You would often come across the term ‘Enterprise Environmental Factors’ while studying for the PMP® exam. A project’s success is contingent upon many internal and external factors, and a project manager ought to learn them all.
So, EEF is something that you should be aware of if you’re looking to work in the project management field. Without further ado, let’s jump right in to discuss Enterprise Environmental Factors and why you should learn them.
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What is Enterprise Environmental Factors
Just as the term suggests, Enterprise Environmental Factors is everything that influences the overall performance of a project. It represents the factors that a project management team has no influence over. Therefore, it is hard to tell whether or not the impact will constrain the project’s progress or outcome.
However, in most scenarios, these factors would leave a negative impact causing the project’s feasibility to come into question. That said, there are ways for organizations to adapt to the changes and challenges that come with EEF. And so, Enterprise Environmental Factors are always taken into consideration while planning and evaluating a project.
Every project manager ought to have a thorough understanding of every internal and external factor that may affect the project to strategize better.
Organizational Process Assets vs. Enterprise Environmental Factors
Before you dive in deep to understand more about the factors of EEF, it is critical to learn how it differs from Organizational Process Assets.
OPA is often mistaken as EEF since both are inputs in almost all the processes of the PMBOK® guide. However, unlike EEF, OPA is any or all assets used to influence the success of the organization’s project.
OPA is information and data collected over time by an organization from its past projects that are now enforced in current ones to enable consistent performance. Since it is an accumulation of past data of a company, OPA is very organization-specific, as opposed to EEF. These assets include project framework, security policies, database, guidelines and policies, and many more.
Although EEF can externally or internally affect a project, OPA is always internal to an organization. While planning and strategizing, a project manager needs to design per the data received through OPA to enable consistency and EEF to mitigate constraints.
Categories of Enterprise Environmental Factors
Enterprise Environmental Factors comprise both internal and external elements that may impact the flow of an operating project of an organization. And now we will discuss them.
External Enterprise Environmental Factors
Marketplace
The marketplace is one of the most fluctuating external factors out there. It includes trends, potential competitors, brand awareness, potential buyers, and many more. And these branches tend to shift continuously, making it difficult for organizations to predict the outcome.
When you keep up with the changing marketplace and tailor the project accordingly, it affects the overall business pace and analytics and strengthens the brand image.
Political factor
Political factors playing into the disruption of individual lives and businesses are nothing new to us. Even then, most organizations fail to consider the political climate of a place before setting camp there.
For example: if you plan on expanding your business internationally, doing it with a country where there is a constant political feud might not be the best idea.
Expectations of Stakeholders
Stakeholders pay keen interest to project outcomes, and depending on their control over the organization meeting their expectations is critical.
In such scenarios, communication is the key. Organizations need to maintain healthy management with stakeholders and continuously communicate with them.
The level of customer service and company politics showcased by the project’s outcome will impress the current stakeholders and also attract new ones.
Risk appetite
This issue may also arise from the lack of communication. Often businesses fail to take into consideration the risk factor. With each project, there come risks of not meeting the demands of stakeholders or stakeholders not trusting the process enough.
In the future, businesses ought to consult with stakeholders beforehand to avoid such troubles.
Socio-cultural factor
Imagine selling pork in an Islamic country or selling fairness cream in a Black-owned economy. Sounds foolish? Because it is. The social norms and culture of the region are critical for the success of your product.
Apart from that, you need to understand the needs of your target audience and tailor the product accordingly. If your target audience is a 16-year-old, selling products that would cater to an adult will not work. Not just that, to keep your products per the stakeholders’ socio-cultural norms is equally necessary.
Government regulations
You and your organization do not have control over rules and regulations set by the government.
A government may impose certain business restrictions on a said product or its trade. In such a case, your organization needs to comply with the rules. Especially if you are planning to set foot overseas, you need to have a basic idea of the business restrictions set by the government in that country.
Contractual restrictions
Businesses are interdependent most of the time. When you’re working as an organization, you need help from suppliers and collaborators, etc.
Companies partnering up with other parties know that mishaps happen, and it is more than likely that one of the suppliers or collaborators may fail to deliver a said product. That is a situation you cannot predict. Hence it is an EEF factor.
Industry standards
Large organizations are responsible for setting standards all around the globe. For example, PMI sets standards for business analytics.
These said standards have to be met by other companies. It determines your current market value and position depending on your region. On top of that, it gives you an idea about the improvements that you need to make.
Academic research
Every organization keeps a collection of previous data and information from past projects.
When you use this database at the beginning or middle of managing a project, it gives you insight and helps you make an informed decision.
Financial factor
You need to persistently check the financial conditions of the region where you have your business.
That means meticulously checking the tax rates or currency rates, or tariffs, etc. You also need to consider these things if you’re planning on expanding your organization.
Environmental factors
Environmental factors such as floods or tsunami, or earthquakes can heavily impact your project.
That is something that differs according to geography. When you are giving this aspect enough importance, you are limiting your access to different locations. However, this lessens risks.
Commercial database
Lastly, this external factor represents the cost estimation information of the previous project of the organization. A commercial database gives you an overview of the measures you can take to increase the possibility of benchmarking success.
Internal Enterprise Environmental Factors
Culture and Administration of Organization
Organizational culture is a shared set of vision and mission of a company. Its administration, on the other hand, is hierarchical control. Both of which a project manager has no control over.
Every planning process of an organization ought to align with the culture and administration of the organization. You could use the historical data collected from previous projects as well.
Expectations of stakeholders
Expectations from stakeholders could be both internal and external factors.
Since stakeholders comprise people from inside the organization and outside, they could affect the business goals, expectations, analysis, and decisions simultaneously.
Available resources
The resources currently used by your organization are the available resources. That can be cloud computing or virtual teams or employees, or many more.
Market research
When you research your marketplace and analyze your product before release, you get the edge of making an informed decision.
One of the ways you can do research is by surveying before or after the release of a product. That helps with the analysis and planning of the project. On top of that, the results will help you tweak the last-minute decisions.
Architectural and infrastructure
Business architecture and infrastructure differ in a way where architecture is all the tangible goods and infrastructure is all the processes.
Business infrastructure helps you framework the process and its functions. Whereas business architecture helps you understand the tools and facilities of the organization. These should be taken into consideration while analyzing business processes.
Technology
Project managers often use tools to make their tasks easier. These include analytical and scheduling tools, modeling tools, and many more. Since project managers are constantly juggling in between projects, the availability of these tools affects progress.
Geographical factor
The geographical condition can also work as an internalized factor. For instance, production problems arise due to the natural calamities caused because of geographical location.
Resource policies
Communication is the key while signing contracts with suppliers. There are certain limits to what your contractors can bring to the table.
That is why it is crucial to understand their limits and plan the process accordingly. At the same time, keeping back-ups or storage options will never hurt in terms of crisis.
Security policies
Security policies concerning internal factors include customer or stakeholders’ data, the confidentiality of organizational data, and many more.
While executing a project, a project manager must adhere to the safety of the organization’s data and its clients simultaneously. These safety protocols must be mentioned to the stakeholders and clients while planning the project as well.
Financial standing
One of the crucial responsibilities of a project manager is to ensure that the project meets its budget. One way to do that is to analyze the financial data of the organization before planning the project.
Lastly, the project manager needs to ensure that the budget is stable and the project meets the organization’s revenue.
Employees expertise
Your employees are one of the internal resources who play a crucial role in the success of a project.
The level of competency of an organization’s employees is the factor that leads it to success. No matter how competent a project manager is, she has no control over the project’s outcome if the employees lack skills.
That is why you should be mindful of who you choose to be on your team.
Enterprise Environmental Factors for PMP® Professionals
So far, we’ve learned how Enterprise Environmental Factors works as a variant in every other project.
When you’re studying for PMP®, there are several topics that you need to cover. You must have a thorough understanding of calculating VAC, BAC, and EAC. And learning Enterprise Environmental factors help with predicting a budget and adjusting it along the way.
Not just that, it assists you in retrieving the data from previous projects and using it as needed. A project manager needs to be on their toes at all times while keeping all the variable factors in check. Once you get good at that, meeting deadlines and expectations while maintaining a budget becomes a piece of cake.
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Final Words
Enterprise Environmental Factors can be an intimidating topic for any aspiring project manager. However, learning EEF is unavoidable for anyone willing to sit for PMP®. With the right amount of practice, you can get a grasp of this concept in no time.