Increased complexity with international projects

03 oktober 2017

Increased complexity with international projects

Project sponsor: two essential decisions to make in advance

This article has appeared in Managementimpact and is translated into English. For the original Dutch version click here.

Introduction

Due to the internationalisation of our society, international influences have become unavoidable in the implementation of projects. Locations in several countries all over the world are not only for stock market listed companies. Thanks to developments that ease communication, the economic potential in foreign markets, and the trend of our economy – and our operating hours – becoming a 24/7 process, companies are increasingly expanding abroad.

As a result of this, new opportunities have opened up in the field of project management, though they are not without pitfalls. National projects with everyday risks such as time constraints, compliancy to local laws and legislation, budget limitations, and teams dynamics, were already complex enough. The international component has added a new dimension to it. Consider time differences, foreign laws and legislation, geographic distance, and perhaps the most important but yet underestimated aspect which adds significant complexity: cultural differences. In short, more is required from an international project manager and from his or her  project sponsor to make the right decisions before the start of the project.

Every phase in international projects requires a lot of decisions to be made. In this article, we will focus on two essential decisions that must be made at the start of a project: The decision of appointing the right project manager and the decision to handle the project off-site (from headquarters) or on-site (with a local team on the ground). We do this because the impact of these two decisions on the eventual success of the project is often underestimated. The temptation to limit costs by handling the project from headquarters and appointing an already known and only locally experienced project manager is significant. A wrong decision can often lead to major problems months later, resulting in loss of investment, but more importantly still, lost time. Becoming conscious of - and anticipating - on these two decisions can prevent this from happening.

Decision 1: select a project manager with cultural sensitivity.

A project manager may have a lot of experience with projects within his or her own borders, but that does not guarantee the success of this particular project manager in international projects. The international project manager must possess a specific skills set to ensure the cultural differences do not impact the project progress and its results. Cultural management is considered one of the most important factors in leading multinational teams (Korkondilas I, 2015). The international project manager must be able to ensure that his team(s) with various cultural backgrounds, habits, and operation methods, work effectively. The primary skill required is to recognise and acknowledge cultural differences. This requires a high degree of empathy and cultural sensitivity from the project manager.  He/she must then be able to anticipate on possible cultural differences via appropriate and effective communication. This is also supported by literature in which communication is often listed a factor for success by international employees (Kealey et al., 2006) and planning communication appears to be an essential step in successfully managing cultures (Korkondilas I, 2015).  Finally, a sufficient degree of flexibility in management style is required: the cultures you interact with decide in part which (management) style is the most effective for the project.

A classic example where these two aspects meet is visible in Western European versus Eastern European hierarchical interactions and relations. In Eastern European cultures, it is a lot less common to argue with your superiors about actions and decisions, especially if these were determined by project leaders. The risk is that a "yes" is given in situations where "no" is actually meant.

This may result in finding out in a later stage (or even too late) that work has not been delivered according expectations, which will impact predictability and subsequently the final project results. This can be prevented by listening carefully, acknowledging the country's culture, knowing where the "interpretive pitfalls" are, and adjusting the communication to match this. Speaking the language of the country one is in is generally viewed as a positive influence. Despite English being the lingua franca of the world, in practice – especially on an operational level – it often turns out that people do not master the English language well enough to effectively communicate their message. Such a situation paired with a culture that is very hierarchical can make successful project performance extra complex, much more so when the project manager does not have the right skill set. Another well-known phenomenon is the treatment of time. In some (Southern European) cultures, it is normal to treat time as a guideline, rather than a deadline. It helps to know the culture and explicitly communicate about it. Knowledge of the culture can be obtained by experience, but it also helps to become more aware via learning (from theory) about the potential cultural differences. It is only natural that a high level of experience from the project manager in the country where the project sponsor is located and in the country where the project is being conducted will contribute to the chances of success for the international project.

All of these aspects emphasize the importance for a project sponsor to choose the project manager carefully. A suitable candidate should – even more so than a "national project manager" – have skills such as empathy, cultural sensitivity, (management) style flexibility, and communicative skills.

Decision 2: Determine where the project will be carried out: on-site or off-site?

As communication is an obvious success factor in dealing with cultural differences, one should also take the available tools into consideration in supporting this process. Nowadays, there are plenty of communication technologies, such as (video) conference calls, and "Instant Messenger" conversations for groups. It seems very attractive (cheap) and obvious to use these in international projects. However, using these methods blindly can be dangerous, and may even be a pitfall in project approach.

Modern communication methods have the primary limitation that they are only a method to shorten the distance between sender and receiver, but do not compete with face to face communication and cooperation.  Overusing these methods blindly will lead to risks in project performance as  the message may be worded poorly, interpreted incorrectly as well as non-verbal communication that can be missed. These risks can be mitigated by combining use of communication methods with on-site cooperation and project execution. However, this has budget-related consequences. The question is what the borders of effectivity and efficiency are? In which situations is the solely use of modern communication sufficient and when is a (complete) on-site cooperation necessary to execute the project successfully? To simplify this, we observe the situation from the model below:

Model decision making on-site project performance:

This model was set up from the perspectives of the ‘Klaverblad’ model (Noordam, P. et al[1]). Here, organisations are viewed from 4 different perspectives: Management & organisation, Processes, People & Culture, and Information, data, & ICT. Based off this, we believe the following aspects are decisive in choosing an on-site or remote approach.

Governance:

According to Zoeteweij  (2016), governance can be defined as a combination of written and unwritten rules, which enables policy goals being met (guidance), being communicated about (responsibility) and being checked (supervision). The stricter the rules, the easier it is to support remote cooperation in international projects. Living by these rules provides guidelines on responsibility and supervision of the project, which means that on-site involvement is less of a necessity. When headquarters and subsidiaries operate based on a strong governance structure, the need for project guidance and performance to be done at the same location will be less.

Maturity in projects & processes:

A variety of factors impacts the maturity in projects & processes. Both the experience present with working in projects and the experience of working according project management methods are important success factors for international projects. A rule of thumb is: the more experience in these fields, the more likely it is that a remote approach will suffice. This conclusion also applies on the process side: The more developed process management is – for example, guided centrally by process owners – the less need there is for an on-site project approach. After all, one can lean on the existing process structures, which mitigates the risk of interpretation differences between involved parties and project sites. For determining process maturity, we refer to the process maturity model by Stam and Noordam (2010).

Cultural differences:

From the people & culture perspective, the degree to which cultural differences are present is a deciding factor in the choice of an on-site rather than a remote project approach. It is recommended to opt for an on-site approach in cases of major cultural differences. This is due to the fact that communication is of (even more) critical importance. Here, technology may help in bridging the physical difference and send a message along, though it does not match or replace face-to-face communication and cooperation. Acknowledging cultural differences and the interpretation differences that come from them is difficult to support – let alone solve – with technology. Experiencing the situation with boots on the ground is still the most effective approach.

In example, a German headquarters can be more avoidant of uncertainty in its project handling, while a Singaporean counterpart does not exert the same behaviour[2]. This is only clear by experiencing the culture, interpreting communication correctly, to which an on-site approach would definitely contribute. A remote approach can work but this adds more requirements to a number of other factors, such as the maturity of processes and/or the skills of the project manager.

Predictability of solution:

The degree to which the chosen solution is predictable in its (probable) outcome and performance, influences the complexity of a project. When a (standardised) software package has been rolled out successfully at other locations, the solution and implementation is (naturally) easier to predict than the implementation of a custom solution. When a project has a final goal but the precise strategy to get there is unclear, the predictability of the solution is limited, and the project risks and complexity are far greater. Success is partially determined by how these risks are dealt with. The choice of a certain project location can be a risk mitigating measure. This can be done by selecting an on-site project approach in the case of complex and difficult to predict solutions. On the other hand: the more predictable the solution, the easier headquarters can guide a local team.

Finally: according to the Klaverblad model, Information data and ICT is also a perspective from which to observe organisations. We see however that from this perspective, it mostly concerns preconditions that need to be met in order to work remotely. After all, when one opts for working remotely, the technology needs to be readily available. Information, data, and ICT by themselves are not deciding factors; according to Noordam et al. the information technology must be there to support the necessary flexibility of processes.[3].

Room for more exploration

The two decisions that this article focuses on are not all-encompassing. They do not guarantee that with the right decisions, the project will be a success. The project sponsor does have two guidelines at the very least to ensure he makes the right choices in the two proposed decisions. A more extensive exploration of the choices for project sponsors at the start of an international project would be a logical next step. A further development of the theoretical model with qualitative and quantitative data leaves room for more exploration. This can be done via surveys, interviews, and broad literary research.

Conclusion

Project sponsors now have a responsibility to be more aware of the choices involved and the accompanying risks of international projects in an increasingly international setting in which these projects take place. Important decisions, in our opinion, are the choice of project manager and the location or rather the on-site off-site cooperation type.

By making these decisions beforehand, the project sponsor is able to make a great impact on the project's success and can positively influence the results. It is important to realise that the choice for the right project manager and for either on-site or off-site cooperation is not a guarantee for success and will have to be tailored to context and the project characteristics. The decision and consequences of this will have to be integrated into the project approach, the project plan, and the budget determination for the sake of limiting the risks and complexity of international projects.

About the authors:

An article by Dirk van de Kerkhof and Joep de Leeuw, both working as project managers for Bisnez Management. Dirk and Joep have both gained experience as project managers of various international projects in various branches at multinational companies.

[1] Noordam, P, et al, Managen van toekomstrobuustheid: de paradox van besturing en beheersing, Management Executive, juli/augustus 2006

[2] http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/uncertainty-avoidance-index/ Germany has a UAI (Uncertainty Avoidance Index) of 65, which indicates that they work in a uncertainty avoidant fashion, while Singapore has a score of 8, which means the do not avoid uncertainty. Based on study by G. Hofstede.