Projects are set up as functions within a bigger organization for the undertaking of specific goals, objectives and targets. These projects are established to successfully carry out their respective purposes. Thus, the right people are recruited, hired and then assigned to work together for accomplishing their common mission, which should be positively clear to them from the very start of the project.
While putting the plans and strategies of the project in place, the project environment has to be looked into for possible hitches that just might cause the project to fail. Such setbacks that might occur in the project environment should be countered by the strategies that will be implemented.
The project environment is made up of various factors, both internal and external. These factors can be controllable, influenceable or uncontrollable for the project management. Each of these factors should be thoroughly scrutinized, thereby knowing the strengths, weaknesses, opportunities and threats that they will give rise to. The identified advantages of the project are best maximized to get optimum results. The disadvantages, on the other hand, should be addressed promptly to remove obstacles that would get in the way of the success of the project. Having done all these, the project should turn out to be well-planned, well-organized, smooth-sailing and profitable.
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This paper aims to cover in detail the project environment and the factors that generally influence it. Studying these factors is an effective way to confidently ensure that all possible concerns and issues of the project and its team members will be properly foreseen and handled.
II. The Project Environment
Project environment comprises the systems, forces, rules, regulations, and people – the company’s top executives, the project manager, the project team members working on the project and those belonging to other groups within the company, and then the people representing the public and private entities that the project team will have to deal with in the course of working on their project.
The most commonly used approach in analyzing project environment requires the proper identification of the factors that influence the internal and external environments of a project. This is done to determine the threats and weaknesses that the project and the company as a whole will have to deal with. A keen analysis of these factors will further produce the mechanisms that the project manager and the company management should establish to remedy the existing threats and weaknesses that might lead to the failure of the project.
It would equally be beneficial for the project manager to as well take note of prevailing the opportunities and strengths of the project. These positive issues ought to be continually harnessed so as to tap more opportunities and to further develop the strengths of the project.
Each project operates within both an internal and an external environment. There will always be the external environment to belong to because no project exists entirely on its own. Each project forms part of a larger system – whether it is a market niche or a specific society – that has other entities and elements in it. Thus, the external environment of a project includes people such as the its clients, suppliers, competitors, government regulatory agencies, public pressure groups as stakeholders, and then factors such as the prevailing foreign exchange rates, inflation, the GDP and GNP growth rates, and the possibility of the occurrence of natural disasters.
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The project’s internal environment, meanwhile, encompasses all aspects that pertain to the project directly and that exist within the boundaries of the organization undertaking the project. They include the design of the work plan and schedule for a specific project, the people involved in the project and the culture established therein, and the corporate organization that launched the project.  Needless to say, it is important to know that the company’s vision, mission, objectives and strategies as a whole are in accord with those of all its individual projects. Otherwise, confusion and division among the people in the organization will set in, and this absence of unity will eventually cripple the organization and trigger the failure of its projects.
This move to analyze project environment and its factors has brought on breakthroughs in the field of project management. Various models were conceived to provide project managers the needed tools for analyzing the environment using mathematical and systematic approaches.
One such approach is to apply the universal “input-process-output layout” which then presents the project as a series of processes that transform the raw materials or inputs into finished goods or outputs, whether they are products or services. The identified environmental aspects – both the favorable and the unfavorable ones – are factored in based on the weights or degrees of influence assigned to them. The resulting constraints then serve as additional inputs for computing the overall project performance. This second approach underscores the efficiency of making informed decisions based on an objective approach. It further establishes the need of the project manager and his team to regularly be in the know as to the recent events and developments that affect the environment. Being in touch with the current trends will enable them to maintain the accuracy of the results generated by the “input-process-output layout program.” 
The third approach uses the prevailing degree of control in analyzing project environment. This approach divides the environment into three levels: the controllable level, the influenceable level and the uncontrollable level.
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The controllable level pertains to the project itself and the environment factors therein which are basically under the administration of the project manager. This level, therefore, covers matters and resources that are totally at the behest of management, such as the selection of the crew and the choice of sub-contractors for outsourcing certain parts of the project. Meanwhile, the influenceable level pertains to environmental factors that are not within the sphere of control of the project management. This level, instead, allows the project management to wield only some influence on the making of decisions affecting the project.
The real decision makers in this level are the government authorities who enforce the upheld laws and regulations and other entities such as the suppliers. In this scenario, the project management can only take steps to gradually win the authorities, lawmakers and suppliers to their side and then convince them to make moves in favor of the project. The third level is the uncontrollable level, which leaves the project management with a total lack of control over environment factors. This level classifies the occurrence of natural calamities like destructive earthquakes and floods and the erratic fluctuations in the currency and the stock markets.
Based on these descriptions, it can be noted that the controllable level generally covers the internal environment factors of a project, while the influenceable and the uncontrollable levels cover the external environment factors.
Thus, present-day project managers are equipped with valuable knowledge on detecting risks that accompany environmental factors. Thanks to the formulated approaches, early detection of these risks has become doable and effective management of projects has become methodical.
III. Critical Project Factors
Several studies have sought to examine the incidence of project failure, the things that cause them, the solutions for dealing with such causes at the onset, and if possible, the ways to seek immunity from project failures. This should not be surprising since, after all, organizations aim to achieve the vision, mission and goals that they have set out for. These targets all spell success, growth, profits, additional opportunities, and better things for everybody in the organization. Failure, therefore, has to be avoided at all costs and probable causes of failure have to be analyzed and dealt with as soon as they take shape anywhere within the organization.
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One study was conducted by Cetreline Solutions, a project management institute education provider, which presents the following as the 10 major causes of project failure: a) Lack of change management; b) Poor communications; c) Inadequate resources; d) Poorly defined requirements; e) Inaccurate estimates; f) Poor risk management; g) Poorly defined deliverables; h) Over-optimism; i) No time for project management; and, j) Improved project management skills set needed. 
Based on this study, then, the most common causes of project failure happen to be internal environment factors, and they all belong to the controllable level of the environment. It is fortunate, then, that the most common causes of project failure are things that the project management can decide to do something about. They are workable issues that the project management can act on so that they will never have to be encountered throughout the project duration. Should any one of them turn up any time, the measures to put an end to it are within reach.
Meanwhile, the French computer manufacturer and systems integrator, BULL, contracted a research company in 1998 to do a survey that will identify major causes of failure.
The results of the of the Bull survey were consistent with those of the Cetreline Solutions study. Of the twelve (12) major causes identified by this survey, only three (3) of them pertained to an external environment factor – the supplier – and these three ranked 9th, 10th and 12th only. This is to say that the vast majority of the cases of failure, based on this survey, were internal environment factors.