Chapter

International Project Management

18
—Richard Feynman

You can know the name of a bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird . . . So let’s look at the bird and see what it’s doing—that’s what counts. I learned very early the difference between knowing the name of something and knowing something.

Consider three recent projects: 1. General Electric divided the development project for a new cardiac monitoring device between two teams, one in Milwaukee, one in Bangalore. The hardware development work was done by the US team, the software work by the Indian team. The project required continual back-and-forth exchange of people, equipment, software, and information. The manager coordinating the project was based in Milwaukee, but made frequent trips to Bangalore. 2. Bechtel, a US corporation with divisions around the world, oversaw the construction of a complete industrial city in Saudi Arabia. As prime contractor, it managed and coordinated on-site work, materials, and major systems provided by subcontractors from Europe, the US, and Saudi Arabia. The project manager, an employee of Bechtel-UK, stayed on site during most of the project, but traveled globally to meet with Bechtel’s senior managers and contractor associates.1

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3. Boeing Commercial Airplane Division is the principal designer, systems integrator, and final assembler for the 787 commercial aircraft, but virtually all of the design and manufacture for the plane’s major components and subsystems— wings, fuselage sections, engines, and instrumentation—is done by contract suppliers in Japan, Canada, Spain, Italy, and the US. Oversight and integration of suppliers and other Boeing divisions contributing to the program is run from Boeing’s program management office in Washington State. The obvious commonality among these projects is that they are all “international” or “global” in scope. Unlike single-country, domestic projects, where most or all stakeholders and physical project work are confined to one country, stakeholders in these projects are in different countries, and project teams and work sites are cross-national and cross-cultural.

18.1

INTERNATIONAL PROJECTS
International projects have become ubiquitous as more companies establish divisions, seek customers, and outsource work to suppliers and contractors in different countries. Thanks in large part to lower costs and increased capacity of global air and sea transportation, enhanced communication technologies fueled by the Internet, and emerging business and technological capabilities in nations such as China and India, companies seek out and execute projects everywhere. While such projects are enticing because of the benefits and opportunities that come with operating on an international scale, they are at the same time vulnerable to considerable risk. Regardless of its scope or end-item, a project that is “global,” “international,” or “overseas” automatically inherits more issues and greater risk than one that is not. And regardless of the issues and problems that face the manager of a domestic, one-country project, the manager in an international project automatically faces an “extra layer” of issues. That extra layer touches almost everything about management—leadership, interpersonal relations, stakeholder identification and involvement, communication, planning, work definition, estimating, risk management, and work tracking and control. Language, communication, local customs, transportation, and infrastructure—all that might cause little or no concern in a home-country project—become potential showstoppers in an international project.

18.2

PROBLEMS MANAGING INTERNATIONAL PROJECTS2
Each new international project poses a new set of unknowns. To illustrate, think of an international project as analogous to a play with actors, scripts, sets, and props. Actors are the project stakeholders and social networks, scripts are the social institutions that guide and constrain peoples’ behavior, the set is the project’s natural environment, and props are the project technologies. Just as the actors, scripts, sets, and props differ in every play, so do the stakeholders, institutions, natural environment, and technologies differ in every international project. These differences expose the project manager to potential mistakes and oversights in organizing, planning, and running the project.

Chapter 18

International Project Management

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Table 18.1 lists important issues and unknowns in an international project, most concerned with aspects of the project’s locality. Some of these issues are “explicit” (somewhat easy to identify and account for in project plans and estimates); others are “tacit” (more difficult to pinpoint and address). The less a project manager knows about the locality of the project—the host country and its people—the harder he must work to make sense out of these issues and adapt to them. (Hereafter, “host” refers to the place where the project is executed; “home” to the native country of the contractor, developer, or project manager.) Ignorance about the unknowns makes it difficult for managers to anticipate problems, set priorities, and act appropriately. It is why international projects often have trouble meeting schedule, budget, or requirements commitments.

18.3

LOCAL INSTITUTIONS

AND

CULTURE

Stakeholders in international projects comprise diverse languages and cultures that influence communication, attitudes, behavior, work practices, decision patterns, and, ultimately, project performance. Additionally, they are guided or restricted by regional or national laws, regulations, and rules.

Language
When project stakeholders speak different languages, conversations and shared documents about project scope, requirements, schedules, budgets, and contracts must be Table 18.1 Unknowns in an International Project*
1. Local institutions and culture a) Language (explicit) b) Norms, social customs, attitudes, traditions (tacit) c) Laws, rules, rights, sanctions (explicit) 2. Local stakeholders—laborers, managers, consultants, suppliers (tacit) a) Skill, experience, motivation b) Reputation, honesty, integrity c) Who knows who; who has knowledge, resources, and connections 3. Local natural environment (explicit) a) Site environment—soil, ground slope, vegetation b) Regional environment—climate-weather, geography, seismic activity 4. Local technology (explicit) a) Infrastructure—roads, buildings, communication b) Available tools and systems—GPS, equipment, hardware, software, materials
* Note: “Local” refers to people and factors situated at the location or region of the project, or that become activated in the local context, including international NGOs, associations, and other organizations that play a role in “promulgating environmental, technological, occupational, and legal” rules and regulations to the local level. Adapted from Orr R. Strategies to Succeed in Foreign Environments. Collaboratory for Research on Global Projects, Stanford University, presented at the CIB W92 International Symposium Construction Procurement—The Impact of Cultural Differences and Systems on Construction Performance, Las Vegas, Feb 8–10, 2005, 3. http://crgp.stanford.edu/publications/conference_ papers/RyanVegas.pdf, downloaded April 10, 2007.

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Part V

Project Management in the Corporate Context

Older people automatically garner greater respect. Napoleon did something like this: before issuing military orders he always had a corporal read them. or credibility as an older manager. emailed. tell the Americans to walk on the pavement. Australia. Such formality extends to the way people introduce themselves. idiomatic terms. vernacular. hence. When they pepper their responses with “yes. ask several people to interpret them. yes. For example. When giving verbal directives. too: in most countries proposals and contracts are commonly faxed. always follow it up in writing. and India may have different meanings. and poor diction. such practices pose questions regarding the country where agreements are made or contracts concluded.” For example. regardless of experience. a special French–English project dictionary was created. Gift Giving Many companies and countries permit gift giving and taking as suitable ways to show gratitude and respect.4 Often locals will claim to understand English when in fact their grasp of it is poor at best. however. Formality Whereas business associates in North America tend to address one another—subordinates. the same English words when used in America. mister. The challenge is that every translation faithfully reflects the content and intention of the original message. whose contract law and court of law should prevail. The best practice in international communication is to always use the simplest. but many others prohibit it. then certainly so would his officers. For the 1960s project to develop the Anglo-French Concorde supersonic airplane. in international projects. almost everywhere else in the world they use some variant of sir. add to that slang. make commitments. “tell the English to walk on the pavement and they will walk on what the Americans call the sidewalk.”3 US managers often say it is more difficult to communicate with British subjects than with French. and. Even projects wherein ostensibly everyone uses the same language face difficulties. or verbally communicated. they will walk down the middle of what the English call the tarmac. communicate ideas. Attitudes about Age Many cultures associate wisdom with age. Only certain gifts are considered acceptable. The workplace itself may be subject to a code of behavior that discourages kidding around and other forms of informality. Before sending out important messages and documents. and give and receive business cards. yes. and what happens is the message gets “lost in translation.” it is a sure bet they don’t understand what’s being said. Managers sometimes create a project glossary of terms that at times can be extensive and even include pictures. the UK. reasoning that if someone of such low rank could understand them. Managers in Chapter 18 International Project Management 605 . most clear and concise wording and phrasing.translated. or madam. reverence. Formality pertains to documents. and seldom can a younger manager command the same level of attention. South Africa. and even senior managers—by first name. immediate superiors. and discretion is necessary to avoid violating local laws or etiquette customs.

say. People in Rome tend to be more nicely dressed and courteous than. Proper conduct at such gatherings is dictated by local norms. older managers do most of the speaking. A Western manager accustomed to filling every minute with work will be annoyed by the many “time-wasting” gatherings organized by his Asian or Middle-Eastern business associates. a good rule of thumb is to try to adopt some of the local customs of dress and behavior (assuming they do not violate a personal or universal code of ethics). and even to ask about them is utterly inappropriate. they. most relationship-building and much formal business happens after-hours at social gatherings. although in general any sign of inebriation. even if the schedule slips. In the Middle East a woman’s head should be covered in public. Meat and martinis might not be on the menu. and accepting. or on any menu anywhere in the country. A project that involves 606 Part V Project Management in the Corporate Context . and will question his motives and loyalty to them. fraternizing with business associates. and younger managers never contradict them—even when they disagree. Holidays. will be insulted by his angst to get on with business. offensive behavior and dress should always be avoided.) Meat portions in Europe and Asia tend to be small—miniscule by US standards. Vacations Every country has its own non-work holidays. and they tend not to deal with or even listen to anyone much younger than they are. so be it.and Far-Eastern countries.senior positions are always older (and usually male). but Germany has 16. Attitudes about Time In some Western countries. (Home-based or well-known franchises are more reliable and sometimes provide welcome familiarity. Social Behavior In Middle. If it takes time to prepare a plan. punctuality is everything. in US cities. Weekends. although what is considered offensive varies by country. polite. careless or too-casual dress. even when the items or customs do not suit your taste or predisposition. Time is viewed as a limited resource. in turn. Behavior that would be considered suitable or even expected elsewhere—like bringing a spouse to a gathering or talking to another’s spouse—can be cause for embarrassment. and being on time assures it is never wasted. and then revise the plan and revise it again. and men and women are not supposed to greet each other by shaking hands. most European countries have 10. When working in Rome (or Beijing or Mumbai). and damaging to a business relationship. Of course. and a tourist from the US who would not draw any attention at home might come across as somewhat slovenly and crass in Rome. The US has 7 national public holidays. In meetings. The rule of thumb concerning food and drink—but applicable to everything about local customs—is to be respectful. People who dither or are late are considered rude and inconsiderate of others’ time! But in the Middle and Far East and most of Africa the concept of time is viewed differently: more important than doing things punctually is to make sure they are done right. Food and Drink Newly arriving expatriates often will scan local menus looking for familiar items— not knowing that the foods listed won’t be the same as back home. or sharing of personal details about family or friends is considered inappropriate.

have large families. While in the US 2 or 3 weeks’ vacation is standard. 4 countries. While these differences create problems for some projects. say. but in the Middle East it is Thursday and Friday. Even when different counties share the same holidays. In the US the Christmas holiday runs December 23 through January 2. and laws. the manager of a 9-to-5 project will probably see his local workforce falling asleep around 3 pm. exact dates may differ. and Chinese law specifies a five 8-hour day work week. and the trick is to not violate laws in either country. Layoffs Although it is common in the USA to terminate employees when a project ends and there is no follow-up work. French law mandates and enforces a 35-hour work week that cannot be exceeded. If the local culture dictates that the “work day” is between 6 am and 2 pm. each with 5 national holidays could conceivably face 20 days of holiday downtime. plus another 6 weeks for sick leave. Labor Time What constitutes a “usual” work day and work week also varies.com. terminology. international contacts take longer to finalize than domestic contracts. Australian law prescribes 4 weeks. not of the home country of the developer or contractor—although US contractors working overseas must confusingly also comply with US law. risking the possibility that at any time the rules could be enforced). In the Southern Hemisphere. Labor laws are not always enforced. Contracts. and even the littlest details (like initialing changes and pages) matter. According to David Pringle of CareerJournalEurope on Expatica. regulations. Some countries mandate by law 6 weeks’ vacation. and might find it very difficult to get new jobs. formalities. Ramadan and Chinese New Year are major holidays that affect the schedules of many projects. they offer solutions to others by enabling work to continue at different places around the world 7 days a week. In countries like China some rules are not always enforced. and local contractors and customers might tell you just to ignore them (of course. Because of differences in language.” Laws. Social norms also matter.participants from. project work is sometimes halted for most of the month. especially for workers who have served 12 continuous months on the project. Rights The law in effect for a project is the law of the host country. as does the European Union— usually the whole month of August.6 A safe practice is to verify whatever the locals say about the law and never do anything illegal. in some countries such termination is not automatic. The “weekend” in many parts of the world is Saturday and Sunday. where summer holidays are in December. Getting the wording and terminology right on contracts is extremely important.7 The project manager should Chapter 18 International Project Management 607 . German employers must base layoff decisions on social criteria that sometimes force them “to retain staff that is older.”5 Companies in France often must “give detailed reports on the progress of staff-cutting programs to state authorities. Vacation time-off also varies by country and region. but no project manager in any country should gamble on violating them. What is a manager to do with these employees? In many European countries labor laws determine who an employer can lay off and how the employer must go about it. but in Russia and some Eastern European counties it is between December 31 and January 8—sometimes later.

To protect the contractor. and sometimes corrupt. [and] at the heart of world trade. The contract might impose severe penalties for failure to meet schedules or requirements. US contractors often specify England. which can take 60 days. Politics National and local political stability. neither the host nor the contractor’s home country. Meeting Contract Terms Contracts should be designed to avoid legal disputes.e. Radical political reform. products. not by the customer but because international funds transfer typically requires approval by an agency of the host country. 608 Part V Project Management in the Corporate Context . . They should specify that any legal disputes would be litigated in a neutral country—i. and offer strong incentives to exceed them (such incentives assume that the contractor is in the position to perform work to meet requirements—which is not always the case in developing countries). Payment. It should be obvious from this section that international projects are fraught with problems absent in single-nation projects. or “Incoterms. slow. such events rarely materialize on short notice and without early warning signs. Litigation. . contractors should never perform work for unsecured payment after project completion. and be prepared to take action should it discover that its ideas.. To minimize confusion about contract terminology.”8 The contractor must be sure to include stipulations and actions in the contract to protect its intellectual rights. However. and customer creditworthiness is difficult to ascertain. A contractor working on an international project must have reliable people in the host region to monitor these signs and keep project management informed. or technology are being pirated.be involved in contract negotiations from the beginning and—this is essential—have access in the host country to his own legal counsel or sound legal advice. While phenomena such as labor strikes are seldom experienced in countries such as the US. the International Chamber of Commerce has created a list of International Commercial Terms. The following example illustrates a few more problems—plus what happens when cross-cultural teams don’t try to integrate. are potential risk factors. the system for managing credit and receivables is not very good. and labor strikes are clearly situations that could threaten a project. This would seem customary even in single-country. the contract might specify a large first payment followed by payments upon meeting frequent time-phased targets. In many countries. including China. yet because of the extreme difficulties of litigation in international projects the stipulations must be such as to remove even the slightest chance of problems. Payments are often delayed.” described in its website as “standard trade definitions most commonly used in international sales contracts . further complicating the payment process. and the government’s position regarding the project. which in the international arena can be a nightmare—messy.” Usage of Incoterms in contracts helps clarify expectations and “goes a long way to providing the legal certainty upon which mutual confidence between business partners must be based. Sometimes payments to foreigners must be made via tax agents. The contract should provide stipulations to assure that the customer will receive its deliverables and the contractor its payment. expensive. Ordinarily. they are common in some other countries. overthrow of the government. local military intervention. domestic projects.

Also important is the contractor’s ethical reputation (“ethical” as defined according to US standards. the other from France. resources. it was felt. a due diligence review of the contractor’s business history. and a panel appointed to resolve disputes often faced the situation of having to make very tough decisions. RFPs. but even more so in international projects. reputation for honesty. A local contractor who is familiar with local customs and bureaucracy can sometimes cut through red tape and avoid hassles that would stymie a contractor from the outside. railway width. Practices taken for granted in most countries (e. and status reporting) may be unfamiliar to a local contractor and a challenge for it to adopt. But the teams represented two cultures. Simply deciding whether to increase door width from 600 mm to 700 mm took 9 months. and political connections is nonetheless a necessity. thus erasing any potential savings (many countries like India. Decisions by a democratic government can require substantial deliberation. voltages. ideally contracts are written in one language and governed by one legal system. for example.1: The Chunnel Project9 The initial construction phase of the 32-mile (51km) Channel Tunnel between Britain and France was managed almost as two separate projects—one starting from Britain. experience. legal approaches to health. trade unions. it can increase costs for training and supervision. For starters. 18. and financial stability. and taxation differed significantly. the higher should prevail—though it was not always obvious which standard was the higher (for example. One is the likely quality of the local contractor’s communications as determined by language and culture. although clearly in every case there would have to be only one. Competition. which translates into needing more workers. however. and neither had precedence over the other. It was decided that where a difference existed between the standards of the two countries.Example 18. SOWs. Selecting a local contractor requires considerations beyond the usual criteria of skill. Customers and Supporters Good relations with customers and supporters is always important. safety. change controls. In general. Although the contracts were purportedly based on principles common to the two legal systems. proposals.. but decisions by two democratic governments require even more deliberation. Sometimes lower labor cost equates to lower productivity. and the competition only aggravated their differences and exacerbated problems. train engines and cars. would speed things up. Another is the contractor’s familiarity with common business practices.4 LOCAL STAKEHOLDERS Contractors10 Project teams operating in foreign countries are often required to hire local contractors. both racing to see which would reach the halfway mark first. The two countries also differ with regard to standards concerning. in the way to pour concrete). Although perhaps difficult to undertake. have low labor costs yet productivity as high as in Western nations). and signaling systems. Although subcontracting to local contractors can reduce costs for labor and relocation. one each in English and French.g. but in the Chunnel project there were two contracts. whereas Westerners tend to first set contractual Chapter 18 International Project Management 609 . not local standards).

To protect the value of its contracted work. or infrastructure for the locality or region. subcontractors.agreements and then build relationships. the more the local stakeholders are likely to commit to the project. the matter is moot unless the host government grants the customer the legal right to pay for the project in foreign currency. Example 18. although it must be said that virtually all international contracts are concluded in US dollars. Building personal relationships and trust with business colleagues and associates is fundamental to the business process. so he tried to urge them along. The more the project manager can show how the project improves employment.g. the more the Indians doubted his motives and the less they trusted him. As is their custom. A customer is likely to agree to this for short-duration projects. and the manager returned home without a contract. but by pointing out the project’s benefits to the local population. though not necessarily for longer projects because of the greater risk of significant changes in exchange rates. Easterners build relationships first and then reach agreements. 18. services. No agreement was reached. or support until they feel they know the project manager personally. and only later to be transferred to the customer’s site in India. revenues. vendors. and significantly affect project costs. This is done not by the project manager telling them how important the project is to his company or home office (which locals do not care about). and potential customers) are apt to withhold agreement. But the more aggressive he became. The American project manager sensed that his Indian customers were needlessly dragging their feet. availability of products..2: How to Ruin a Business Relationship11 Negotiations between a firm in India and a US company to finalize the contract on a promising project began with a series of informal meetings. Of course. US dollars for an American contractor). Regardless of the professional track record of the project manager and his company. collaboration. Exchange Risk and Currency Swings in the economy can alter exchange rates and relative currency values. Because the negotiations were in English and most of the project work was to be done in the US by a US team. a contractor should require payment in terms of its home currency (e. and profits. But the project manager was expecting serious talks to begin immediately upon his arrival and conclude after no more than a few days.5 GEO-NATIONAL ISSUES International projects are subject to many issues that originate from the simple fact that the stakeholders are in different nations or geographic regions. they had planned to delay serious talks until after becoming acquainted with the American—a trust-building process that was supposed to happen during a few days of after-hour dinners and social gatherings. the project manager must also gain buy-in from local managers and workers. Managers and Laborers12 Beyond building relations with business associates and customers. 610 Part V Project Management in the Corporate Context . local stakeholders (business associates. the project manager hadn’t bothered to become familiar with Indian social customs.

That being the case. Sometimes the trick is for the contractor to satisfy the offset requirement.300. prices the project at €1.000.” requires the contractor to contribute to non-project endeavors such as business enterprises or improvements to roads. The offset might require the contractor to spend a percentage of project cost on local labor. A still different way is to say that the increased rate led to an increase in the dollar expense of the project (from €900.170. software. this protects the future cash flow against negative currency fluctuations and eliminates some of the uncertainty of doing business abroad.000 to €900. called “indirect offsets. The purpose of the offset is to reduce the net amount of payments going outside the country.571 − 900. hence the price specified on the contract is US $1.000 profit. not the rate at the time of payment. The locked-in forward price reflects the difference in interest rates between the customer’s and contractor’s countries.000(1. Early in the project. the offset is the deal-clincher. the contractor received much less profit than expected.000. State. Offsets14 A foreign contractor on a large government-funded project is often subject to requirements concerning spending in the host country called an “offset” or counter trade. the work ends up costing €900. The amount of payment is thereby determined by the rate set in the contract. Export/Import Restrictions The export/import of certain US technology. The customer pays the agreed price of $1. Called hedging of expected foreign currency transactions. and hardware is regulated by government agencies such as the US Departments of Commerce. An alternative way of looking at this is to say that the increase in the $/€ rate led to a decrease in the euro value of the payment.000. To accommodate the customer.40 = €928. and Agriculture. systems designers and project planners should try to identify items that are essential for the project but are restricted or prohibited from import/export. locally supplied materials or products. as predicted. exceeding in importance the principle work of the project. A third and the most common way to reduce exchange risk is to “forward cover.Example 18.300.” Another form. The value of the offset can range from a few percent to more than the full cost of the project.000 and. the payment equates to $1.3: Impact of Change in the Currency Exchange Rate A French contractor agrees to do a project in France for an American customer. Many months later the project is completed and. the contract price is set in dollars.000. and sometimes a contractor wins the job based primarily on the offset plan as described in the proposal. yet still make a profit. local airlines and transportation services. these items will have to be substituted with non-restricted alternatives. Whichever way you choose to look at it.000).000/1. the contractor made only €(928.000.4) = $1.” or transfer the risk of an unfavorable change in currency value to an insurance company. Instead of making €100. communications. and local subcontractors. Offsets like these that are tied directly to project activities are called “direct offsets.13 Another way to reduce the risk is for both parties to agree upon and specify the exchange rate in the contract. The contractor estimates the project will cost €900.3 per euro.4 per euro.571. In essence.300.260. One way to reduce exchange risk is to lock into the contract today’s price for a payment that will not occur until the future.000) = €28. At the time of contract signing the exchange rate is $1. so as to earn a nice profit. but the exchange rate has changed and is now $1.000(1. or other national infrastructure. Chapter 18 International Project Management 611 .3) = $1. Offset requirements are specified in the RFP.571.

as does prior work experience in international projects. and it might take days for messages between them to be read or responded to. supporters. like emulating aspects of their social customs. contractors. eating local popular foods. to gain their acceptance and respect. The local staff.Time Zones15 Project stakeholders located in different time zones around the globe might have no overlapping normal business hours. The project manager must 612 Part V Project Management in the Corporate Context . For example. Self-Sufficiency In unfamiliar surroundings. although local laborers might appear to be unmotivated or lacking in creativity. Sometimes he does this in subtle ways. and laborers might not know what to expect from or how to deal with foreign managers. Of course. such as scheduling work hours in different time zones so they overlap by a minimum of 2–3 hours. they might just need careful instruction and explanation. faced with unique challenges and often without support from nearby associates and family. and be able to develop trusting relationships with business associates. 18. while dealing with issues such as these the project manager must also continue to deal with project-related problems both on site and back home. or wearing forms of local dress. and customers in the host country. the reality might be that they simply do not know what they are supposed to do. Avoiding communication delays is largely a matter of planning. A sense of humor helps. and experiences from one culture or country cannot be generalized to others. the project manager must be adaptable to the local environment and able to resolve problematic situations that would perplex or immobilize a lesser person.6 PROJECT MANAGER Typical problems in an international project include the following:16 • • • • • A member of the project team does not have a valid passport Team members need travel visas A coworker needs health tests and inoculations before heading to the project site Someone on the team gets sick or injured at the project site Someone gets arrested for a local traffic violation. the first place people go is to the project manager. Sensitivity and Acceptance The project manager must understand local norms and customs. At times like these. Every Culture a New Experience Each project in a new country or region requires new learning and familiarization. the project manager must be able show respect for and acceptance of their culture. and assuring 24-hour accessibility of the project manager and other key participants via cell-phone messaging and email during critical stages of the project. expecting he will be able to handle the predicament personally or know where to get help.

The local manager reports to the global manager. and vice versa • Keeping the project sold to customers and supporters • Arranging for in-country services such as hotel and car reservations. At time of hiring.seek out whatever sources of motivation are effective. so when a problem arises the manager should be given every opportunity to work it out. local communications. then day-to-day responsibility for the project should be delegated to someone who workers see as visibly engaged and fully in charge—a local project manager. and willing to remain at the work site until the project is completed and the customer has signed-off. each subproject in a global project will have two project managers: the global project manager who plans and coordinates from the home office and travels among sites. and government officials. and commitment. On Hand. responsibilities. in this way he earns their gratitude. Fully in Charge The project manager must be in the middle of everything. Thus. Fully Engaged. or that local laborers and suppliers will automatically accept the process or method. and help resolve cultural and regulatory issues. currency. and workers. Hiring and training a good local project manager is not easy. but also with documents. and performance targets. People on the project team witness the project manager making decisions that affect the project and them personally. respect. office staff and space Chapter 18 International Project Management 613 . Sometimes it is a simple matter of modifying the workday hours to conform to local biological clocks! Nor should it be assumed that because a process or method has succeeded in one country that it will be workable in another. the global project manager should “parachute in” a trusted person to assess the situation and offer assistance. Local Project Manager In cases where the project manager cannot be on site. ideally managing the project not from a remote office but at the project site.7 LOCAL REPRESENTATIVE17 Every international project needs someone at the project site or host country to keep the project manager informed about local matters. and to discuss problems with local managers. the local project manager should be informed about expectations. detailed planning and day-to-day management. He is always or frequently there to see what is happening. He is fully committed to the project. Only when the situation is deemed hopeless should the local project manager be replaced. and then reminded again periodically. and the local project manager who is responsible for on-site. Making assumptions without considering the local sentiments and attitudes can lead to resentment and resistance among the local staff. unions. interpreters. This person—the local representative—works beside the project manager and is responsible for: • Representing the project manager and company to the customer. or medical assistance. the responsibilities and authority of the two are clearly delineated and understood by everyone on the project. mediate with local laborers. staff. The project manager must be in constant touch with his team and available to assist them when they need help—not only with project decisions. housing. 18. If the problem is serious and thought to be getting worse.

e. For a global project comprised of multiple project sites. One way to obtain a local rep is by partnering with a local company for a portion of the project work. but it is necessary that he is sensitive to and comfortable with local customs and culture. Each project should also have a second. running into problems and taking too long. the local rep must be committed to the project and not eager to race off as it nears completion. If. To avoid that. attaches. and ethical reputation. and stakeholders. in some cases. the local project manager. the local rep should be familiar with all of them. Serious issues that it cannot resolve are forwarded to the executive committee. The role of this “executive” or “global” steering committee is to establish a governance framework to coordinate and fund the project. This committee plans and executes details of the project. AND PMO Practically everything about an international project is more difficult and takes longer than a home project. and team members—and of the contractor company—its officers. technology.• Arranging meetings with government officials. It is not necessary that he is a native of the host country. If the contractor is doing several projects in the host country. 614 Part V Project Management in the Corporate Context . the local project manager is not familiar with local culture. management. Sustained backing and support from top management is crucial. Qualifications of the local rep include thorough knowledge of the project—its mission. In effect. Also.” steering committee.4 with capability to perform the contracted work. STEERING COMMITTEES. it is easy for managers back home to get distracted and lose interest. and handles problems originating at the project site or host country. for example.. top management should create committees to guide the project and assign the PMO a role to help manage it. scope. 18. Qualifications of the partner combine those described in section 18. customs. The local rep must have a good working knowledge of the culture and social customs of the host country. the global project manager) also sits on this committee. and services. yet when the project is far away. and. ideally that person also fills the role of the local rep. fluency in the local language. the partner becomes the local rep. however. and consulates • Educating the customer about home-country government requirements concerning.8 TOP MANAGEMENT. This committee is comprised of local sponsors and managers and. the transfer of technology and technical knowledge • Helping arrange local housing for project personnel • Assisting in locating in-country subcontractors • Keeping the project manager informed about in-country politics and economy. for a global project comprised of multiple project sites. Steering Committees18 The steering committee (or review board) for an international project includes senior managers and sponsors from both company headquarters and the host country/ region of the project. When the project has a local project manager. then he too should have a local rep. If the project comprises subprojects at multiple sites around the globe. ability to communicate. products. the manager in charge of the overall project (i. “local. the committee also sets global goals and coordinates work and resources among the subprojects.

protocol. In general. such as coordination across multiple countries and time zones. The guidelines address familiar matters such as collaboration. trade. pertaining to each international project. they should not have to worry about what to do. laws. or who to see—worries that can only detract from their ability to work on the project. they arrange for training and coaching. labor—will come in handy. culture. and training sessions • Follows up on issues and problems identified by management that require coordination among multiple international projects • Manages files and a library of documentation for international projects • Identifies project managers for international projects • Provides support and mentoring for project managers overseas • Schedules forums for managers of international projects to share experiences • Provides training and education about language. The contractor should also hold a similar session with each local subcontractor to discuss issues that might arise and prepare a plan to prevent or mitigate them. At the session. conflict management. but also problems unique to international projects. the project manager must develop relationships with key stakeholders in the host country. This will encourage local workers to take ownership in the project yet allow the contractor to retain control over the work. identify likely or possible problems. Chapter 18 International Project Management 615 .Role of the PMO19 In addition to the PMO functions described in Chapter 16.20 A useful exercise is for each participant to express how much he assumes people from other cultures are willing to adapt to his culture..9 TEAM- AND RELATIONSHIP-BUILDING The project manager kicks off the international project with a team-building session for key members from the project team. etc. having strong personal ties with local and national vendors and officials—government. The PMO and executive steering committee share responsibility for these matters. After they arrive. including local managers and staff. norms. and numerous other matters. Beyond building relationships with local members of the project team. travel and living arrangements. a large portion of the work packages (20–30 percent) will be performed jointly by team members from both the host and the home countries. and how much he is willing to adapt to others’ cultures—a variation of the role clarification technique described in Chapter 15. checklists. 18. where to go or stay. and role assignments. If the project becomes embroiled in problems. and cross-cultural language and social factors that could hamper communication and decision-making. big and small. Ideally. The purpose of the session is to develop a common purpose and shared expectations. they determine which tasks they will do individually and which together. the local project rep. and incorporates them into templates. the PMO for an international project does the following: • Assists senior management in assessing and selecting international projects • Collects lessons learned from international projects. project personnel going overseas should be well informed about the project and know what to expect. and develop project guidelines to avoid problems.

they will know about local labor. typically. and politics must first be identified. Potential issues in the project associated with culture. it must be handled by the project manager and cannot be delegated to others in business development. 616 Part V Project Management in the Corporate Context . institutions. This back-and-forth process can be lengthy and frustrating. business practices. or marketing. In a multi-language project the process is more complicated. and. disagreements over details are inevitable. country. Customer Requirements Most projects begin when the customer provides a list of needs and wants to the contractor. Where to Start How do project managers learn the important issues they need to be aware of in each international project? Some common ways are:21 • Look at examples of similar projects done in the country by your company or others and try to learn what they did. but they will be worked out.especially if the problems are serious. To this end.10 PROJECT DEFINITION An international project cannot be approached in the same way as a domestic project. Western managers are eager to get through it as soon as possible. people. and laws. The attitude is. and to build relationships and establish areas of agreement first. or international advisory groups for advice about local politics. customs. But managers from non-Western cultures may take a different stance. Seek those with project experience in the host region who have developed a social network of important local connections. The membership of this team should mirror the national and ethnic groups of the project stakeholders. 18. • Hire a credible consultant or freelance expatriate to provide guidance and serve as a cultural intermediary with local stakeholders. and environment. professionals. as happens in domestic projects. preferring to hold off on defining the details. • Start with a small pilot project in the country to allow time to become familiar with the culture and laws before committing to larger. Seek out project managers who have experience in the host country or region and ask for advice. more risky projects. which the latter then expands upon and converts it into a list of technical requirements. and the contractor’s list has to be translated back into the customer’s language for approval. laws. Although they might not be familiar with the business or technology of a particular project. norms. • Ask trusted guides. resources. sales. because the customer’s list of technical requirements has to be summarized and translated into the contractor’s language. and economic environment. not to worry. • Create a culture risk management team to identify potential cross-cultural and crossnational issues and steps to reduce or avoid them. This process of trust-building and establishing areas of agreement is critical to the project. the project manager should make time to attend social events in the host country for newly arriving staff. and to celebrate local holidays and cultural events. • Attend formal training programs devoted to coping with foreign stakeholders.

The local project manager. 6. regulations. Local project managers and teams are brought into and become committed to their subprojects 2. The plan identifies goals. rows 1– 8). and SOW of the subprojects conform to local customs. SOW. The intended outcomes of the process are that:23 1. proposals. and SOW of the subprojects align with those of the global project. for each country and subproject. and laws 4. and costs. goals. Chapter 18 International Project Management 617 . 10. and languages. goals. although only in the form of estimates. and SOW often end up varying substantially. benefits.Scope and SOW in Global Projects22 For a project that has global reach and consists of subprojects at multiple international locations. Stakeholders at the global level and local level are in agreement 5. accounting for what they know about the region and site. the scopes and SOWs of the subprojects and the global project (row 11) are mutually adjusted and made compatible. 2. The scope. 7. and a preliminary plan specifying the countries or regions of the subprojects. The process is repeated for every subproject. (Table 18. etc. subprojects that start out with almost identical purpose. or suggestions. To accommodate differences in purposes. Scope and SOW of global project Subproject in Country B Subproject in Country C Adapted from Lientz B and Rea K. the global steering committee must adjust the scope and SOW (rows 9 and 10) for each subproject. 2003. norms. 11.2. scope. costs. strategies. a global steering committee prepares the scope statement.. Purposes Goals Strategies Cost Schedule Benefits Issues Risks Scope SOW Goals. targets. 8. 4. 3. Amsterdam: Academic Press. They also make suggestions to the global committee about the subproject’s purpose. strategies. local sponsor. and results in the information illustrated in Table 18. Because of differences in culture. Ch. scope. etc. International Project Management. In the course of back-and-forth iterations between the global and local steering committees. 9. and local steering committee for each subproject then review the preliminary plan and expand it into greater detail. Goals. goals. 2. Each local sponsor agrees to the goals and scope of the subproject and promises his support 3. Table 18.2.2 SOW Impacts of Country Differences on Global and Local Scope and Subproject in Country A 1. 5.

In an international project. board. passports visas.. institutions.g. and so on.3 Issues in International Projects • • • • • • • • • • • • • • • • • Team members speak different languages Expatriate team members need vaccinations. This special WBS can be created by a special “culture risk team” whose sole purpose is to identify and deal with cultural/international issues. Table 18. Local or international issues identified in each work package (e. How does the project team know what unique issues and factors need to be addressed in an international project? Besides discovering issues through the traditional WBS process. Each first-level activity is assigned to the project team member who will be responsible for managing it (presumably the person who knows the most about it). geography. This person. It is at the lower levels of the WBS that an international project becomes truly unique. Identify important international and local issues and factors in the project 2. domestic project. One approach is to start with a generic WBS template for the technical part of the project. Although a generic kind of project repeated in each of several countries might look the same in terms of high-level technical activities. Thus far. the team can create a separate cross-cultural/cross-national WBS devoted entirely to international issues (Figure 18. and then expand it to include international factors. relevant local and international matters begin to surface. the work-definition process is not much different than for a domestic project. who might include the local project manager. and so on.3) must be addressed by detailed tasks within work packages or by additional work packages. At the first-level breakdown of this WBS the work packages might consist of the following tasks:25 1. Expatriate team members need local room.1). transportation Local team members lack knowledge and skills about project work Local communication infrastructure is poor Project leader lacks prior international experience Expatriate team members lack knowledge about the local culture and host country Local team members are unfamiliar with business practices of the contractor Work status might be difficult to determine Project will at times require people from the home office with critical skills Local transportation infrastructure is poor The business needs of the local office differ from those of the home office Project will depend on vendors who do not have strong presence in the country Business processes in the host country differ from those in the home country Technology or material require export licenses and import approvals Project or task start-up is dependent on success of another project or task Team members might be pulled off project due to other higher-priority needs 618 Part V Project Management in the Corporate Context . and in fact might not look much different than a one-country. however. Assess risks associated with these issues and prepare plans to address them 3.Work Definition and WBS24 Work definition must account for the many additional factors that distinguish an international project from a domestic project. as activities are broken down into greater detail. infrastructure. The starting template lays out the first-level breakdown of activities or end-items. general areas of work and resources needed. etc. subprojects in different countries look quite different at lower work levels owing to differences in culture. and cost. time. Provide support for overseas personnel on the project Table 18. subdivides the activity into detailed task definitions with estimates for resources.

Technical WBS Cross-cultural/ Cross-national WBS Technical tasks Tasks to address cultural international factors Figure 18. ETP.4. pp.1 WBSs for an international project. 2005 from http://www.htm. any redundancies that appear in both WBSs are simply consolidated. Provide team-building and relationship-building support 5. One way to keep track of the detailed tasks and work packages in a global project is with a summary matrix. As Figure 18. shown in Table 18. This dualpronged approach helps assure that no important issues are overlooked. Managing a Global Project.4 Summary Matrix of Tasks versus Subprojects Tasks Subproject in Country A Subproject in Country B X X X X X X X X Subproject in Country C X X X X X X X X X X Technical tasks Survey Site development Site construction System implementation System test Training Tasks addressing local issues Labor Subcontractors Permits Customs Time zone Language X X X X X X X X Approach adapted from Seward J. the two WBSs can be used to identify work packages wherein international issues reside. The matrix reveals which tasks are Table 18. Manage knowledge obtained for this and other international projects.etpint. and to address and resolve the issues.1 illustrates.com/ globalproject. 3–4. Downloaded September 9. 4. The Structure Programme & Project Management Company. Chapter 18 International Project Management 619 .

the work can be defined in greater detail. and replacements in accordance with the project schedule. trucking and other local services. taxi and limo fares). after the project gets underway and the picture of pending activities becomes clearer and the unknowns fade. clearing port-of-entry customs. the WBS and plan are continually reviewed.unique to certain subprojects and countries. ceteris paribus. overseas work salary incentives. It also suggests places where knowledge gained from one subproject might be used in another. more costly. harbor. As with phased project planning for other aspects of the project. workers. no more than 2 weeks each). and risky than domestic projects. local housing. say. others adding to time and cost in international projects include shipping preparation. both at home and at the project site/host country. Early in the definition process. upcoming work packages are subdivided into detailed. The budget must include fees and costs for insurance. lengthy. and other supporting stakeholders. automobile. governmental reviews. short-duration tasks (ideally. phone. the technical WBS should ultimately be subdivided into small packages of short duration and measurable outcomes. and helps ensure that important tasks or issues are not overlooked. and which are common among many or all. a detailed breakdown for all activities will be neither possible nor—because of the many unknowns—desirable. If the only available transport to or from the project site departs only once a week. and for transporting managers. Since. Expenses and lead times for obtaining passports and visas. transport between countries. Back home. subcontractors. Transport time in the host country depends on the quality of roads. and medical care. in general. and arrangements for conferences and local services. car rentals. travel (air fares. and on available airport. Planned resources must account for differences in equipment and labor productivity levels. In addition to those factors already mentioned. and cost based upon experience in the home country must be revised when applied to overseas projects. licenses. the contractor simply would have brought in other equipment more appropriate for the weather. Any material or equipment to be brought in from the US but deemed as “transfer of technology” must first be approved by the Department of State. daycare. While the WBS is being created. That equip- 620 Part V Project Management in the Corporate Context . Example 18. must also be accounted for. schooling. and the immediate. a change of ±10 percent in the euro on the project estimated cost at completion. All of these extra activities make international projects. Nonetheless. The matrix should show the responsibilities of all individuals and groups working on or supporting the project—customer. which can take months. however. Fluctuating exchange rates should also be anticipated—for example. Schedule. and transportation in the host country. by forecasting the impact of. missing it by a minute could result in a week’s delay. so is the responsibility matrix. Resources. smaller work packages are easier to track and control than larger ones. translators).4: Added Time and Cost of an International Project A contractor working on an overseas project encountered bad weather that fouled the equipment and stopped the project. Time for customs inspection and clearance depends on the item shipped and local politics. time. security. and Budget26 Any estimates for resources. Work Packages and Responsibilities Tracking technical tasks in an international project can be difficult. and schedules and budgets must be adjusted for the additional time and costs for communication (fax. courier.

and risk.ment. poor understanding of the cultural environment. much advance preparation goes into training and coaching expatriate managers and staff in the culture. Assuming that technical work packages have been defined to be of relatively short duration—no longer than 2 or 3 weeks—the project manager will then be able to easily discern whether work has been completed. traditions. is on schedule. shipping schedules). was not available in the host country. In the South African projects the expatriate engineers were given only technical assignments. Typically overlooked but sometimes as important is to train the local managers and staff in the culture. and would be compensated for by extending the project’s engineering work schedule. Example 18. 18. or is behind. and technical procedures of the contractor and the home country.” lack of personal networks. lack of knowledge about local companies and processes. On the other hand. the productivity of a local engineer might be considered equivalent to only half that of. Training Often. such trade-offs are rarely easy to determine in advance. since in some cultures the Western mode of classroom lecture–discussion is not very effective. Chapter 18 International Project Management 621 . Cultural adjustment is a two-way street. and communication problems. Canadian. Despite their professional competency. due to many factors—including time to “settle in. and regulations of the host country. in an international project this is simplified by posting the project plan and updates on the Internet. He should require that the local project manager and team leaders submit task updates on a weekly basis. The skills and work ethic of local professionals and laborers must also be factored into time estimates and schedules. say. then extending the project schedule might not be necessary. local transport (local roads and hauling services). Problems associated with international transport of the equipment (export licensing. in all cases these engineers needed significant time before they became as productive as the local engineers. an American engineer. and restricted them to working on tasks below their full potential. and had to be imported. For training of locals the strategy and setting must be carefully designed. A solution that would have been relatively straightforward in a domestic project became a lengthy. cost. if lower labor costs of local engineers would allow hiring several of them to replace one American. however.11 PROJECT MONITORING Tracking and Updating the Plan27 The project manager should make certain that every local subcontractor understands his expectations and procedures about communication and progress reporting.5: Productivity in International Projects One of the authors has worked with several American. and local bureaucracy (customs inspection. and German engineers in projects in South Africa. and risky proposition in the overseas project. However. Such factors put expatriate engineers at a handicap and reduced their productivity. at least initially. Owing to language differences. costly. whereas local engineers with similar qualifications and experience were also given assignments with management responsibility. and import regulations on equipment) substantially added to the project’s time. common business practices.

Site Visits The project manager of an international project must make his presence known. The project manager who cannot be on site will rely heavily on telephone and teleconferencing to communicate with locals. It should specify important contact persons (who’s who) in the host country. advance preparations. he must assign a local person to assist the subcontractor. if he cannot always be on-site. the 622 Part V Project Management in the Corporate Context . The project manager should meet with local customers or officials before formal meetings to report any major problems. Since formal meetings in international projects can be difficult to schedule. In addition to the usual contents described in Chapter 12. and the content and format of each. and who will lead. It is important to ensure that everyone— domestic and foreign project staff and subcontractors—understands the required reports and written communication. No one should be shocked by what they hear in a meeting. and describe the format of meetings. Good practice is to precede all verbal communication with written communication so local workers will know what to expect and can be prepared. home country.12 COMMUNICATION Communication Plan28 As in any project. and elsewhere. the communication plan for an international project must address difficulties arising from differences in languages and time zones. Nowhere is the value of site visits and visibility more important than in international projects. International litigation can be a big hassle. Meetings The communication plan should include a tentative schedule for all formal reviews and milestone meetings. Those not familiar with the working language should be given accelerated language lessons. time limits on presentations.When a local subcontractor starts to fall behind or miss requirements. convened as needed. the project manager should prepare a communication plan. expected content. attendance policy. This will help reduce misunderstandings among parties—common in international projects. it is best to restrict them to as few as possible. and expose people to cultural gaffes or imbroglios. everyone using the common language should be reminded to speak slowly and use simple terms and no slang. the project manager must step in to take a more direct role in managing the subcontractor’s work. 18. then he should make frequent visits—unannounced. and then to follow up with written directives or action plans. The primary method for status tracking and identifying problems should be one-on-one communication and frequent informal meetings. require time-consuming preparation. Foreign contractors and local project staff might not be familiar with “common” project documents and have to be taught why they are important and how they will be used. so it is always better first to try to coach a subcontractor into getting back on track rather than to resort to legal action. The project newsletter should be published in multiple versions for the different languages of the key stakeholders on the project. if that is not possible. A common “working language” should be adopted for all or specific portions of the project.

By outsourcing these activities to knowledgeable subcontractors. materials. and resources. writes them up. alternate weeks if everything is okay. these risks are subtle or hidden and can be exposed only by looking at the project from the perspectives of the different cultures and countries of the project stakeholders. Hence. This practice is mandatory in countries where local laws are unclear or enforcement is unpredictable. and infrastructure. As with domestic projects. Most companies employ a mix of the above—they learn about and deal with some aspects of the host country and culture themselves. no matter the project or country. but avoid having to learn about and deal with others. finalize all contract agreements according to international law or in a neutral country where the laws are more familiar. its laws. the project manager should be the person who takes notes. learning is an important strategy for reducing risks in international projects. the more a project requires the contractor to be “imbedded” in a foreign country. the better you can identify and mitigate the risks. Thus. the firms must learn about the country or region of the project. however.time and place determined by urgency and purpose—for example. the risk tolerance upon which the policy is based should remain constant. and distributes them. language. have large scope. and expatriates Chapter 18 International Project Management 623 . and stakeholders. the burden of responsibility (and much of the risk) is shifted to the subcontractors. Rather than learn the intricacies of local laws and depend on local lawyers. the more the contractor must learn about the country. As discussed in Chapter 10. is to decrease the amount of learning necessary to deal with local regulations. the greater the risk. fraught with risk. infrastructure. • Perform technology-intensive work at home. almost by definition. hiring locals. Project risk is associated with level of uncertainly: the less certain you are about something. obtaining permits. often. laws. • Sign contracts under international law or third-country law. The mix depends on the kind of project. do most of the work on major hardware and software components at home and then transport them abroad to the site for simple assembly and installation. and culture. Contractors such as Fluor and Bechtel performing large construction projects must be heavily imbedded in the local environment because the projects take years. customs. Another strategy. In an international project.13 RISKS AND CONTINGENCIES An international project is. 18. institutions. and rely somewhat on local resources. local laborers. Purchasing land. which they do by hiring local contractors. risk analysis begins during project conception and definition by imagining different scenarios about what could go wrong. and at the location experiencing the problems or issues. Rather than dealing with the uncertainties of local labor. The more you know about these matters. Any standing risk policies of the contractor or customer (described Chapter 10) should be applied in a consistent manner across all projects in all countries. much of the uncertainty relates to ignorance about local and international culture. In general. This is done in the following ways:29 • Outsource activities that are heavily restricted by local regulations. Attendance should be restricted to those who can contribute to the meeting or would benefit from being there. In other words. and moving materials through customs are risky because they require knowledge about local laws and customs. more often if not.

collaboration. the on-site project manager of an international project is always “imbedded” in the host country—even when the contractor (his employer) is not. another for cultural or international aspects. laborers. These issues touch most everything about project management— leadership. if not. outsourcing to local suppliers and contractors. The project manager must give firm direction—explaining to local managers and subcontractors the project goals. gaining personal familiarity and building relationships is a fundamental aspect of managing international projects. planning. subcontractors. and cost. or support until they feel they know the project manager personally. The project plan should describe the required forms of communication. and help resolve any local issues. the project manager must possess the qualities of selfsufficiency. They also methodically manage all knowledge gained about the host country. he makes frequent visits. and budgets. consultants. adaptability in unfamiliar environments. laws. and officials. and include a schedule for formal review meetings. infrastructure. and his expectations for communication and progress reporting. Of all the ways to reduce the risks in an international project. The project might have two WBSs—one for technical aspects of the project. mediate with local stakeholders. In addition. and to build trusting relationships with leaders. schedules. etc. Often these stakeholders withhold effort. country. 624 Part V Project Management in the Corporate Context . Thus. risk management. It should also have a local steering committee for each subproject to plan and execute the details and handle local problems. and social norms. The project manager must be able to work with local subcontractors. who has to live and work in the host country for as long as the project takes. and hiring local representatives to deal with local stakeholders and freelance expatriates to manage technology and contracts. the project should have a permanent “local representative” to update the project manager on local matters. suppliers. he should appoint a local project manager to handle detailed planning and daily management. knowing the local ways and protocols does matter to the manager. When the project manager cannot always be on site. Each global project should have an executive steering committee to oversee governance and funding. and tracking and control. stakeholder involvement. unannounced. they reduce their need to learn about everything by utilizing prefabricated components from home wherever possible. and budgets. But. and accounting for them in project plans. estimating. 18. Although much about the local environment might not matter to his firm. and to set goals and coordinate work and resources among subprojects at different sites.who thoroughly know the language and the country. and this must be factored into tasks. and others familiar with the local environment must be consulted and involved in preparing detailed plans. perhaps the overall best is to learn and adapt to the local customs.14 SUMMARY A project that is international automatically inherits more issues and greater risk than a project that is not. interpersonal relations. customers.. Almost everything takes more effort. Definition and planning for an international project requires identifying the many issues and unknowns associated with culture. At the same time. representatives. and officials in the host country. and readiness and ability to understand and respect local culture and customs. Besides “domain competency” over technical aspects of the project. communication. schedules. people. laws. Managers. Ideally he is on-site. business associates. identify points of contact. time. of course.

What are the four main categories of “unknowns” in an international project? 3.Many of the risks in international projects stem from ignorance about local and international customs and conditions. and who is on the committee? What is the difference between the global and local steering committees? 21. social behavior. Describe the role of informal gatherings and social events in building trust in international projects. and regulations of the home or host country—the managers and staff who will be going to the host country to work on the project. what are the scripts. What is the role of the project steering committee (or governance committee or review board). Discuss how you would accommodate the 6-hour time difference between the countries to encourage maximal communication and coordination between the teams. 16. What difficulties are associated with contracts in international projects? What steps should be taken to avoid legal problems. A project involves team members in New York and Rome. and social norms. In what ways can export/ import restrictions impact an international project? 15. What is an “offset”? Compare indirect and direct offsets. what are the sets. or the local managers and subcontractors in the host country who will be working on the project for a contractor that is based overseas? 19. gift giving. and what are the props? 2. What are “Incoterms”? 8. Describe some ways that the contractor can protect against rising costs or falling prices as a result of fluctuating exchange rates. 5. holidays and time off. and customary labor time. 13. formality. In global projects that include subprojects at multiple sites. What is the role of the PMO in an international project? Chapter 18 International Project Management 625 . How can the project manager know in advance of impending political or labor/ union problems in the host country? 10. whose laws prevail—those of the host country or those of the home country? 7. REVIEW QUESTIONS AND PROBLEMS 1. 12. In an international project. attitudes about age and about time. who are the actors. who should be trained in the cultures. In the above list. food and drink. For an overseas project. and to deal with them should they arise? 9. one of the best ways to reduce risk is to learn about local customs. who is responsible for day-to-day oversight of each subproject at each site? 17. infrastructure. and to build trusting relationships with local stakeholders. What are the potential benefits of hiring local contractors in an international project? What are the potential drawbacks and difficulties? 11. 14. thus. Consider the analogy of an international project to a play. What are the responsibilities and qualifications of the local representative? 20. Name some forms of export/import restrictions. Why might worker layoffs following the project cause legal problems for the contractor or employer? 6. laws. Compare and contrast them in terms of the following: language. which unknowns are implicit and which are explicit? Why are implicit unknowns potentially more problematic for the project manager? 4. In international projects. Consider two countries you are familiar with. traditions. Can it be assumed that a technology or process that proved successful in a project in one country or culture will automatically be successful in an identical project in another country or culture? 18.

1. Describe what the contractor and or project manager did for this project that differed from typical preparations for a domestic project. domestic project? 28. time. 29. Discuss the following. What adjustments did the project manager make to estimated resources. and cost. were they knowledgeable and wellprepared to work with stakeholders in the host and other countries? 4. multinational global project. Comment on the size of work packages in an international project. How did the project manager and staff learn about the culture.22. How can the project manager learn about the host country and about potential risks related to culture and environment in the project? 25. country. List some of the many factors that must be accounted for in estimating project resources. the role of the steering committee. What special issues should the communication plan for an international project address? 33. the role of the PMO. What difficulties did the project encounter that stemmed from the international nature of the project? Could these difficulties have been avoided through better planning? 5. How are work packages tracked and controlled? 31. and social behavior of the host country that posed challenges to the project manager. 2. did the contractor and project manager employ to identify and reduce risks in the project? 626 Part V Project Management in the Corporate Context . Name some of the issues the WBS in an international project might have to address. culture. 6. 27. What are the unique issues in defining the scope and SOW for an international project? 26. consider the following questions. 30. Discuss the process of developing the scope and SOW for the subprojects in a multi-site. What strategies are used for handling risks in international projects? QUESTIONS ABOUT THE STUDY PROJECT If your investigation project was a global or international project. or involved customers and/or contractors overseas. if any. How did the project manager identify special issues related to the international nature of the project and account for them in planning the project? 7. time. and in establishing budgets and schedules for an international project. Describe the purpose and content of the summary matrix in Table 18. as appropriate: the role of a local project manager. What strategies. What are ways to build teamwork and encourage cooperation between members of the project team from the home and host countries? 23. What are ways to build good relations with local stakeholders? With local vendors and officials? Why are these relations so important? 24. How is the technical WBS similar to or different from a technical WBS for a single-country. Describe the WBS for identifying the unique issues of an international project. Discuss aspects of the country. and cost to account for differences countries supplying labor and materials to the project? 8. language.4. 3. 32. and traditions of the host country? In your opinion.

and French specialists from the Hillside project to search for the site for another smelter.000 tons per annum (tpa) aluminium smelter in Mozambique (Figure 18. the South African power utility Eskom saw an opportunity to extend its power grid into Mozambique. Canadian. a large South African mining firm (later a part of BHP Billiton) that had recently completed the world’s largest (500. plus abundant low-cost (though largely unskilled) labor. Mozal is a $1. In 1995 Gencor sent a multinational team of South African. MOZAMBIQUE Mozal’s primary promoting and controlling shareholder was Gencor. Chapter 18 The team chose to focus on Mozambique for several reasons (Figure 18. Yet the project was a success. and international financing. International Project Management 627 . The grid would provide Swaziland with reliable power. state-of-the-art production facility would require stable supplies of raw Figure 18. offered a suitable (though run-down) harbor for importing alumina and exporting aluminium. completed months ahead of schedule and well under budget.3). Its capital. At first glance. Also.1 Mozal Project—International Investment in an Undeveloped Country30 materials and labor. but Mozambique was one of the world’s poorest nations with an infrastructure in ruins after two decades of civil war. To build such a large. the idea of such a project seemed preposterous. and might later be the conduit to supply hydropower from the Zambesi River in Mozambique to the RSA.2). Maputo. Republic of South Africa (RSA). It is worthwhile seeing how that happened.4 billion project launched in 1998 to construct a 250. modern.Case 18.000 tpa) Hillside smelter in Richards Bay.2 Mozal aluminum smelter.

Key members of the Mozal team relocated to Mozambique. The locals speak 628 Part V Project Management in the Corporate Context . signed on. a development bank of the RSA government created to seek investment opportunities that promote economic stability. In addition. the governments of Mozambique and the RSA signed an agreement pledging to honor and protect cross-border investments. a member of the World Bank Group that promotes sustainable investment in developing countries. giving its supporters important tax and duty exemptions. FINANCING Another sponsoring shareholder for the project was the Industrial Development Corporation (IDC). guarantees to South African manufacturers and contractors. and the commercial case supporting the project surpassed Gencor’s investment criteria. Mitsubishi Corporation. since the project would provide impetus to its industrialization policy and opportunity to modernize its investment procedures. and in May 1998 the project was given the go-ahead at a ceremony in London. against repayment over time through taxes and harbor revenue offsets.3 Mozal Smelter and surroundings. In May 1997. Mozal would become the first enterprise to qualify as an enterprise in the Industrial Free Zone. The site chosen for the smelter lay in an undeveloped area 17 km from the harbor. In 1997.MOZAMBIQUE MOZAMBIQUE Pretoria Mozal Smelter Johannesburg Swaziland Maputo INDIAN OCEAN SOUTH AFRICA Kilometers 50 100 150 Richards Bay Figure 18. this enabled them to build relationships with stakeholders throughout government and the community. IDC agreed to provide low-cost financing and export credit. including developing the harbor facilities. the $78 billion Japanese conglomerate. the IDC and IFC decided to seek an influential international shareholder to share in the risk. and offered important benefits to the local economy. Mozambique’s government was especially receptive to Mozal. The only major risk in the project was Mozambique. RISK MITIGATION AND GO-AHEAD The project’s production costs were anticipated to be in the bottom 5 percent of industry capacity. environmentally sound. To clinch the project Gencor agreed to finance all related infrastructure work. Mozambique’s prime minister championed the project and facilitated the regulatory and bureaucratic changes necessary for it to proceed. aluminium produced there would enter the European Union duty free. also agreed to provide financing after being convinced that the project was commercially viable. since Mozambique is an Asian-PacificCaribbean country under the Lome Agreement. After a visit to the Hillside smelter. All major cash inputs and outputs were set in US dollars to minimize currency exposure. After private discussions with influential interest groups in Mozambique. and CONSTRUCTION Construction at the Mozambique site provided major management challenges. The International Finance Corporation (IFC).

and to string power cable. and you now must convince the international sponsors. RSA. What do you see as the criteria for evaluating the success of this international project? Chapter 18 International Project Management 629 . commissioning of the smelter were threatened by major country-wide cyclonic floods. You are the newly appointed director for the proposed Mozal project. Some basic engineering work was done in Canada and France. and the importance of that work. At peak construction. 4. where material and equipment arrived from overseas for transport to the project site. What actions led to successful completion of the project despite the risks? 3. An estimated $75M was spent in the local economy. 70 percent of the 9. and convinced them to allow the Mozal team to assist in managing the border post. Schools were set up near the project to train them in conQUESTIONS 1. address their expectations and how you will deal with the perceived risks. Discuss the social responsibilities relating to projects in developing countries such as Mozambique. and lenders to commit to the project. The project has received the go-ahead. supervisors. Discuss the kinds of work required during the pre-project phase of a high-risk international project such as Mozal. Road and rail links connected Mozal to Richards Bay. and increase awareness of safety and the risks of HIV infection.000 cases. detailed design. But the project director had built good relationships with key stakeholders. At one stage of the project it became clear that Mozambique agents were having trouble processing the 60–80 trucks of equipment and materials crossing the border daily. coordination. but the expatriate managers. and how will you go about laying the foundations for success? 3. the placing of crosscountry power supply lines and. Most of the planning.4 billion to the project. The project employed many experienced workers from the Hillside project. though thousands more unskilled workers had to be hired. Develop a presentation to a special board of stakeholders asking for the go-ahead to commit $1. One goal of the project was to maximize local content. For residents displaced by the project. 2. land mines laid during the civil war had to be cleared. Heavy-lift helicopters were needed to fly in large pylons prefabricated offsite. The team began searching for a suitable site in 1995 but the project was not launched until 1998. In the latter stages of construction. STUDY ASSIGNMENTS 1. The feasibility study is complete. consequently. new farming land was allocated and cultivated. including Mozambique’s president.Portuguese. To combat malaria the area surrounding the site had to be continually sprayed. struction. and computer software used English. Before contractors could access parts of the site and service corridors. and you now face the reality of mobilizing your team and starting work in a foreign country. What special project challenges can you expect to face. and a development trust established to provide for local schooling and other community needs. and full-time on-site clinics were set up that would eventually handle over 6. Which of these arose from the international nature of the project? 2. shareholders. Summarize the issues and factors that posed risks to the Mozal project.000 people employed at the site were Mozambicans. some specialized equipment was designed and manufactured in Japan and France. and preparation of material took place in the RSA.

is building an office branch in Puerto Rico. on-time work). Susan asked contractors to estimate and order the needed fixtures at the earliest possible date. • Added cost and time for imported materials due to import tax and shipping costs. Spirit wanted the project completed within 30 weeks. is managing the project. but Susan was able to negotiate with vendors and reduce the cost to $987. To avoid delays. Spirit threatened to cancel. In preparing the budget. Susan knew that in overseas projects extra time must be included in the schedule to account 630 Part V Project Management in the Corporate Context . Bids received from US firms seemed extremely high (possibly due to the perceived risk of working outside the US). a construction management consulting firm.655. a US firm. Susan hired the first. and 6 weeks for government inspections. which usually must be done on-site after walls are completed and exact room dimensions known. some carpenters and laborers). She was able to create a schedule to meet the original target by paying the government $20. but Spirit objected. • Language differences between locals and US members of the project team (site superintendent. As the project progressed. For tasks requiring coordination between local and US members. She visited the project site and met with the person who would be her local project representative. Since cost bids from the vendors were slow to arrive. She proposed delaying the target completion by 8 weeks. issues arose from the project being in Puerto Rico: • Permits are required from both city and state (the US requires only city permits) • Labor insurance is required at 5 percent construction cost (not required in US) • City taxes for construction work are unusually high • Furniture costs are high (much higher than in the US) • Security costs are high due to the risk of theft (higher than in the US) • Work shut down due to a state holiday (December 22 through January 15). this. plus the fact that labor laws in Puerto Rico require certain jobs to be performed by local vendors. she sought bids from vendors in the US and Puerto Rico. Susan prepared the budget using her firm’s cost estimating spreadsheet and standardized costs. to which Spirit agreed. • Disorganized furniture installation vendors. Susan extended the duration times.Case 18. Susan Marcie of Weller & Waxhall. and.998. As project planning progressed. • Long lead times on permits (3–16 weeks). To avoid this. The project budget for $690. This is Susan’s first non-US project. she thought.457 was approved. IT personnel. Susan had to respond to several other high-risk issues: • Long lead times for custom-made fixtures (6–8 weeks). the quicker the budget is approved.2 Spirit Electronics’ Puerto Rico Office31 for unknowns. Susan made the vendors create a plan (from which she estimated 8 weeks completion time) and then held them to it. Spirit’s budget review process takes 4 weeks. the building design was changed so millwork could be premade.250. showing dates when permits would be needed. • Millwork for cabinets and shelving. These plus other smaller issues raised the estimated cost to $1. the sooner the project can begin. Spirit Electronics Company. led Susan to select mostly Puerto Rican vendors. • Local labor pool dichotomy—extremely highcost (five times more expensive than in US but reliable and able to meet expectations) or extremely low-cost (uncertain ability to do quality. She submitted drawings and permit applications far in advance.000 to rush the permits. Susan arranged for local storage space and shipping of materials far in advance of need. In most cases.

see especially pp.edu/publications/conference_papers/RyanVegas. The Chunnel Project. International Project Management. Adapted from Orr R. Ibid. Turner J. In managing the project. Managing a Global Project. pp. 6. 56 Ibid. Murphy. International Project Management. Tunneling and Underground Space Technology 10(2). 18. 2003. com/business/india/cultural_tips. 11. Anbari FT (ed. 63.asp?subchannel_ id=157&story_id=10562. 5. 4. Las Vegas. New York. 2006.org/policy/law/id315/ index. International Chamber of Commerce.zawya. 24. Professional Knowledge Centre. 15. and Lientz and Rea in International Project Management. www. Adapted from Mathew M.com/pub-project-wbs. 178. 21. CareerJournalEurope. Finding ways around rigid labour laws. accessed March 10. p. International Project Management. February 8–10.htm. Collaboratory for Research on Global Projects. 72–73. International Project Management. Similar approaches are discussed by Seward. 9.). International Project Management. p. p. how did Susan explicitly address the fact that it was an “overseas” project? 2. in Managing a Global Project. 2006.org/applications/30th/PDF/ TUST_95_v10_n1_5–29. 71–72. Stanford University. 2005. expatica. Lemley J. 20. http://www. http:// www. Orr. International Project Management. p. International Project Management. 88. Case Studies in Project Management. These and other considerations are discussed in Murphy. accessed April 11.html. 2005 from http://www. Doing Business in Chapter 18 India: A Cultural Perspective. 91–94. Lientz B and Rea K. 10. 3.stanford. Strategies to Succeed in Foreign Environments. accessed March 10. TD Commercial Banking.etpint. Murphy. downloaded April 10. 16. www.grovewell. A Parallel WBS for International Projects. The Structure Programme & Project Management Company.com/pittsburgh/adviceforchina. Lientz and Rea.htm. 1999. www. downloaded December 2. p. Lientz and Rea.com/foreignx/ products/forward. Lientz and Rea. Managing a Global Project. Ibid. Murphy.html. 44–45. downloaded September 25. How might Susan have pre-identified the issues that ultimately required her to redo the budget? How might she have anticipated other issues that emerged later? NOTES 1. p. com/globalproject. pp. pp. 22. OH: Thompson. 2007. 2006.pdf. 36. Downloaded September 9.iccwbo. Hallawell W. Pringle D. 12. 5. Grove C. International Project Management.com/actual/article. Incoterms 2000.QUESTIONS 1. http://crgp. 13. 2006. Strategies to Succeed in Foreign Environments. presented at the CIB W92 International Symposium Construction Procurement—The Impact of Cultural Differences and Systems on Construction Performance. PA: Project Management Institute. Jubail City-2: SR 200bn Industrial Hub in the Making. International Project Management. 155–170. pp.. 28. 49 Murphy. 1998. 161.cfm/sidZAWYA20050321123628. 19. 65–66. Zawya. p. www. Lientz and Rea. 2007. 25. 7. 1995: 9–11. International Project Management 631 . 2. Foreign Exchange. 23. 3–4. International Project Management. 2005. downloaded June 12.jsp. Murphy O. NY: McGraw-Hill. pp. 2007. 2. 8. 26. ETP.buyusa.ita-aites. 2006.stylusinc. Seward J. p. p. 63.tdcommercialbanking. 14. 124–128. http://www. 17. 27. pp. accessed May 8. and Smith C. Newtown Square. Handbook of Project-Based Management. Policy and Business Practices. Managing the Channel Tunnel— lessons learned. Amsterdam: Academic Press. Derived from Seward. Mason.. Ch. 483.com/ story.. 23. Grovewell LCC. 81–95. 2006. pp. downloaded January 25. International Project Management.html. http://www.pdf.

Personal communication. 632 Part V Project Management in the Corporate Context . Sprint Powered Workplace. February 2007.29. Orr. Graduate School of Business. and Kim C. 31. Case adapted from Carta K. Farr B. Cisek A. Barbour. Mozal. Cho L. Strategies to Succeed in Foreign Environments. Hobbs M. former chairman. Loyola University Chicago. pp. 30. Rob A. 6–7.

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