The Local Economic Impact of Projects as a Core Component of Sustainable Project Management

The decision of where to develop a project can significantly impact the local economy. Considering the local economic impacts before initiating any development project is essential since it can have far-reaching consequences. The prosperity category of the GPM P5 Standard focuses on maximizing positive returns for as many stakeholders as possible. Therefore, it is critical to consider the economic impacts of a project on the local community.

In the P5 Standard, we describe Local Economic Impact (from a project context) as “the direct and indirect effects the project has on the economy of its local area. This can include job creation, increased spending in the local economy, or increased regional development.”

Positive Economic Impacts

When a project is developed in a local area, it can bring about several positive economic impacts for the local community. One of the most significant benefits is the creation of job opportunities. The development of a project in an area will require a workforce to complete various tasks, such as construction and maintenance. This can provide employment opportunities for the local community, improving the living standards of people in the area.

Another significant positive impact a project can bring to a local community is an increase in revenue. When a project is developed, it can attract tourists and other visitors. This can lead to increased spending in the local economy, resulting in a positive economic impact. Also, when a project is developed, it can increase property values in the area. This can benefit homeowners in the area, as they can sell their properties at higher prices.

Negative Economic Impacts

While a project can bring several positive economic impacts to a local community, it can also have negative consequences. One of the most significant negative impacts is the displacement of people living there. When a project is developed, it can lead to the eviction of people living there. This can result in a loss of livelihoods and homes for these individuals. It can devastate families who have lived in the area for generations.

Environmental degradation and biodiversity loss are other negative impacts a development project can bring to a local community. When a project is developed, it can destroy natural resources such as forests and water bodies. This can severely impact the local ecosystem, resulting in a loss of livelihoods for people in the area. Additionally, it can lead to increased pollution levels, which can affect the area’s biodiversity health.

It is essential to consider a project’s positive and negative economic impacts before deciding where to develop it. This will help ensure the development project benefits the local community in the long run.

For Example

Let’s consider the construction of a new factory. If this factory is built in a rural area, it can positively impact the local community. The factory can provide employment opportunities for people in the area, which can improve their living standards. Additionally, the factory can attract other businesses to the area, increasing revenue and bringing about economic growth.

However, the construction of a new factory can also have negative impacts on the local community. It can lead to increased pollution levels, which can affect the health of people in the area. Additionally, if the factory is built near residential areas, it can lead to noise pollution, disturbing the peace and quiet of people living in the area.

In the P5 Standard we provide guidance on what project teams should do.

The project team should:

  • Ensure that projects have a direct, measurable impact on the local economy.
  • Support the growth of the local economy by engaging in partnerships with local organizations.
  • Develop initiatives that support sustainability while also driving positive economic outcomes in the local area.
  • Create educational opportunities related to the project or its effects on the local community.

Creating a positive local economic impact from the project helps to achieve the following

Sustainable project outcomes:

  • More opportunities for local employment.
  • Direct economic benefit from money spent in the local economy.
  • Improved standard of living for individuals who reside in the local community.
  • Increased tax revenue for the local community to support services and infrastructure.
  • Improved quality of life for members of the local community by providing additional resources and opportunities for growth.

Taking into account the local economic impacts when determining where to develop a project can ensure that the development project benefits the local community in the long run. It is essential to weigh the positive and negative impacts of a project before making any decisions; ensuring that the development project is sustainable and has a positive impact on the local economy.

A side benefit is that by putting these practices into action, you directly support SDG 1, Target 4. “By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including micro-finance.”

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Dr. Joel Carboni

Dr. Joel Carboni is a highly respected expert in sustainable project management. He is a graduate of Ball State University and holds a Ph.D. in Sustainable Development and Environment. He has over 25 years of experience in project management, including government, finance, consulting, manufacturing, and education. He is a frequent speaker at conferences and events related to project management and sustainability and has worked in more than 50 countries. In addition to serving as President Emeritus of the International Project Management Association (IPMA) in the United States and being a member of the Global advisory board, Dr. Carboni is also the founder of GPM (Green Project Management) and a visiting professor at Skema Business School. He is also the GPM representative to the United Nations Global Compact, where he was a founding signatory of the Business for Peace Initiative and the Anti-Corruption call to action and a contributor to the development of the UN 2030 Agenda for Sustainable Development (SDGs). Dr. Carboni is the creator of the PRiSM™ project delivery methodology and the P5 Standard for Sustainability in Project Management and has written training programs on Green and Sustainable Project Management that are offered in more than 145 countries through professional training providers, business associations, and universities. He is the lead author of the book "Sustainable Project Management."

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