PROBLEMS IN MANAGING INTERNATIONAL PROJECTS

International Projects IPM is a Project Management Consultancy firm dedicated to

adding value to clients across diverse industries, by providing cutting edge solutions through
effective management strategies.

With innovative, out-of-the-box ideas conceived by our network of seasoned

Engineers, Architects and Planners, IPM has become the preferred partner for many
associations, organizations and companies. Each team member at IPM works with total
dedication to deliver results that go beyond the clients’ expectations

PROGRAM OF IPM

A project can be defined as a venture intended to accomplish a specific objective

through a unique set of interrelated tasks, by the effective use of a team of project-specific
resources. It is the responsibility of the Project Manager to see that the objective is
accomplished to the Clients’ complete satisfaction.

A Project or Program encompasses five distinct phases:

 Pre-Design
 Design
 Bid and Award
 Construction
 Taking -over and Occupancy

IPM’s professional staffs are dedicated to excellence in each of these phases. Our primary
objective is to provide you with a finished product on time, within budget, with superior
quality and an admirable safety record.

PRE-DESIGN OF IPM

In the Pre-Design Phase, there is a period in which the project becomes identified as a
concept and a project definition and scope are developed. The Project Manager’s knowledge of
later project requirements, limitations and options can influence the decision process and provide
necessary continuity. Project elements such as risk assessment, strategic planning, phasing of
work and procurement strategies are implemented as the expertise of the Project Manager is
called upon to bring together and interface the four basic fundamentals of any project: Need,
Cost, Function and Timing.

Pre-design phase services:

 Feasibility Analysis
 Existing facility analysis
 Renovation vs. new construction
 Conceptual scope development
 Phasing studies
 Site evaluation
 Develop Management Plan
 Scope of Work
 Project Team – Internal and Client Coordination
 Budget / cost evaluation
 Master Schedule
 Risk Identification and Analysis
 Project Delivery Methods
 Selection of Consultants
 Entitlement Process
 Develop and Review Consultant / Contractor Agreements

Problems in managing International Projects

The future of project management involves an ever increasing number of projects that

Require the cooperation of geographically and culturally diverse teams. Leaders in the
International project are today are more aware of the challenges and more excited by
The opportunities to work with international teams and partners.

As experience with these international project partnerships grows, the organizational

Competencies needed for success are emerging. Most prominent among them are the
Knowledge and skill to select the right projects and the right project partners for
International efforts, as well as the ability to select, develop, and support leaders for
Projects and programs who have the skills and flexibility to make cross-border collaboration
successful.
The Challenges of Working in an International Project Environment

Due to globalization most of the EPC projects are becoming international in nature comprising of
owner/contractor from different parts of the world. Sometimes the project is in neither parties homeland but is
located in a third country. Such scenarios are becoming more prevalent than ever before.

Managing any project, particularly an international project, requires special leadership skills and awareness of
the project manager and his team to harness the challenges and thereby to create opportunities for success. This
paper elucidates these challenges and special risks and how to manage them.

Key Drivers to Execute a Project Successfully:

The successful execution of a given project is influenced by properly controlling the Budget (cost), Schedule
(time) and quality of all deliverables. All these interdependent factors of success are accomplished by People
(Project Manager and his Team). This is schematically shown in Figure 1 below:

The leadership and management skills coupled with the technical strengths of the Project Team (not
necessarily Project Management Consultant, PMC) determine the success of the project. In that sense, cost,
schedule and the quality, the three measures of success for any given project are the results (dependent
variables) and the Team's ability to accomplish this success is the driver (independent variable).

Problems in managing international projects :

Understanding and cementing out the project scope (SOW)

This being the starting point of any project execution, a clear understanding of the scope of work
is vitally important. For an international project, one has to be very careful via discussions,
including face-to-face clarification meetings to arrive at the client's expectation. During this step
the team needs to address carefully all four Ws (Which, Where, When and Why ) and one H
(How). Often, the SOW included in the request for proposal (RFP), may not be exactly what the
client's expectation is of the project. So, for the execution of the project, this step is even more
important for the bid preparation. Any divergence in understanding can potentially cause a lot of
monetary loss and lasting dissatisfaction of client. Although it is of technical category, this is a
significant part
Implementing a disciplined approach to engineering (from the conceptual stage
to detailed engineering)

For a typical project involving Engineering, Procurement and Construction (EPC), the Total
Installed Cost (TIC) is split between the above three phases 10 to 20% , 35 to 45% and about 40
to 50% respectively. Therefore the common notion is to focus heavily on the Procurement and
Construction phases of the project because P&C are two significantly higher cost components
However, the cost influence of E on an EPC project most often could be very significant. Such importance
needs to be taken into account at the very beginning of the development of project execution plan.

Following a rigorous systematic methodology and gated approach during engineering phase, E
helps to avoid any adverse impacts on the remaining two significantly higher cost components of
the project viz., P & C. The influence of various phases of any EPC project on the project cost is
described and elucidated by the author elsewhere(1) . Once the E phase is completed the
influencing factor of the opportunity to minimize cost overrun as well as project schedule of the
overall project gets significantly minimized often to complete elimination..

Arriving at various levels of cost estimates with the progress of the project
execution:

This aspect of activity is purely technical. Typically with the progress of the project along its life
cycle, the cost estimate accuracy improves from order of magnitude (±40) to preliminary (±25%)
to definitive (±10%). Although the terminology and the associated % accuracy may change from
country to country or organization to organization, they are basically same. There is no special
consideration of skills necessary for an international vis-à-vis an in country project.

Developing a realistic project schedule:

For this activity one has to understand the client's culture. Depending on the country and the
client's culture some could be more tolerant than others. In general most of the projects are
schedule driven and adherence to schedule becomes very important.

• Negotiating a suitable contract and adhering to the contract terms to drive the project execution
through E (Engineering) to P (Procurement) to C (construction) phases:

Understanding of the contract language and pros and cons of various types of contract, and an
understanding of the culture of the client are extremely important to achieve successful
negotiation.

Basically there are four types of contracts. They are:

Lump–sum or Fixed price (Hard – money)

Reimbursable

Reimbursable with fixed fee

Unit price

Contract types and associated risks were discussed else where (2).

Implementing an appropriate quality assurance (QA) and quality control(QC)

scheme :

A rigorous QA and QC procedure need to be developed so that the project performance is

monitored appropriately. An open discussion with the TEAM members with appropriate level of
involvement and input from the client are essential to establish a detailed QA & QC procedure

Determining the Environmental, Safety and Health (ES&H) issues & requirements
and integrating them in well-planned project execution strategy:

Success of this activity is dependent on the technical knowledge as well as requirement of local
government and other non governmental entities where the project is located. Special attention to
and consideration of these requirements and integrating them ahead in the project execution
planning (PEP) is very important for any international project

Understanding and managing risk factors associated with international projects:

These risks could be of different nature: Technical risks especially when the project involves
new technologies, or a first of a kind situation without any prior experience of the kind. There
could be Engineering and other performance risk involving construction performance. For
international projects specially, the interface management risks with client, specially with a first
time international client and/or any major supplier in overseas location could be a big challenge.
Other type of risks could be in working with sub contractors. A few other risks to pay attention
to will be managing suppliers especially new/unproven ones, traffic & logistics risks including
heavy haul to the project construction site, expatriate content, hazardous operations risks, risks
for customs & duties.

If the project is of LSTK type then the project pricing risks includes currency issues as
appropriate. Sometimes it is mitigated by choosing basket of currency in the offer as well as
incorporating currency hedging In an international project, project location risks which include
local politics, security, labor availability and quality could be of great importance

Prior knowledge and understanding and proper proactive recognition of these risks in the PEP
are critically important for successful execution of any international project

Selecting and managing the subcontractors:

Caution should be taken in selecting subcontractors and negotiating subcontract languages. This
requires a thorough knowledge of the local government and non government requirements
including the local content requirement. Sometimes a project specific JV may be a better
approach to mitigate some of the risks associated with subcontractors.
Understanding the in-country rules, regulations and requirements

A thorough understanding of these is important even before a project bid is prepared, let alone
during the project execution stage. Very often that becomes a catch up effort and creates a lot of
difficulties to assimilate and implement.

Conclusion:

The future of project management involves an ever increasing number of projects

that require the cooperation of geographically and culturally diverse teams. Leaders in the
International project are today are more aware of the challenges and more excited by
The opportunities to work with international teams and partners.

References:

1. Histrich: entrepreneurship, tmh, New Delhi, 2009.

2. Narayana reddy: entrepreneurship. Cenegage learning, New Delhi, 2010.
 Eswar College of engineering
Master of business administration
II MBA –IV SEM—II Mid

Subject: entrepreneurship and project management

Topic : problems in managing international projects

Submitted by

D. Santhosh Kumar

R.no. 09je1e0046