People, Planet, Profits & Projects

Well, at least be aware of them.  Read on to understand.  One of the pleasures of writing books on different topics (or at least different within the field of project management) is to find unusual connections between them.  I recently had the pleasure of collaborating with Loredana Abramo, PMP on the new book, Bridging the PM Competency Gap.  One of the things on which we focus in this book is the role that generational differences plays in the way that people gain knowledge.  In turn, this required us to dig in and find out what drives Millennials.  In one of the tables of the book, we look at Motivating and Enabling Factors, Deterring and Blocking Factors, and Engagement Strategies.  One of the Motivating Factors was ‘strong ethical leaders’.  And that is the connection from the Bridging the Gap book to the books on sustainability in PM (Green Project Management and Driving Project, Program, and Portfolio Success) and indeed to this blog.

Today’s post is about how Millennials are driving change to the way that wealth is invested, with their propensity to insist that ethics, and along with it, social, economic, and ecological bottom lines are considered and balanced.  By the way, let’s not ignore Millennials.  Why?  Their spending power is estimated at US$170B per year.  I highly recommend that you spend a moment looking at this infographic (in small form here, linked to a larger size image for your convenience).

This is why a small story in The Economist’s most recent issue caught my eye.  It’s called Generation SRI and the subtitle is “Sustainable Investing Joins the Mainstream”.  SRI is “Socially Responsible Investing”.

From the article:

Fans of “socially responsible investment” (SRI) hope that millennials, the generation born in the 1980s and 1990s, will drag these concepts into the investment mainstream. SRI is a broad-brush term, that can be used to cover everything from divestment from companies seen as doing harm, to limiting investment to companies that do measurable good (impact investing). The US Forum for Sustainable and Responsible Investment, a lobby group, estimates that more than a fifth ($8.7trn) of the funds under professional management in America is screened on SRI criteria, broadly defined, up from a ninth in 2012 (see chart).

The numbers are hard to ignore. 

From the Green Money Journal:

Sustainable, responsible and impact investing assets now account for $8.72 trillion, or one in five dollars invested under professional management in the United States according to the US SIF Foundation’s biennial Report on US Sustainable, Responsible and Impact Investing Trends 2016 which was released in mid-November 2016.  See chart below:

According to a survey in America by Morgan Stanley, 75% (of Millennials) agreed that their investments could influence climate change, compared with 58% of the overall population. They not only believe in the triple bottom line, they have confidence that they can be change agents.  They are also twice as likely as investors in general to check product packaging or invest in companies that espouse social or environmental objectives.

The Economist article cautions us that we can’t fool Millennials.  They have too much savvy, and their’s too much data available to them (and they know how to use it) to ‘greenwash’ this group.  From the article: “money managers who pay only lip-service to SRI are unlikely to get away with it for long: sooner or later the robots and millennials are bound to call them out”.  And there is the rationale for the title of this blog post.

Let’s get back to the Morgan Stanley survey. 

“As widespread attention to sustainability continues to increase, consumers and investors alike are now more than ever factoring sustainability issues into their investment decisions,” said Audrey Choi, Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley.

Because it’s important for us as project managers – with an increasing number of Millennial stakeholders – to understand this generation, we provide this extract from the survey.  Note the connection to long-term thinking.

•     Values Matter. Consciousness around sustainability has leapt from the consumer space to the investment space. According to the latest survey, investor attention to sustainability factors is now growing faster than that of consumers as a whole.

•     Environmental impact. Increased interest in sustainable investing occurred despite a heightened sense of market volatility, implying perhaps that in uncertain times, companies and funds with sustainable attributes may be viewed as more stable over the long run. 71% of investors polled agreed that good social, environmental and governance practices can potentially lead to higher profitability and may be better long-term investments. 

•     Focus on Customization. The poll showed a strong desire for the ability to customize sustainable investments; 80% of individual investors and 89% of Millennials are interested in sustainable investments that can be customized to meet their interests and goals.

•     Sustainable Investing in the Workplace. With Millennials projected to make up 75% of the American workforce by 2025, it’s interesting to note that nine out of ten Millennial investors (90%) expressed interest in pursuing sustainable investments as part of their 401(k) portfolios. This implies that offering sustainable investment funds as 401(k) options may be an additional way for companies to attract and retain Millennial talent in competitive job markets. 

Millennials continue to fuel growth. Nearly nine in ten Millennials surveyed (86%) are interested in sustainable investing, compared with three-quarters of individual investors overall (75%). This heightened interest is likely tied to Millennials’ strong belief that they can make a positive difference with their own investments. Related findings from the survey include:

•     Influence. 75% agree that it is possible for “my investment decisions to influence the amount of climate change caused by human activities," compared with 58% of the total individual investor population.

•     Impact. 84% agree that it is possible for “my investment decisions to create economic growth that lifts people out of poverty," compared with 79% of the total individual investor population surveyed. 

In summary, you get a feel here for the mindset of these Millennial investors, who are also project sponsors, team members, leaders, and customers.

What does this mean to project managers?  Well, if investors, who are (or should be) long-term thinkers are increasingly thinking about long-term impact, and projects are launched by investors, then by the tried and true property of transitivity, project managers should be thinking about long-term impacts as well – thinking through the project’s outcome to the benefits – and other side-effects of the project’s product in the long-term.

In Part 2, I’ll discuss the particular ‘outcome areas’ that are the focus of sustainable investment, and how you can use this information to (A) make better decisions on your own project that serve the longer term, and (B) better understand the thinking behind the investment choices made by Millennials.

You think it’s important to reduce carbon emissions?  Think again.  Sure, it is important, and whatever you believe about climate change and its causes, you hopefully agree that IF the global temperatures are rising, we want to understand it.   So, here’s a little-known fact.  The pledge at the Paris Climate Agreement to limit global temperature rise to no more than 2 degrees C above pre-industrial levels, is going to require not only emission reduction, it’s going to require removing carbon from the atmosphere. In fact, 87% of the UN’s International Panel on Climate Change models make assumptions that include ‘negative emissions’.  Wise project managers know that assumptions are the ‘seeds’ of threats and opportunities.  And that project management truth holds true here as well.

That’s right: the agreements reached in Paris, and somewhat reaffirmed in Bonn last week include assumptions.  They assume that the portfolio of programs and projects to bring down the rising global temperature includes not only initiatives which aim at emitting fewer tons of greenhouse gasses, but importantly, also projects to significantly remove vast amounts of greenhouse gasses already present.  Otherwise stated, it means we need to undo what’s been done.  And that means we’ll need to create carbon sinks.

That’s where science – and project management – will need to come to the rescue.

Take Sweden for example.  In a recent article (“Sucking up carbon”) from The Economist, Sweden’s lawmakers have passed legislation which requires no net emissions of greenhouse gasses into the atmosphere by 2045.  Even if everyone in Sweden went to fully-renewable sources of power and drove electric vehicles, they would still be emitting (adding) greenhouse gasses by virtue of (for example) use of fertilizer and from use of airplanes.  This ‘net zero’ will therefore call for the removal (subtracting) of greenhouse gasses with emergent and not-yet-invented technology.

What really makes a difference with respect to climate change is the total amount of greenhouse gas in the atmosphere.  If we need to keep the temperature stable it means staying inside a certain budget of greenhouse gasses in the atmosphere.  If we go over our budget, even with strict “spending controls”, we will need to balance that budget via extraction.  So let’s talk extraction for a moment.

As any good project manager should, let’s begin with the end in mind and understand our project objective.  In the long term, this is a gigantic impending aspiration.  The numbers are actually mind-boggling.  To take into account the aforementioned assumptions – the median IPCC model – assumes the extraction of 810 billion tons of carbon dioxide by 2100.  Stated in different terms this means “undoing” 20 years of our global emissions (taken at the current rate) by that year.

The Economist article discusses NETS (negative-emissions technologies), the generic term for techniques which serve as carbon sinks. One family of NETS is BioEnergy with Carbon Capture and Storage (BECCS), which involves power stations fueled by crops that can be burned generate energy while injecting the carbon into the ground rather than into the air.  The problem with this technology is that it is at least twice as expensive as standard power generation and it cannot produce the size of sink necessary for the large numbers in the objective.

Another technique is afforestation – the regrowth of deforested logging areas – very large areas.  It has been estimated that the area of afforestation would have to be somewhere in the range of sizes between India and Canada – up to 68% of the world’s arable land.  Clearly, this technique alone will not suffice.

The other technologies don’t yet exist, meaning the projects are in the research and development stage.  Machines designed to capture carbon dioxide from the air are problematic.  If you try to extract CO2 from a smokestack of a power plant – no problem; the concentration, there is 10%.  Try the same in the atmosphere, and although levels are indeed historically high, the concentration is only 0.04%.  Still, companies like Global Thermostat in the US, Carbon Engineering in Canada, and Climeworks of Switzerland are working on such contraptions.  Here is a video explaining what Global Thermostat is up to:

And here is one from Climeworks:

Other thinking in this area includes techniques to accelerate how the soil and natural weathering processes remove CO2 from the air.

But here’s the thing: mechanical techniques at the moment show only 40 million tons of CO2 per year.  Remember our project objective?  It was 810 billion tons by 2100.  That’s 10 billion per year.  40 million, as they say, ain’t going to cut it.

So there will need to be a wave of innovation over the next decades which focus on adding value by subtracting carbon (and other greenhouse gasses).  This will spell opportunity for large R&D as well as deployment projects, which in turn will require informed, inspired, capable project managers.  Are you ready for a challenge?  Get informed, stay informed, and get ever more curious about greenhouse gas extraction.  We’re hoping that this story provided you with a good (excuse the pun) takeaway.

For more information about the technologies involved, try these sources:

The Guardian: Startups have figured out how to remove carbon from the air. Will anyone pay them to do it?

Knowledge@Wharton – Can carbon extraction solve the climate crisis?

TED Talk - This country isn't just carbon neutral — it's carbon negative

Science Magazine – In Switzerland, a giant machine is sucking carbon directly from the air

Your blog author was recently involved in a power outage.  An overnight microburst with winds at 100 mph and higher took down a large double oak tree, which narrowly missed the house, but did end up taking down the power lines for the entire neighborhood.  The only sounds the next morning were chainsaws and the constant hum of a neighbor’s generator.  The generator-empowered neighbor offered to ‘power us all up’ and even set up a charging table for people to recharge their laptops and mobile phones.

In a way, what they did (besides demonstrating outstanding neighborly behavior) was to establish a microgrid – a small, independent area capable of providing its own power without the existing electric infrastructure.   We lost power for a week and this was a problem for us - but it's nothing compared to what many in the world live every day. This post is about the ways in which microgrid projects may make a difference in the struggle to increase the use of renewable energy, and to “power up” parts of the world (such as in Africa or currently in Puerto Rico) where not having power is not a mere inconvenience, but a matter of moment-to-moment life and death, as well as allowing economic development to advance.

From the US Department of Energy, a microgrid is a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously. To understand how a microgrid works, first understand the grid. The grid connects homes, businesses and other buildings to central power sources, which allow us to use appliances, heating/cooling systems and electronics. But this interconnectedness means that when part of the grid needs to be repaired, everyone is affected.  This is where a microgrid can help. A microgrid generally operates while connected to the grid, but importantly, it can break off and operate on its own using local energy generation in times of crisis like storms or power outages, or for other reasons.

A microgrid can be powered by distributed generators, batteries, and/or renewable resources like solar panels. Depending on how it’s fueled and how its requirements are managed, a microgrid might run indefinitely.

A recent article on this topic intrigued me, and then (perhaps because I was super-attentive to the topic) I found a flurry of recent stories about the increasing applicability of microgrids, for a wide variety of deployments and reasons.  This one caught my attention because it centers on Pittsburgh – the city singled out by US President Trump when he announced that he was exiting the Paris Climate Agreement (and is now the leader of the only country not in that agreement).  'I was elected to represent the citizens of Pittsburgh, not Paris', said President Trump.  The mayor of Pittsburgh, Bill Peduto, said in return, ‘We stand with the world, and will follow the agreement’.  That little interchange already had me focused on Pittsburgh just a little more than other cities.

From the article:

Usually, power grids rely on a far-flung network. For example, a person making toast might be drawing electricity from miles away. A microgrid is a local, independent power grid that can run without electricity from the main network.

A pilot site for microgrids is at the Pitt Ohio trucking company in nearby Harmar, Pa. Jim Maug, director of building maintenance, eagerly showed a reporter the building's green credentials last month. A wind turbine twisted near the parking lot. Solar panels tiled the roof. And in the truck bay, electric forklifts ran on batteries fueled by the renewable power.

"We're anticipating about a seven to eight-year return on investment," said Maug. The project cost about $325,000, he added.

Of course it’s not just the clearly tangible ROI that Pitt Ohio gets as a benefit.  They also have the ability to continue operations during outages, independent of the main grid.

That’s a nice-to-have.  For parts of the world, this is a must-have.  In a recent Economist magazine Special Report on Africa, there’s a segment called “Good night, gloom” which is quite eye-opening.

It starts with (excuse the pun) a jolt.

Of all the measures of (Africa’s) poverty, few are starker than that about two-thirds of its people have no access to reliable electricity.

That’s 620 million people with no access to electricity, most of them in villages and on farms.  This is not a convenience issue.  This costs lives.

In Nigeria each year an estimated 36,000 women die during pregnancy or childbirth, many because they deliver their babies in the dark in clinics such as the one in Makoko, a slum perched on stilts above a lagoon in Lagos, Nigeria’s biggest commercial city.

The article goes on to more optimistic news, luckily.  Africa has been adding renewable power via thousands of projects, at an amazing rate.  The problem (just look at a map of Africa) is geography (see map below).

…generating power is useful only if it can be sent to where it is needed, and in many parts of Africa electricity grids seldom stretch beyond big cities. Adding a house to the grid even in a compact country such as Rwanda typically costs about $2,000, which is more than the country’s average annual income per person. The APP reckons that expanding grid power across Africa to reach almost everyone would cost $63bn a year until 2030, compared with the $8bn a year that is being spent now.

So the answer, much like in Pittsburgh, is microgrids (called minigrids in the article).

Increasingly, projects are being launched to power these remote villages and farm areas with microgrids.  According to the article,

 a study by the Rockefeller Foundation in India found that when minigrids were installed in villages, small businesses increased their sales by 13% and incomes rose across the area. “If you want to drive the productive use of electricity and move people up the economic ladder, then you need a minigrid,” says Deepali Khanna of the Rockefeller Foundation. The Smart Villages Initiative, which has brought together scientists from Cambridge and Oxford Universities to get minigrids adopted more widely in poor countries, found that once smallholder farmers have electricity, they quickly adopt a range of other technologies such as irrigation pumps and smartphones to get long-term weather forecasts. “You then soon find support industries springing up to feed this higher level of economic activity in the villages, together with a general increase in well-being,” says John Holmes, a co-leader of the initiative.

However, to get this done, it’s going to take projects, project management capability, and project managers.  Have a look through this document (Click on the image below – or here to download it for free).  In it you see the need for projects of which I speak:

To achieve universal electricity access by 2030, the current pace of expansion will have to double. It is estimated that off-grid solutions will supply 50-60% of the additional generation needed to achieve universal electricity access by 2030.

It’s important work and project managers will play a key role.  I provide the following links if I have piqued your interest even a micro-amount.

https://www.npr.org/2017/11/12/563276003/pittsburghs-microgrids-technology-could-lead-the-way-for-green-energy

https://microgridknowledge.com/microgrids-businesses-institutions/

https://www.eiuperspectives.economist.com/sites/default/files/Power%20Up.pdf

https://download.schneider-electric.com/files?p_enDocType=White+Paper&p_File_Id=6794200773&p_File_Name=998-2095-03-10-17AR0_EN.pdf&p_Reference=998-2095-03-10-17AR0_EN

Photo credit: Randy Pench/The Sacramento Bee via AP

If you are familiar with the weather in California, you know that it’s been ‘variable’ to say the least.  Over the past five years, the entire state – 100% - was under drought conditions.  Then between October 2016 and February 2017, the state saw almost double the seasonal average for precipitation, causing massive evacuations due to overflowing dams and mudslides.  We can attribute this to historical alternation between dry and wet weather.  But the cycles are more intense than ever, and scientists do attribute both the increased dry and wet ‘peaks’ to climate change.

In addition to the cycles, the generally warmer temperatures are helping to melt the Sierra Nevada’s snowpack significantly (some predictions say 90%) – releasing much larger amounts of water than usual.

An amplifying aspect to the droughts and flooding is the fact that more and more people are moving into areas which are into the path of the potential floods, and are placing an increased demand on the water supply during droughts.

Although this post will focus on California in the United States, consider that the increased threat of climate change related flooding is global – affecting people in Asia living around the Himalayas, Europeans who reside near the Alps, and South American neighbors of the Andes.

So the question is: how can projects save the day?

Let’s start with the problem statement: Since there are increased ‘peaks and valleys' with respect to flooding and drought, what can be done to capture the excess water and store it for those times when the drought cycle starts?

Reservoirs are not the solution.  Given the number of dammed rivers, that just will not work.

Could aquifers be the solution?  According to an excellent article in the November, 2017 issue of Scientific American, maybe they could – but it will depend on some pretty impressive projects.

In fact, aquifers have ten times the capacity of the 1,400 reservoirs in the state.  Also, if you compare the cost of building a reservoir with storing water underground in an aquifer, the cost of adapting an aquifer is 80% less expensive.

We can think of this idea as undoing what was done over the past decades with the construction of massive dams, reservoirs, aqueducts, canals, levees, and pumps, which the article says, “changed the plumbing of the entire state and caused countless unintended consequences”.   A series of projects that are proposed in the article seek to “return, somewhat, to nature’s way”.  How would this work?  Let land flood, but in a controlled manner.   Some of the projects that were undertaken in the past did not have a very long-term view with respect to their objectives.  In fact, the article says, “Successful projects start with correcting long-term misunderstandings about basic hydrology”. 

Consider the real meaning of an aquifer. An aquifer, the lakes, streams, rivers – all of the surface water above it - are actually the same water.  So when surface water looks replenished based on recent resupply (such as the October-February period mentioned above), the aquifer is still heavily depleted from decades of pumping by farmers and municipalities.

Some solution proposals

Three ways to store surplus water are proposed in the article: Recharge Basins, Underground Water Banks, and Controlled Levee Breaks

We’ll provide one example of a project, the Oneto-Denier restoration site in the Cosumnes River Preserve.  A short project description: 750 feet of a levee (one that was built over a century by farmers to protect their farmland from flooding) was removed to help the Cosumnes River fill this part of the floodplain when waters run high. 

In winter 2016, the project got its first test.  Hydrogeologists from UC Davis set up instruments to determine what happened as a result.  It turns out that the flooding had recharged groundwater three times more than typical from normal rain and irrigation, in turn replenishing more than 2,000 acre-feet of water, and it also appears that native fish are benefiting from this type of floodplain habitat.

Read about this project directly from the UC Davis site here.

Since not many of our readers are hydrologists, we’ll stick with the main point: whatever you believe to be true about climate change, there is a need for projects, project management, and project managers, to deal with climate-related effects, and it serves us well as a discipline, and you as a career aspirant, to be familiar with the changes that are taking place and the opportunities for projects to serve as solutions, whether it’s in responding to (for example) flooding and droughts, or to work on projects that address the causes of human-induced climate change or pollution.  And remember – this is just one of the ‘lines’ of the triple bottom line.  We will continue to post about not only ecological but also economic and social aspects as well, keeping true to the theme: People, Planet, Profits, and Projects.

In Part 1 of this post, I raised the issue of, and said that we would come back around to the divergence we see between the 70% failure rate (based on “project success” – looking at the steady-state outcome) and the 25% failure rate (based on “project management success”).  You may want to go back and review Part 1 for orientation.

To help explain this major divergence in statistics, we need to revert to the very definition of a project.  Here’s what Dr. Kerzner is saying about this in his talks on “Project Management 2.0 and 3.0”.  I thank Dr. Kerzner for permission to use these images which remain his intellectual property.

Do you catch that rather non-subtle mention of sustainability?  Remember: we’re not talking in particular about saving snails or reducing our carbon footprint.  Of course, those things are part of the concept of the “triple bottom line”, made up of social, economic, and yes, ecological outcomes, but they aren’t the only part.  What Dr. Kerzner is so wisely pointing out is that a project should be concerned with ‘the beyond’ – the sustained view of the project, that is, the way in which its outcome (hopefully) starts to realize business value – in a sustained way.

How can we do this?  Don’t we have to change our view of the lifecycle of a project, expanding it to look past the end, even past what we normally consider the outcome, handover, and even past what we have come to call “Benefits Realization”?  The short and only answer, is: yes.  Yes with a capital Y.

In the figure below you can see that Dr. Kerzner has mapped out timeline that adds an important new element, “VA” – Value Analysis, paired with Benefits Realization, and calls that portion of the Investment Lifecycle “Value Determination”.  Note the name of the figure: Investment Lifecycle.  We know from the PMBOK® Guide that prior to the Project Charter, senior management of an organization “owns” the project decisions, the choice to invest at all, and in fact, is using tools like ROI, IRR, NPV, and Payback Period to determine whether or not a project is even worth the investment.  So I think it’s actually easier for project managers who have been practicing for a while to “get” these green chevrons (IG and PA in the figure).  The tougher part is to switch to a mindset in which the later green chevrons (BR and VA) are considered in project decision making.  If you want to test yourself on this, check my recent blog post “Paved With Good Intentions” – there’s a scenario in that post that challenges your PM thinking in this very area of Value Determination.

Dr. Kerzner takes this idea much further, providing even tools and techniques to help perform Value Analysis.  I provide an example below in which he proposes a scoring system to assess the project based on its deliverables (which is where most of us as PMs are trained to STOP) and also its business value.  It’s no accident that the business value (with thanks to Vilfredo Pareto) is 70% compared to the 30% for deliverables.  In our Project Management World, we see that 30% as The Whole Pizza, when, as Dr. Kerzner is coaching us, it’s just a slice.  A big slice, granted, and a slice without which there’s really no Pizza at all, but still – just a slice. 

Also, notice the symmetry here.  The very same measurements we use and acknowledge, and happy integrate without question, into the PMBOK® Guide, namely Benefit/Cost Ratio, ROI, Payback Period, are used again after the project is handed over.  In effect, we are seeing if our predictions about the project – those that we made during the selection process – are coming true.  We cannot validate this at the ribbon-cutting ceremony, we have to wait, and this is problematic for the mindset of the PM (and I know you, because I am one, and I have the same propensities) - you are saying, "OK, on to the next project, let me have at it!".  It's also a problem from a pragmatic perspective, since we have to wait, perhaps years, to know if a project is providing (harvesting) this business value.

The 70% failure rate that Dr. Kerzner is quoting uses this long-term view.  That’s the difference!  The 25% failure rate shown in the Standish studies – well, that’s using the ‘scope, time, cost’ view, with failure being considered if two of the three are not delivered. 

How do you look at your projects?  Are you focusing only on the deliverables, or are you considering what your project delivers in the steady state?  Importantly, how are you making decisions in your project?  Are you focused on the Triple Constraint, or the Triple Bottom Line?   What Dr. Kerzner is telling you (adjusted to reflect the narrative that I use) is that your focus needs to be not only on project management success, but also on project success.  And that means you should be making those decisions with harvesting value from your project in mind.

Happy Harvesting!