employment. The reduction in the number of human employment affects the economy of the country as it increases the un-employment rate in the economy and therefore it is very important to find a balance between automation and manual operations for the project delivery sector which will not only maintain the level of effectiveness of the project delivery but will also help to generate human employment in the economy. The increasing adoption of technological advancements has also resulted in the rise of operational costs related to project delivery as there is a significant amount of cost which is associated with implementation of various technological advancements in the project delivery sector.
Increase in cyber security risks- Due to the high rate of implementation of technological advancements such as artificial intelligence and cloud computing there has been an increase in the risks related to cyber security. As stated by Moynihan and Harsh (2015) as the project delivery sector is becoming increasingly dependent on technological innovations, the data and information of the project delivery sector is becoming increasingly prone to cyber-attacks and other hacking activities. The data and information which remain prone to cyber-attacks and other hacking activities contain sensitive and confidential data about the company and their clients and therefore theft or modifications of such sensitive and confidential data and information generates negative influence for both the company and their clients. The frequency of cyber-attacks have increased in the last 5 years considering the fact that more and more companies have opted for various technological advancements without safeguarding the vital resources of the companies in a secured manner against such vulnerabilities. Cyber-attacks and hacking activities resulted in huge financial losses for companies belonging to various sectors which are evident from the fact that companies have faced losses amounting to millions of dollars due to cyber-attacks and other hacking activities. The project delivery sector has too adopted technological innovations in their day to day operations in order to increase the effectiveness of project delivery and to enhance client satisfaction but they must also ensure that they safeguard their resources from risks of cyber-attacks considering the technological advancements which are being observed in cyber-attacks with each passing day due to the widespread of Information technology infrastructure and its exposure to risks.
Increasing flexibility among workforce- The increasing flexibility among workforce in the form of remote workforces offers various advantages to the project delivery sector of Australia in the form of increased productivity and improved performance of the workers of the sectors but they are also bound to create several problems for the service delivery sector in the future. The remote working facility offered by the project delivery sector to its employees though provides freedom to the employees to work accordingly from any location and also aims to improve the work life balance of the employees it creates problem for the company to establish a strong organizational culture within the company and to facilitate team co-ordination among the various teams of the company. According to Mohammad and Md (2014) the remote working facility offers the employees of the project delivery sector to work in their comfort zones in order to achieve project deliverables but it is bound to create problems for the project delivery sector as at times it requires the employees to come out of their comfort zone in order to accomplish certain project deliverables. The remote working facility also decreases the communication and coordination among the employees of the project delivery sector companies as they do not remain in close contact with each other which harms the team dynamics as the employees of a particular team do not remain aware about the strength and weaknesses of each member of the team and therefore it is bound to create issues regarding the effectiveness of the delivery of projects in the future. The remote working facility is also bound to create problems regarding monitoring of the employee performance by the company in the future as due to virtual communication with the employees, the management will not be able to analyse and predict problems which can affect the performances of the employees and accordingly cannot take steps to resolve those issues. Therefore though mobility in the workforce in the form of remote working offers certain advantages to the project delivery sector currently, it is bound to create problems for the sector in the near future.
Technological Factors
Rising cost of big data analytics-As opined by Mohabeer, Mohammad and Roopesh (2018) the project delivery sector uses big data in order to gain effective insights and trends regarding the behaviour of their clients and therefore the proper gathering, categorizing and analysis of big data plays a major role in the project delivery sector. In this context it is very important to note that companies belonging to the project delivery sector should develop high quality and high capacity intranet connections in order to exchange relevant and useful information with UX focussed design, in order to make the data accessible and to present the information in a convenient and user-friendly manner across all the levels of a company which involves high costs which in turn increases the operational costs of a company. Therefore in order to enjoy the advantages which are associated with utilizing big data analytics, a company belonging to the project delivery sector must be able to bear the costs which is associated with the implementation of big data analytics in the company by designing their operations effectively otherwise it can result in financial losses for the company.
Generational shift- The near future will experience the retirement of baby boomers generation and filling of vacant positions by the born digital generation which will result in un-avoidable shift in the dynamics of the companies belonging to the project delivery sector and the companies will also experience a change in the company culture. Therefore it is very important for the companies to manage the change in an effective manner otherwise it will lead to disruption of the operations of the company. As opined by Blixt and Kirytopoulos (2017) as the mode of working of the baby boomer generation and the born digital generation differs a lot, every company belonging to the project delivery sector is about to experience a variety of problems regarding facilitating co-ordination among the workforce of the companies which will result in various organizational problems. The generational shift which every company belonging to the project delivery sector is about to experience in the near future will lead to disruption of the organizational culture due to the differences in the mind-set and skill-level of the various generations of the workforce and therefore companies must come up with effective and innovative strategies in order to maintain their organizational culture and to embrace the generational shift in an efficient manner. As the demands of the new generation regarding communication modes, work-life balance and mobility are different from the baby boomer generations, therefore companies will face problems regarding providing the ideal environment to the new generation and therefore they too need to adapt effective change management strategies in order to mitigate such problems.
Conclusion
From the above report it is clear and evident that though the current external environment of Australia facilitates the growth and development of the project delivery sector across Australia owing to a variety of factors but the project delivery sector will be experiencing various problematic trends in the near future which could change the scenario of the project delivery sector. As such it is very important for the companies belonging to the project delivery sector to adopt preventive measures against the above identified problematic trends otherwise these could disrupt the profitability and progress of the sector.
Environmental Factors
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