PMP Domain #3: Business Environment [updated 2021]

The Project Management Professional certification (PMP) was updated to a new format on January 2, 2021. This new format has replaced the 49 processes with 35 tasks. PMP domain 3: business environment covers 8% of the PMP exam and comprises four tasks used to test a project manager’s ability to perform the project management process.

Project management is only effective when closely aligned to the needs of a business. The business environment section of the PMP exam looks at how to plan and evaluate a project and to align it with business goals. By including this new section, the Project Management Institute (PMI) has established a need for a project manager to understand business and the relevant skills to ensure a project works at a business level. This section of the PMP certification may only be worth 8% but it is a vital aspect of any project. Ultimately, however, a successful candidate will be able to demonstrate their expertise across many areas of project management.

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There are four tasks within the PMP business environment, and each task has several “enablers” to help focus on key areas within each task:

1. Plan and manage project compliance
2. Evaluate and deliver project benefits and value
3. Evaluate and address external business environment changes for impact on the scope
4. Support organizational change

The next section discusses each task in detail, along with the enablers, and why they are important in the project management process.

PMP business environment tasks

Plan and manage project compliance

A project must usually conform to project compliance requirements in the areas of security, health and safety, as well as regulatory compliance. This task tests the project manager’s understanding of how to weave regulations and health and safety expectations into project management. This includes how to classify compliance categories, explore and analyze potential threats to compliance and which methods can be used to support compliance. This task also looks at how to analyze the consequences of noncompliance, and what actions are needed to address compliance (risk or legal). Also, PMs are expected to be able to measure the extent to which the project adheres to regulations and other related compliance areas.  

Evaluate and deliver project benefits and value

A project manager’s job includes being able to understand and evaluate the business benefits of a project. This task looks at areas such as how to document an agreement on ownership for ongoing benefit realization. Included in this task is the ability to evaluate a measurement system to track benefits and delivery options to demonstrate value. As part of this exercise, PMs must be able to inform stakeholders of value gain progress.

Evaluate and address external business environment changes for impact on the scope

During the lifetime of a project, any changes to the environment can have an impact on the project delivery and success. A PM must be able to evaluate any changes to the external business environment. This includes a wide scope analysis of changes such as regulation updates and additions, technology changes, geopolitical issues and market changes. A PM must be able to evaluate, assess and prioritize these impacts on the project. As part of this analysis, a PM must be able to recommend options for changes to the schedule of delivery, costs and so on. This process of evaluating the business environment is continuous. 

Support organizational change

Changes to the internal organization can have a major impact on the successful delivery of a project. A PM must be able to assess organizational culture and evaluate the impact of any change in this culture on a project. From that evaluation, the project manager must be able to adjust the project and understand how to minimize this change impact. 

What to focus on

The exam for PMP certification is focused on the tasks and enablers as outlined above.  However, the PMI offers “A Guide to the Project Management Body of Knowledge” (PMBOK Guide). This is a body of knowledge collated by the industry as a fundamental resource for project managers to refer to. As such, it is an evolving handbook that reflects best practices at any given time. This is an essential guide to the practice of project management and offers anyone sitting the exam an insight into the standards expected of the profession.

Some general areas to focus on for domain 3 of the PMP exam are:

• Evaluate and assess compliance requirements in line with task 14 of the PMP domain 2 process
• How to evaluate the return of investment (ROI) of a project and align a project with business goals
• Evaluate the benefits of a project and assess its value to the organization
• Understand any implications (legal and risk) on changes to a project from external or internal forces
• How to evaluate external forces (market and technology changes) and their impact on a project
• How to integrate project management alongside change management in a business

Specific knowledge and skills in the project management process

Analytical skills: How to use techniques that allow a project manager to evaluate, assess and measure the risks and benefits of a project. How can the ROI of a project be ascertained?

Communication: As a PM you will be required to communicate across multi-disciplinary teams. A PM must know how to communicate project benefits and issues with disparate roles, teams and potentially consortium companies and vendors.

Risk management: Understand how to evaluate the risks of a project across its lifecycle. Know how to manage those risks and make decisions based on the risk level as aligned to the project and business goals.

Leadership skills: The latest PMP exam adds new scope for the leadership ability of a PM. The exam expects that a project manager will be able to liaise with all levels of individuals within an organization and with external vendors and clients. The PMI defines a PM leader as having “currencies — time, money, knowledge, security and prestige.”

Management and governance: Managing a project can be complicated, especially if there are multiple stakeholders. Being able to effectively govern a project and ensure all entities are informed and involved is a vital project management skill. A PM has a high-level understanding of the organization as well as the technology/products of the company and uses this knowledge to make decisions that maximize the business value of the project.

Estimation tools and techniques: Be able to plan, cost and schedule work packages effectively. This includes analogous, parametric, three-point and bottom-up estimating.

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Learning what you need to know about PMP domain 3

We hope this offers any interested parties an insight into what taking the PMP certification domain 3: business environment entails and helps you understand better the types of skills needed for success in this exam.

Sources

PMBOK, PMI

What are the core competencies of a successful project manager?, PMI

PMP Handbook, PMI