Individual essay
fffinal
sampleindividualreport12.pdf
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Essay title:
Green Project Management:
Challenges and Opportunities.
Full name:
Registration number:
Programme:
MSc Innovation & Marketing Management
Course (class registrar):
EF 931 (David Butler)
Date of submission:
05.12.2018
Word count (excluding
cover page and reference
list)
132 (Abstract)
2334 Main Document)
Turnitin Check:
0%, ID: 96137978
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ABSTRACT
The purpose of this report is to explore the challenges and opportunities presented
by Green Project Management (GPM) . Initially, this report looks into the and the defi-
nition of GPM . The report then looks into some of the challenges associated with
GPM and then proceeds to examine potential opportunities. The challenges and op-
portunities are looked at with regards to the construction industry. The report finds
that while there are many, namely in terms of cost and complexity, there are signifi-
cant opportunities offered which in the long run are likely to outweigh the initial chal-
lenges, in terms of cost but also, increasingly appears that as concerns for sustaina-
bility grow, more and more countries will begin to implement Green policies, meaning
GPM could become a business imperative.
Keywords Green Project Management, Sustainability, Green Construction
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Table of Contents
1 INTRODUCTION ......................................................................................................................................... 4
2 CHALLENGES OF GREEN PROJECT MANAGEMENT ........................................................................ 6
2.1 HIGHER COSTS ............................................................................................................................................. 6
2.2 PROJECT RISK .............................................................................................................................................. 6
2.3 TECHNICAL DIFFICULTY .............................................................................................................................. 6
2.4 LENGTHY APPROVAL PROCESS FOR RECYCLED MATERIALS AND GREEN TECHNOLOGIES ....................... 7
2.5 LACK OF EFFECTIVE COMMUNICATION ...................................................................................................... 7
2.6 TIME REQUIRED TO IMPLEMENT GREEN PRACTICES ................................................................................. 7
2.7 COMPLEX LEGISLATION ............................................................................................................................... 7
3 OPPORTUNITIES ........................................................................................................................................ 9
3.1 ECONOMIC BENEFITS .................................................................................................................................. 9
3.2 LEGISLATIONS AND REGULATION .............................................................................................................. 9
3.3 GOVERNMENT INCENTIVES ...................................................................................................................... 10
3.4 IMPROVED RISK MANAGEMENT .............................................................................................................. 10
4 CONCLUSION ............................................................................................................................................ 11
5 BIBLIOGRAPHY ....................................................................................................................................... 12
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1 INTRODUCTION
The earth’s resources are limited and are at risk of running out if consumption continues at a
rapid pace. One of the reasons cited for reason for adopting a more sustainable approach to
project management is to satisfy present day needs without jeopardizing those of future gen-
erations. (Al-Tekreeti, 2016). It has become an imperative that we develop a more sustaina-
ble approach to managing our resources and environmental sustainability has become in-
creasingly important for both society, and business with changing customer demands and
the tightening of regulatory requirements. Investors and shareholders prefer to invest in so-
cially responsible firms, and companies that include sustainability in their operations are also
favoured by government and communities. In fact, Chou et al go as far as to say that an en-
vironmentally orientated strategy is of ultimate importance for sustainable corporate success,
helping a firm to gain in terms of legitimacy, competitiveness, and economic performance
(Chou, 2017) states that Project management the process that helps businesses and organi-
zations plan their resources with the purpose of achieving organizational goals (Itegi, 2015).
According to (Maltzman & Shirley, 2010) projects are where the business goals become real-
ity, they coined the term ‘Greenality” to describe “the degree to which an organization has
considered environmental (green) factors that affect its projects during the entire project life
cycle and beyond.” Therefore, the application GPM is one of the key’s in which a company
may reach sustainability goals, helping to ensure the sustainability of a project, and tackle is-
sues that arise (Al-Tekreeti, 2016).
Project success in usually measured in terms of three criteria - cost, quality and time. These
three performance indicators create the Iron Triangle” of project management (shown in fig-
ure 1). The theory behind this, is to enhance performance, firms need to reduce costs, mini-
mise project duration and improve quality (Atkinson, 1999). In the case of GPM, the object is
“greenthink” is incorporated into every project stage and all decisions take environmental im-
pact into account. GPM does not mean that every decision made is necessarily rhe most en-
vironmentally friendly, but the environmental impact is considered and not ignored (Mochal &
Krasnoff, 2008).
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Much of the research looking at GPM focuses on the construction industry. It is estimated
that buildings (commercial and residential) are responsible for around 20-40% of the world’s
total energy consumption. (Perez-Lombard L, 2008) Green features have increasingly been
integrated into construction plans around the world and in the case of Singapore for instance,
sustainable development is now a national priority (Hwang, 2012).
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2 CHALLENGES OF GREEN PROJECT MANAGEMENT
Green Project Management presents many challenges to Atkinsons (1999) cost, quality (and
time triangle, as from a technical perspective GPM inherently different to traditional PM
(Sharma, 2011).
2.1 Higher Costs
There is a widespread belief that building green is much more expensive (Kats, 2003), and
the cost of capital on green projects is usually between 1-25% higher (Tagaza , et al, 2004)
Green building design is also more complex, resulting in in higher modelling costs (Zhang, et
al., 2011). Hwang et al studied the challenges and obstacles faced by green building pro-
jects in Singapore. Their research showed that cost was also a significant obstacle to GPM
(Hwang, 2012). Green technologies and green materials are usually more expensive- , for
example, compressed wheat board costs about ten times as much as plywood (Hwang , et
al, 2010). Higher costs directly impact PM’s, tasked with keeping projects within budget. Es-
pecially in green construction, when the budget may be pre-allocated (Ling, 2003). 45% of
companies also said that budget challenges were one of the main impediments to imple-
menting more sustainable initiatives. (LaBrosse, 2010).
2.2 Project Risk
Project delivery determines the success of green design development, and it is imperative
that details of green design is incorporated into the wording of green project contracts. Ac-
cording to Tagaza and Wilson, if the design is fixed before the sustainable aspects are fully
developed this will result in huge problems (Tagaza & Wilson, 2004). Late incorporation of
green features and initiatives in projects, will increase the overall project cost, will cause sig-
nificant challenges for PM’s (Hwang & Tan, 2010).
2.3 Technical difficulty
Green technologies often require complex construction processed and techniques (Zhang, et
al., 2011). This has implications for the performance of a PM who must focus on these com-
plexities. Technical difficulties are one of the main barriers to green construction (Tagaza &
Wilson, 2004). Design complexity in green projects, compared with more conventional pro-
jects are often cited as a challenge as the alternative systems and materials are evaluated,
making the design process more complicated (Hwang & Tan, 2010).
The complexity and difference of green technology present far more of a challenge when
compared to more conventional types. A lack of familiarity with green technologies creates
further challenges. Studies have recognised that green technologies create certain barriers
for developers, contractors and clients. It is hypothesised that this is due to a lack of familiar-
ity with the systems, designs, materials or products, and a lack of technical expertise (Zhang,
et al., 2011). The challenge for PM’s stems from the fact that a project is to be delivered to a
level of performance specified by the client, and performance outcomes are directly impacted
by unfamiliarity with the performance of green technologies (Hasan, 2016). A competent PM
is vital and 34% to 47% of project success is directly influenced by PM’s (Hwang & NG,
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2013), highlighting the challenges associated with finding PM’s with sufficient skills to man-
age green projects.
2.4 Lengthy approval process for recycled materials and green technologies
The time it takes for approvals of recycled materials and new green technologies presents
another challenge for PM’s, who must deliver projects within a schedule and also need to
factor in payments for both vendors and suppliers in their schedule. This is more of a chal-
lenge in green projects as the planning process can often be prolonged (Hasan, 2016).
2.5 Lack of Effective Communication
One of the most common challenges in a construction project is lack of effective communica-
tion, needed to effectively contain costs. The PM typically handles a large team, including
suppliers and subcontractors. Green projects typically require a larger team in order to be
successful. Effective communication is even more important in this case in order to gain their
sustainable practice. Therefore, the interest of the team members is a top priority. For in-
stance, Tagaza & Wilson found that enthusiasm for separating waste material in recycling
skips between subcontractors had dissipated throughout a project, leading to a mix of materi-
als in skips (Tagaza & Wilson, 2004). Sharma (2011), argues that in order to bridge the gap
between communication and technology, which can occur more easily in a green (building)
project, more training programs should be launched, noting an accreditation program
launched by USGBC to certify and train professionals in Leadership in Energy and Environ-
mental Design (LEED) standards (Sharma, 2011)1.
2.6 Time required to implement green practices
In construction, green practices can take more time to implement. In the case of on-site sus-
tainable practices implementation, PM’s are required make random checks and visits
(Tagaza & Wilson, 2004). This often leads to green projects becoming more time consuming.
2.7 Complex legislation
Complex legislation and increasingly complicated regulations make it difficult for developers
when they evaluate the cost of complying (Hwang, 2012) if environmental certification is a
goal, this may entail extensive documentation and reporting (Sharma, 2011).
A lack of information, with regards to green products and sustainable building systems also
drives up costs, as developers are forced to consult with specialists at a fee. It is imperative
that the developer have the correct information, or otherwise they risk losing certification or
incurring the high costs of correcting issues with products which do not meet the standards
(Hwang, 2012).
1 LEED -is a certification program which sets a standard and measures the sustainability in construction
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In order to minimise risk and increase the likelihood of delivering the project on time and
within budget for Green construction and sustainable development , there needs to be ad-
justments to traditional project management approach. According to Sharma (2011), these
adjustments reflect the need for coordination access disciplines and on-site selection
(Sharma, 2011). In this view, achieving a truly sustainable model in the construction industry
will require a paradigm shift, in which sustainability is considered at all phases of a projects
life cycle. For those who make the project decisions- PM’s, will need to make decisions with
sustainability as an objective and evaluate both the long term and short-term impact to the
environment.
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3 OPPORTUNITIES
Though the challenges of implementing GPM are significant, it is becoming increasingly im-
portant that organisations are aware of their impact on the environment. A display of environ-
mental sensitivity is becoming a business imperative, a 2009 story in Environmental Leader
found that going green is a “must-have” for the organisations surveyed. Companies who em-
brace GPM will gain a competitive edge (LaBrosse, 2010).
3.1 Economic Benefits
While much attention is paid to the environmental benefits, there are also business and eco-
nomic opportunities in GPM. In fact, research shows that the decision for a developer to go
green is often rooted in financial viability (Sharma, 2011). Gluch et al. (2009), discuss how
organisations are able to improve performance by focusing on three predictors of green ad-
vantage; acquisition, assimilation and transformation. There are also savings in the form of
savings in energy and water costs, waste reductions and a decrease in costs in operation
and maintenance. The increasing prices in oil and natural gas resources also presents many
economic opportunities as the energy savings associated with green building each year in-
creases the building value (Hwang, 2012). Sharma points to a survey by McGraw-Hill Con-
struction (2006), which showed that the top reason for building green was to reduce energy
costs, according to 54% of respondents, compared to only 24% respondents who cited that
environmental value was a key driver. Although the higher initial cost was named as an ob-
stacle, this may be recovered through cost savings in operations and maintenance over the
long term (Sharma, 2011).
For instance, savings on operating costs can be as much as 8-9%, while the potential for an
increase occupancy rates is 3.5% (Sharma, 2011). Green buildings also boast a higher
building value of 7–8%, leading to a growing interest in green buildings in the building indus-
try (Venkataraman, 2018). This has clear potential opportunities for green projects however,
the operational savings may not be hugely important to a potential developer who does not
have long term interest in leasing or operating a building. Therefore, PM’s must develop a
strategy to manage costs during the early project stages (Sharma, 2011).
3.2 Legislations and Regulation
The increasing awareness of sustainable issues has seen the implementation of legislation
which governs environmental issues, including the construction industry. Green development
plans by the BCA have been endorsed by experts in sustainability and in Singapore, build-
ings must meet a minimum standard for environment sustainability according to legislation
(BCA, 2008). There are also huge efforts being made in the hope to certify 80% of buildings
by 2030. Green Mark certified buildings have also seen a dramatic increase from 130 to 250
between 2007 and 2008 (Hwang, 2012). Given the current social climate, it is this type of leg-
islation will become more widespread and presents huge opportunities for GPM practice.
(Hwang, 2012).Therefore, the importance of green building management is expected to grow
over time.
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3.3 Government Incentives
Hwang et al. found there are also potential opportunities for GPM to be advanced in the form
of government incentives, which they recommended are widened to include the usage of
green products and technologies and help with the cost-related problems of implanting green
PM (Hwang, 2012). Incentives can take different forms, for instance in the United States,
New York state offer tax credit for green buildings depending on the size and LEED Certifica-
tion. In Singapore, green buildings can receive an incentive of $3 000 000 depending on the
‘level of green mark’ (Hwang, 2012).
3.4 Improved Risk Management
GPM also has the potential for risk management advantages. Adoption of sustainable prac-
tices in construction, re-suing materials for instance, can help to reduce liability in terms of
waste disposal and help to reduce the likelihood of future lawsuits related to non-compliance
of sustainability regulation (Hwang, 2012).
The increasing public awareness of environmental issues, such as global warming also pre-
sents huge opportunities, and according to Yudelson (2008) Green properties now generate
faster sales and leases in comparison to other building units (Hwang, 2012).
This also reduces financial risk (cited as a potential barrier). The faster sales and leasing of
green buildings means that developers could be in a better financial position to pay off loans.
Thus, there is potential for a reduction in accumulated interest and greater profits (Hwang,
2012).
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4 CONCLUSION
The implementation of GPM does pose significant challenges, namely in terms of higher
costs and increased complexity in quality control, which can have implications for scheduling.
However, there is a rise international concern for environmental causes and sustainable de-
velopment is becoming increasingly prioritised for governments, organisations and wider so-
ciety, including consumers. Thus, there are numerous opportunities for GPM to carry out
sustainability goals set by organisations, government legislation and consumer demand.
Government incentives and the potential for cost savings in the long run, as well as the po-
tential for a price increase in green developments, means that the opportunities offered by
GPM can overcome, or at least offset most of the challenges that it poses to organisations
and PMs. With governments pledging more and more sustainability initiatives, GPM is likely
to become a business imperative as organisations will be forced to comply with pressure
from the governments and also consumers. Organisations that learn to navigate some of the
challenges early will see far greater benefit in the long run. However, that does not mean to
say that these challenges are necessarily overcome. There will need to be more exploration
and more research into best practice in order to for GPM to truly realise its potential.
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5 BIBLIOGRAPHY
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