Social Environment of Project

Social Environment is refers to all the social surroundings that influence project. It consists of factors related to human relationships.

Projects operate within the society. They satisfy societal needs. Social factors influence the practices and activities of projects.

Important factors in the social environment consist of demographics, social institutions, pressure groups and social change.

Factors in Social Environment of Project

Factors in Social Environment of Project
i) Demographics: Demography is concerned with human population and its distribution. Demographic forces that affect labor availability in projects are:

• Size, distribution and growth of population in project area. 
• Age mix of population
• Migration of population
• Foreign employment policies.

ii) Social Institutions: They consist of reference groups and social class:

• Reference Groups: They consist of groups that have a direct or indirect influence on the attitudes and behavior of ties or professionally successful people. 
• Social Class: It is the rank within a society determined by its members. It can be classified into upper, middle and lower. Members of a class share similar values, interests and behavior. Project activities are influenced by classes in the society. Projects need to tailor their activities to meet the needs of specific social classes.

iii) Pressure Groups: They are special interest groups. They use the political process to advance their position on an issues of social concern. They pressurize and lobby government and projects to protect their interests through change in laws, policies and practices.

Pressure groups can be related to consumerism, environment protection, human rights, women rights, good governance etc.

iv) Social Change: Change is making things different. Social change implies modification in relationships and behavior patterns in a society. Life style and social values promote social change.

Life style is a person's pattern of living reflected in his activities, interests and opinions. It affects product choice.

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Economic Environment (Economic Conditions)

Economic conditions indicate the health of the economy in which the projects operate. The factors of economic conditions are:

1. Income: The level and distribution of income affect expenditure, saving and investment. They together influence the economic conditions of projects. Nepal has a per capita income of US $ 280. The GDP growth rate is very low.
2. Business Cycles: The stages of business cycle can be prosperity, recession and recovery. They affect the health of projects.
3. Inflation: It is rise in price level. It influences costs, price and profits of projects.
4. Regional Economic Groups: They promote cooperation among member countries for projects. They provide opportunities to member countries and threats to non-member countries.

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Economic Environment (Economic Policies)

Policies are guidelines for action. Economic policies of the government significantly influence and guide projects.

Key economic policies influencing projects are:

1. Monetary Policy: It is concerned with money supply, price stability, interest rates and credit availability. Cheap money reduces project cost costs, dear money increases project costs.
2. Fiscal Policy: It is concerned with the use of taxation and government expenditure to regulate economic activity. Taxation on income, expenditure and capital exerts an important influence on project decisions. Government purchases, subsidies and other transfers also influence the activities of projects.
3. Industrial Policy: It is concerned with industrial licensing, location, incentives, facilities, foreign investment, technology transfer and nationalization. It greatly influences the investment climate for projects.

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Economic Environment (Economic System)

Economic environment refers to all the economic surroundings that influence project activities. It consists of economic parameters.

Important components of economic environment are :

Economic System

Economic system determines the scope of private sector participation and market forces. The models of economic system are:

• Free Market Economy: This system is based on private sector ownership of the factors of production. Profit serves as the driver of economic engine. The comparative market mechanism guides project decisions. There is freedom of choice. Individual initiative is encouraged.
• Centrally Planned Economy: This system is based on public ownership of the factors of production. The economy is centrally planned, controlled and regulated by the government. There is no consumer sovereignty. Public enterprises play a dominant role in projects.
• Mixed Economy: This system is a mix of free market and centrally planned economies. Both public and private sectors coexist. The public sector has ownership and control of basic industries including utilities. The private sector owns agriculture and other industries but is regulated by the state.

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• Economic Environment of Project (Economic Condition)
• Conflict Environment in Project

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