How project management can overcome Brexit uncertainty
by Adam Ripley and Dr. Ray Nulty / 11/1/2018 1:28:32 PM
Adam Ripley, Director of P2 Consulting and Dr. Ray Nulty, founder of Brexit Partners discuss the trials and tribulations of Brexit and how project management might be best placed to save the day…
In the UK, uncertainty is the order of the day. Ever since the referendum was held on 23 June 2016, the business world has been in a tailspin about what the repercussions will be. And tailspin wasn’t always the case - at the start, it was more of a paralysis. No one knew what the Government was doing about Brexit, what their competitors were doing, what they were doing – and so they did very little or nothing at all.
The UK Government entered the Brexit process without a sufficiently thought through vision and understanding of its impacts and complexity. Furthermore, the UK has become hostage to the challenging demands of the two-year Article 50 timeline. Regulators across Europe are telling firms to prepare contingency plans for a no deal or a hard Brexit in recognition of the political difficulties associated with the negotiation process.
Today, with the sand in the egg timer rapidly running out, and our inexorable march towards the March 2019 deadline for the UK’s actual exit from the European Union, few organisations are on the front foot about putting the appropriate measures in place to ensure the transition works for them. Irrespective of one’s political views on Brexit, it is happening, and organisations must be prepared.
It’s not going to be easy. Our country joined the EEC – as it was then – on 1 January 1973. And since then, years and years of effort has been spent on harmonising standards, creating regulatory frameworks, integrating markets and creating cross border supply chains. And now we might have to spend just as long unravelling it. We now have to make sense of a veritable ‘noodle soup’ of legislation, trade agreements, compliance regulation and financial standards.
First of all, it is useful to outline some of the challenges that lie ahead for corporates once we have departed the European Union. Of course, it can also depend on factors such as the sector businesses operate in, how much currency exposure they might have, how much they rely on international trade and where they source their labour. Some of the main challenges include:
- Supply chains: the premise of the EU is that we have been able to depend on trade agreements that allow free movement of labour, goods, services and capital. The uncertainty of the situation isn’t helpful – despite some potential concessions on timing proposed by the UK Government, we still have no clarification on what will happen to the custom’s union, whether we will have a hard or soft Brexit. But that uncertainty doesn’t mean companies should put their heads in the sand. What they need to do is start planning for a scenario where these trade agreements are very different. The issue is nothing will be agreed until everything is agreed.
- Regulatory frameworks: again, we have no idea what the regulatory landscape post Brexit will look like. It is thought – in the financial world – that the FCA and PRA will adopt much of the regulation that has been driven out of the EU. But that’s not a given. There are still concerns that UK supervisors might gold plate future regulation and also concerns that there is no parliamentary oversight of supervisors in the UK. With the amount of regulation that faces financial firms anyway, the thought of yet further layers of regulation leaves most institutions in a cold sweat. It’s no secret that many financial firms are scoping out the possibility of moving their European headquarters out of London to more of a Euro friendly city such as Frankfurt or Paris. Again, regulation is a consideration for any business in any regulated industry post Brexit and firms have to plan for different scenarios.
- Currency exposure: in the period directly after the referendum, sterling bombed by over 20%. There could be further volatility following our departure from the EU depending on the success of the negotiations running up to D-Day. This obviously has massive implications for UK PLC – if companies export large amounts of raw materials or other goods in to the UK, it will have a negative impact. For those exporting goods, all of a sudden their wares are more commercially viable on foreign markets so could have a positive impact. For foreign investors, UK businesses are more attractive and could become takeover targets, and M&A could start to burgeon. So where potential currency depreciation is concerned, there are lots of implications for UK businesses.
Of course, these are just a few – although some of the most important – areas that companies have to consider in the countdown to Brexit. But what is clear is that time is running out and organisations have to start preparing and putting contingency plans in place. We are finding that organisations, especially smaller organisations, are confused and are delaying plans until they have more concrete planning parameters.
In this world of uncertainty, one thing that is certain is the vital role of project management in helping organisations prepare for Brexit. So how can project managers anticipate and plan for the unexpected, the unforeseen and dynamic nature of Brexit? What are project managers to do when their organisations find it virtually impossible to translate Brexit negotiation rhetoric into strategic, business model and operating model impacts and requirements? Here are some of the key considerations for project managers approaching the Brexit conundrum.
- Impact assessments: project managers must oversee the development of scenario plans, impact assessments, Brexit strategies and contingency plans. Decisions also need to be made on existing inflight programmes – this could be a regulatory initiative, a new digital programme or a restructuring of the business. Should these programmes be curtailed, brought forward or integrated with Brexit plans? No stone should be unturned in the impact assessment phase.
- Holistic Brexit Planning: a vital phase of any organisation’s Brexit strategy is the planning stage. But planning needs to be holistic – it needs to go beyond internal operations and include the customer, supply chain and partner ecosystem. Many critical dependencies may lie outside your control. Preparation may be dependent upon third party readiness as much as internal factors. For example, the current shortage of certain technical skills in the UK and the potential that fewer contractors from the EU may be available in the future, could jeopardise project success or negatively impact budgets.
- Specific Brexit tools: project managers also need to be aware of proprietary Brexit methodologies and tools. Software providers such as Shapecast and Soluxr have developed tools, which address the full Brexit life cycle, are founded upon solid risk management principles and provide the flexibility and agility to respond quickly to the dynamic environment as it unfolds across an organisation’s entire business ecosystem.
- Portfolio scenarios based on different risk profiles: for project managers it is essential to get a handle on the different Brexit risks facing an organisation and to what extent those risks might impact the business. It is also important to gauge any potential upside from Brexit and any opportunities or competitive edge that organisations might achieve. Having a clear idea of all potential outcomes, will allow project managers to model different portfolio scenarios and how they might be executed.
There is so much conjecture about Brexit. And no one knows for certain what the outcome will be. But what organisations have to be mindful of is that it could well present them with opportunities, as well as risks. At such a significant moment of change in the country’s economic, social and political status, being on the front foot is essential to any company’s future. What is exciting is that project management will have a starring role.
Firms need to approach Brexit as a transformational change and use it as an opportunity to future proof their organisations. It is vital they move swiftly to get a 360-degree view of the challenges and put measures in place to mitigate any risks. UK corporates require clarity as to the consequences of Brexit, but one thing for certain is that it signals significant change. All organisations need to focus on what that change means for them and put the right checks and balances in place.