International Project Management

Bennet Lientz, Kathryn Rea

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136393877
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

'International Project Management' provides specific guidelines for achieving greater project success. It is the result of 15 years of work on international projects by the authors across various project areas and industries. The authors address a need for modern techniques in project management geared and suited to international projects. They offer lessons learned from failures and problems in international projects, and suggest alternative solutions for project issues. Industry examples include manufacturing, distribution, communications, media, transportation, government, IT, marketing, energy, medical care, tourism, and others in forty countries across five continents. The purpose of this book is to answer: * What is an international project and why is it different?
* What are the critical success factors for managing international projects?
* How are vendors and outsourcing managed across national boundaries?
* How do businesses effectively address cross- cultural, social, and political issues?
* How are international communications set up and coordinated?
* What should a manager look for in an international project leader?
* How does a business select the right vendors for an international project?
* How are inadequate or incompatible infrastructure and technology issues overcome?
* How are the legal and bureaucratic limitations on project management dealt with?

Part I Launch Your International Project

Chapter 1 Introduction

DOI: 10.4324/9780080495477-1

What is an International Project?

A project is directed work that is aimed at achieving specific goals within a defined budget and schedule. An international or regional project is a project that involves multiple locations, entities, organizations, and business units. Examples of international and regional projects are:

• A company is doing a major construction project in a country that involves many subcontractors.
• Two companies are merging their operations.
• An organization is implementing major new systems and technology across all business units.
• A company is deploying a new product in a region.
• There is a new marketing campaign for an innovative consumer product.

What do these projects all have in common? They are all projects, but they are complex projects. They are sufficiently complex that the standard techniques of project management do not work well. Traditional project management targets a single project in one location. That was, after all, the case when many project management methods were conceived.

With globalization, mergers, and acquisitions international projects are more frequent. In this book we will consider a wide range of international projects—based in different industries and multiple countries. The methods and lessons learned here also apply to national projects where you encounter issues in culture, organization, and politics.

Why not use standard project management methods? Because they tend to fail or only partially work in the more complex environment. Statistics show that over half of international projects either fail, fail to be completed, or do not deliver the results that were promised.

Examples of International Projects

Let’s consider some categories of international projects that we see more frequently.

• International efforts by governments. The war against terror is one example. Others are international police efforts, foreign aid, government promotion of trade and business, and health care initiatives. Regional government organizations such as APEC, the Organization of African Unity, and others are examples.
• International nonprofit and aid agencies. These organizations regularly are involved in small and large scale efforts around the world.
• Efforts by firms to enter new markets and expand their customer base. We see this all of the time in supermarkets and other retail establishments as new products appear.
• Mergers and acquisitions. Companies for the past decade have moved to acquire other firms across national boundaries.
• Support for standardization. With common and more powerful technologies and systems, it is possible now to impose the same systems and methods on all locations of a firm. Implementation of ERP systems in many companies are examples of this.
• Marketing initiatives. Companies tend to seek new customers and follow their existing customers around the globe.

However, international projects are not new. Probably the first projects were migrations of peoples across the globe after the Ice Age. More recently, the world has seen conquests and invasions. Alexander the Great is probably one of the first and most successful managers of international projects. He mounted armed forces that conquered a substantial part of the known world. He and his armies perfected the technique of operating far from their home base. In contrast earlier conquerors such as the pharaohs of ancient Egypt operated from their bases on the Nile River.

Moving ahead in history we come to the Phoenicians and the Greeks. While they established remote settlements, these were relatively small projects. The groups that improved on Alexander were the Chinese emperors and the Roman Empire. In each case, they were able to establish remote centers and run an empire that spread across many cultures, time zones, and climates for hundreds of years. How did they do it? Let’s create a small list that we can use later.

• Establishment of communications and roads. Critical to any international project is the ability to communicate quickly and effectively with remote locations. The Romans, for example, established a road that was second to none until the twentieth century. The elapsed time for a governor to send correspondence to Rome was not equaled until the twentieth century.
• Sensitivity to local culture. All empires that have been lasting for many years adapted their regulations and rules to the specific culture. Those that tried to impose their will failed. An example is Attila the Hun. He conquered many lands quickly, but when he died, the empire blew apart.
• Establishment of an organization that was international. This is critical to the success of an international project, or even a large project in a single company. Each department has its own style. The organization that carries out projects must be flexible and knowledgeable about what is going on. Techniques and methods that work in one place often fail in other places.

After the Roman and Chinese empires declined, there was a huge time gap before international projects reemerged. Most of the efforts were expeditions. The next wave of international projects occurred during the colonial period that ended in the twentieth century with World Wars I and II. The most successful colonial powers were those that followed the lessons learned and critical success factors listed above. The ones that did not failed in a fairly short time.

Trends in Global Business

Over the past decades we have experienced an explosion of international and large-scale projects. Benefits from these efforts have, in turn, spurred on more efforts. Here are some trends.

• Expansion of individual firms to sell their products and services in other countries. This began in the nineteenth century, but really accelerated after World War II. Today, you see the same products and services in almost all countries—leading to resentment of the invasion of the local culture.
• Standardization in government regulations and simplification.
  Governments around the world have seen the benefits of expanding trade and business through changing and simplifying regulations through free trade zones and other measures.
• Mergers and acquisitions. This will be explored in Chapter 12 in more detail. Today, you can see that the number of individual large companies doing business in just one country or area has greatly diminished.
• Requirement for a global presence to be viable in an industry. Whether you look at automobiles, banking, insurance, pharmaceuticals, or one-hundred other industries, you can see that there is drive for global presence.
• Worldwide manufacturing and distribution. When you buy any complex product that has multiple components, chances are that individual pieces were made in a variety of locations. Assembly was then carried out somewhere else.

Why have these occurred? A prime reason is improved communications and technology. Another reason has been expansion of transportation. Both of these have lowered the cost of doing business in multiple locations to the point that is affordable to many individuals as well as companies.

What are the benefits that organizations seek in carrying out international and complex projects such as those mentioned above?

• Economies of scale. By having one headquarters you achieve administrative economies of scale. By centralizing manufacturing activities of the same type you have additional economies of scale and lower costs of operations.
• Strength in size. For many firms there are major benefits to increased size. Retailing is a good example. A Wal-Mart or Carrefour can obtain goods at lower prices and then be more competitive.
• Penetration of new markets and increased sales. The elapsed time to enter new markets has been dramatically reduced. In addition, a company can enter a market on a test basis and then later withdraw or retrench if the conditions are not favorable.
• Access to human resources. Many firms are challenged with labor problems such as a lack of personnel with specific skills or high labor costs. Operating internationally can help ease these problems.
• Lower cost of operations. With economies of scale and flexibility in moving and locating operations to lower cost locales, the cost of doing business is reduced.
• Maintenance and expansion of the firm’s competitive position. You often either grow or risk dying out. This has been the case in banking, insurance, and the automotive industry. When a competitor has success in expansion, you often have no choice but to copy the move.

What is the impact of these global trends? More international projects. But as you have seen, the results are often mixed. For every case of success, there are many instances of failure and problems. Look at the merger of Chrysler and Daimler-Benz for one example of problems.

Technology and Systems Trends

There are some specific breakthroughs that have made international projects possible and easier as well as cheaper. Some of these are:

• Telecommunications. The middle twentieth century saw the worldwide telephone system being established. Fiber optics and satellite communications greatly increased both the capabilities and the capacity for communications. Costs have been dramatically lowered. A telephone card can let you talk to most of the people of the world for a very low per minute charge.
• Networking. Networking technology has taken advantage of the telecommunication advances to allow for high-speed data and image communications.
• Mobile communications. Cellular phone use has continued to rise rapidly over the past five years. While the growth is lower today, it is still on the rise. Mobile communications not only offers convenience to people and organizations, but it offers an alternative to standard land-based communications. This increases reliability of communications overall and encourages businesses and individuals to carry out more work overseas.
• Hardware and systems software. Twenty years ago, hardware was much more expensive. Further back, there were many incompatible systems. The dominance of first IBM and then Microsoft has created standards for computing and common computing environments. Both of these facilitate and make feasible many international projects.
• Computer systems. In the earlier days of IT (information technology), most computer systems were built for a specific firm in a specific company. The emergence of software packages changed the landscape. Many ERP (enterprise resource planning) systems can be tuned and set up to run in many different countries operating with different currencies and different rules and regulations.
• Internet and World Wide Web. Probably, nothing has been more dramatic in impact than the use of the Web for communications and supporting the operations of multiple locations. Information is more available and widespread than it has ever been. There is a greater awareness of what is going on around the world. This in turn has fueled the interest in international projects.

What does the technology help an organization do better? How does technology support the global trends mentioned above?

• Ability to clone the infrastructure and replicate it in many locations. Look at retailing or manufacturing. Today, you can take the software in one location and establish it in a location thousands of miles away with the same type of hardware and networking technology. You can then adapt it to local conditions more easily due to flexibility. You can obtain vendor support in many countries similar or comparable to what you have at home. One retail firm boasts that they can establish a new remote location within 60 days.
• Ability to control remote locations on a more or less real time basis. Going back in time, the method for control was to empower the remote manager with almost all power and discretion of authority. Times have changed. Today, for many firms, there is a daily monitoring of what is going on in each location. Production schedules can be established, fine tuned, and changed overnight.
• Ability to provide for standardization. The te...