Project Smart ~ Exploring trends and developments in project management today

Calendar iconNot recorded
Adobe PDF icon

PEST Analysis

~ By Duncan Haughey

PEST analysis on a blackboard with colour sticky notes and white chalk handwriting

PEST is a strategic planning tool used to evaluate the impact political, economic, social, and technological factors might have on a project. It involves an organisation considering the external environment before starting a project.

The PEST analysis is an important part of the project planning process:

  • Political factors include areas such as tax policy, employment laws, environmental regulation, trade restrictions and tariffs and political stability.
  • Economic factors are economic growth, interest rates, exchange rates and inflation rate.
  • Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.
  • Technological factors look at elements such as R&D activity, automation, technology incentives and the rate of technological change.

Use the following grid to record each factor:

State Project Objective:
PoliticalEconomic
Political stabilityState of the economy
Tax lawInterest rates
Employment lawExchange rates
Trade restrictions and tariffsInflation rate
Environmental regulationsTaxation
SocialTechnological
Role of men and women in societyRate of technological change
Division of wealth in societyAutomation
Health and safetyInnovation
Population growth rateRecent technological developments

Advantages of PEST

  • Straightforward and only costs time to do.
  • Provides an understanding of the wider business environment.
  • Encourages the development of strategic thinking.
  • May raise awareness of threats to a project.
  • Can help an organisation to anticipate future difficulties and take action to avoid or minimise their effect.
  • Can help an organisation to identify and exploit opportunities.

Disadvantages of PEST

  • Usually, a simple list and not critically presented.
  • The rapid pace of change in society makes it increasingly difficult to anticipate developments that may affect an organisation in the future.
  • Collecting large amounts of information may make it difficult to see the wood for the trees and lead to 'paralysis by analysis'.
  • Basing the analysis on assumptions that may prove to be unfounded.
  • PEST analysis only covers the external environment and the results need considering alongside other factors, such as the organisation itself, competitors and the industry in which it is working.

Comments

Be the first to comment on this article.

Add a comment



(never displayed)



 
2000
Type the numbers for two hundred thirty-one.
Notify me of new comments via email.
Remember my form inputs on this computer.

10 Golden Rules of Project Risk Management

Three red dice reading: Manage your risk

The benefits of risk management in projects are huge. You can gain a lot of money if you deal with uncertain project events in a proactive manner.

The Art of Project Scheduling

Project plan and schedule

The art of project scheduling is based on experience and the more experience you have, the more accurate your schedule will be.

Belbin and Successful Project Teams

Business team brainstorming using coloured labels on an office table

Creating successful project teams is a daunting task for project leaders. A good method for matching people to roles is the Belbin Team Inventory Method (BTIM).

Agile Through the Waterfall

Agile and waterfall tag cloud

Many organisations have adopted Agile practices into their development methodologies and they have proved to be successful for the organisation as a whole.

PROJECT SMART is the project management resource that helps managers at all levels improve their performance. We provide an important knowledge base for those involved in managing projects of all kinds. With weekly exclusive updates, we keep you in touch with the latest project management thinking.

WE ARE CONNECTED ~ Follow us on social media to get regular updates and opinion on what's happening in the world of project management.


Latest Comments

Allana commented on…
12 Tips for Being a Good Manager
- Tue 5 January 8:30pm

George Bockius commented on…
Better Coaching Using the GROW Model
- Thu 24 December 3:55pm

Al commented on…
Better Coaching Using the GROW Model
- Tue 22 December 10:07pm

Latest tweets

General Project Management • Query on PMP Numericals https://t.co/yTDB5rdr6m about 1 day ago

General Project Management • Problems With Project Planning https://t.co/InNdiqxSfD about 1 day ago

General Project Management • IT project management phrases - 10 terms you need to know https://t.co/0ThVkIz5JU https://t.co/AqimD0V75x about 8 days ago