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Introduction to International Project Management (IPM) Paul Berckmans  What is a project? Three main characteristics of a project An organization has only limited Risky res...

Introduction to International Project Management (IPM) Paul Berckmans  What is a project? Three main characteristics of a project An organization has only limited Risky resources. Hence, Uncertainty, Limited the project Complexity Duration, operates within Scope, Financial constraints of Unique Resources, resources and Objectives, Human time. It is Context, Resources supposed to Organization produce a result that meets agreed 2 quality standards. Definition International project management is  the management of projects internationally  or across borders  and cultures, Therefore international project management requires a specific set of skills to ensure success when managing international projects. In particular, the importance cultural awareness plays in international projects and how the Hofstede 5-D model can be used in an international project management framework. What is an „International Project“? (1) 4 What is an „International Project“? (2) 5 What is an „International Project“? (3)  International efforts by governments  International efforts by nonprofit and aid agencies  Efforts by firms to enter new markets and expand their customer base  Cross-border mergers & acquisitions  Support for standardization within a multinational company  Marketing initiatives 6  What are the main purposes of international projects (1)? Realization of efficiency gains Increase of global market share, market Access to scarce power, global political and unique power or global resources effectiveness Search for new geo- Main graphical presence or purposes new international of Reduction of risk stakeholders internation al projects 7  What are the main purposes of international projects (2)? International projects reach beyond national boundaries, usually in terms of project purpose or nationality of stakeholders. International projects can be global, involving the entire world. 8 What are the main characteristics of international projects? Unique- ness Diversit y Risk Inter- national Project Complex Dy- - namics ity Limited Re- sources 9 EXERCISE Work in small groups. If possible from different cultures. First,you must individually think about your personal experience. What would you classify as an international project ? Second , use the figure to characterize the project you have in mind and explain it to your fellow students in the group Uniqu e- ness Divers ity Risk Inter- national Project Compl Dy- ex- namics ity Limite d Re- source s How International Projects are different? (1)  Multiple locations  Purpose usually wider and complex  Bigger scope of project  Multiple organizations involved with complex power structures  Different sub-cultures of the organization involved  Different national cultures involved 11  How International Projects are different? (2)  Various self-interests of local management – what’s in for ALL participants and their respective superiors?  IT: Many legacy systems and individual systems which are not connected or incompatible  Greater risks and complexity, e.g. different sets of laws and regulations  Cost of the project usually higher due to more transportation, communication, coordination, and 12  Project management in the international organization nal Organizatio Int e ati o nt env rnati t ern me n iron ona In viron Strategy, Project portfolio me l nt en Initial state (company internal idea, customer P requirement) R 1 Initiating. 2 Planning O. 3 Executing/ Controlling J. 4 Completion E. C T Objective (product, service, result) 13 Environmental Factors Affecting International Projects 14 Industry Factors Affecting International Projects MACRO-ENVIRONMENT The Economy at Large Le gy/ r gi olo ctu Re a sla h n ru gu nd tio e c st la n T fra e Suppliers Substitutes ti In on COMPANY Rival Buyer Firms s New S ion ic Va ocie Entrants t la ph l t Lif ues al  p u a e s an IMMEDIATE Po ogr ty m s les d INDUSTRY AND De COMPETITIVE 15 ENVIRONMENT Who are the main players within the context of project management?  The are called ‘project stakeholders’  In an international project, their set-up is more complicated than in a standard project. Moreover, they tend to have diverging and conflicting ideas about the project.  The project manager needs to map all project stakeholders and manage 16 An overview of main project stakeholders Require- Require- ments ments Project Owner/ Project Owner/ Project Sponsor Project Sponsor Users Results Results Users Internal External customer/ customer Investor Require- Results Require- Results ments ments Project Manager Project Manager of Leading Contractor Require- Require- Results Results ments ments Project Management Contractors with PM Team A B C 1 2 3 1 2 3 1 2 3 Subcontractors with Project Team Members PMs 17  Special Aspects of International Projects  Scope Creep  Change / modification of project direction  Countermeasure “Project Concept”:  Established consensus of ALL parties involved in international project  Self-interest of ALL parties involved in international project needs to be assessed and taken into consideration in project concept – otherwise, you risk a DOA (Dead On Arrival) 18  What do you need to consider to manage successfully international projects? Adequate project team Consideration capabilities of context Establishment of smooth Right balance communication between s and common supporting Critical methodology infrastructure success and flexibility criteria for Goal international commitment of project management Supportive project team and initial project culture clarity of goals 19 What is critical for success?  General factors:  Establishment of communications and infrastructure  You must be able to communicate quickly and effectively with remote locations  All project members have to be able to use modern technology as high-speed data and image communication, mobile communication, PCs, internet, data warehouses, MS software  Sensitivity to local culture  Flexibility regarding processes and procedures 20 International Project Management Challenges Project management is challenging at the best of times and managing international projects only compounds these complexities and increases these challenges, some of the challenges and global issues of international project management that will need to be considered will differ greatly depending on the countries your project will involve. Differing Standards The problem with standards in a global sense and very much so in international project management is that they are not standard... Standards differ from country to country and consideration will need to be given as to which standards will be used will multiple standards be required. Some key areas of consideration are: Program management challenges International Project Management Challenges International Project Management Challenges Political & Legal Systems Accounting Standards Quality Standards and Unit Of Measure Language Barriers Time Zone Changes Economic Conditions Cultural Differences  Introduction to Hofstede & Trompenaars Case Study : Fight Against Global Pandemics Lesson 2 Project Kick Off & Cultural Frameworks Paul Berckmans How to start a project? Project Management: Different Stages Traditional Project Management Project planning Project Project Project & Implementation Kick-Off completion organization and control  What is happening at the start of an intern. project?  The project objective has to be in line with the organizational strategy.  It is extremely important for the overall project success that the scene is set well at this stage of the project.  This is especially true for stakeholder involvement, and the accuracy of the first rough schedule and budget. Prof. Dr. Kathrin Köster  Questions to be answered at Project Kick- Off What should the project achieve? (targets, scale, results) Who should carry out the project? (internal and external team members) How should the project be carried out? (procedures) When should the target be reached? (time plan and milestones) With Should the project targets be met? What (Methods, resources) Project Management: Different Stages Traditional Project Management Project planning Project Project Project & Implementation Kick-Off completion organization and control  Checklist for kick-off preparation (1) Everyone must win with the project  You must show that ALL parties involved have a stake in the success and outcome of the projects Collaborative effort  You have to secure widespread involvement and participation in the project  Involvement  Commitment Dedication Gather lessons learned permanently Cultural sensitivity and awareness throughout the project (from kick-off to completion) Prof. Dr. Kathrin Köster Checklist for kick-off preparation (2) Special focus on proactive resource allocation & project organization Measurement Don’t forget to measure the situation BEFORE the project Attention to scope management  The project manager has to clarify from project start as clearly as possible what the project should do, and what it should not do.  Due to the heterogeneity of the stakeholders in an international project, special care is related to scope definition.  The danger of differences in associations, attached meanings and general misunderstandings is high. Exercise Think of a project you are familiar with (private or business context) and try to formulate the project scope based on the SMART – technique DEFINING MILESTONES A milestone is a major pre-defined event that represents measurable accomplishment toward the project’s completion. Milestones need to be passed in order to continue with the project. They divide the project into more manageable sub-parts. Milestones are defined at the beginning of the project. It is important to formulate them as clearly as possible. It is also important to communicate them well within the project team. Stakeholder Management Process (1) “Successful Project Management means excellent people’s management.” “Successful International Project Management means excellent people’s management in the light of diversity! Stakeholder Management Power/ Influence on Project High Low Level of Allies Yes-Men Interest Alignment with International Project Challeng Skeptics er Low Stakeholder Management Process (2) 1. Identify all stakeholders 2. Empathize with main stakeholders  Transcend their communication behaviour and cultural predisposition.  Get familiar with every stakeholder’s set of needs in project context. 3. Map Stakeholders 4. Create stakeholder communication plan  Pay attention to scope management Example of Stakeholders in International Projects (1) Example of stakeholders in International Projects (2) Example of stakeholders in International Projects (3) Mini Case : Irritations at the start of a project What is culture? Kroeber & Kluckhohn 1952: 164 definitions A system of values and norms shared among a group of people Culture is a learned, shared, interrelated set of symbols whose meaning provides a set of orientations for members of a society Different forms of culture  Overview of German Culture Standards (1) Equality Hierarchy Embracing Avoiding Risk Risk Individual Group Circumstant Universal ial Prof. Dr. Kathrin Köster  Overview of German Culture Standards (2) Equality Hierarchy Embracing Avoiding Risk Risk Individual Group Circumstant Universal ial Sequential Synchronic Theoretical Pragmatic Prof. Dr. Kathrin Köster  Trompenaars´model to map difference in national culture Universalism Particularism Communitari Individualism anism Neutral Affective Specific Diffuse Achievement Aspiration Future Past orientation orientation Sequential Synchronic Internal locus External locus of control of control Prof. Dr. Kathrin Köster  Communication Styles See Chapter 9 Will be covered later More about the 5D model of Hofstede  Communication individual needs in project context programming by national culture, Communication behaviour, From outside to inside: The different „layers“ of a Culture Connection Acceptance Belonging Honesty Love Authenticity National Behaviour Safety Integrity Meaning Presence Awareness, Clarity, Challenge, Competence, Peace Hope Beauty Ease, Harmony, stakeholder: Behaviour Equality National Autonomy Choice Play Freedom, Space, Physical Joy, Humour Independence Well-Being Air, Food, Movement, Touch, Water, Rest Culture Communication 52 Communication Styles based on Richard Lewis (1) Communication Styles based on Richard Lewis (2) Communication Styles based on Richard Lewis (3)  Communication Styles Overview Prof. Dr. Kathrin Köster Mini Case : Managing a customer in the Gulf region. Introduction to Hofstede 5D Hofstede Cultural Dimensions Hofstede identified 5 key areas of cultural differences and called these the 5 cultural dimensions or 5-D model, the model allows you to compare any 2 or more countries with each other and quickly shows what cultural differences exist, which are aligned and which are uniquely different, each of the 5 categories below are scored on a scale of 0 to 120. 1. Power Distance 2. Individualism 3. Masculinity 4. Uncertainty Avoidance 5. Long-Term Orientation Power distance is that gap between equality and the acceptance of the distribution of power. A flat management structure would be seen as having a low Power Distance as their is greater attention on equality. In an international project management environment in a country of high Power Distance you might only engage with the most senior of stakeholders and everyone else would not be privy to the project or engaged in the process. Individualism Measures the importance of personal achievements and needs against the needs of the group. In a culture of high individualism it might be necessary to engage closer with key personnel and allow to provide more input and take ownership of certain parts of the project while recognizing their individual skills and achievements. Masculinity Masculinity vs femininity is the score that measures a country's need for competitiveness and the importance for male and female roles. In a country with high masculinity a male project manager might face less resistance than a female or at lease do not blur the boundary with male and female roles. Uncertainty Avoidance This is the degree as to which a country accepts of being flexible and accepts uncertainty. Scores of high Uncertainty Avoidance will generally suggest lots of rules and well documented procedures. These countries with high uncertainty avoidance will struggle with the uncertainty of change and may required longer times and additional costs to ensure change is managed effectively. Long Term Orientation Measures the preference of the long term horizon over the short term. Long Term Orientation is seen more commonly in Asian countries with their Confucius background. Countries with high Long Term Orientation may see little value in the importance of sticking to short term deadlines and milestones. International Project Management Uses For Cultural Dimensions The model could be used to select the most aligned countries when evaluating and considering which countries should be involved in the project, for example if you are embarking on an international change project, it might be unwise to start with a country with a high Uncertainty Avoidance score, it might make your life as an international project manager easier and the project more successful to start in a country that is open and embraces change. Then move in some senior managers to the countries with high Uncertainty Avoidance to show confidence in the change project. International Project Management Uses For Cultural Dimensions But quite often, you may not have the luxury of selecting which countries will be part of the project. In this situation analyzing the country's cultural dimensions will give you great insight into how best to manage within these culture for the greatest change of success. From an international project management perspective, lets consider an international project that includes Australia and China. A quick comparison using the 5-D model highlights the areas of close alignment and the areas of stark difference. Close Alignment Link to Hofstede We can see quite quickly that the Masculinity of both country's are pretty close, masculinity is slightly more important in China than Australia, but not by much. We can infer that both country's consider masculinity slightly important and it is probably wise to not lead with talking about your feelings and it is safe to say that males would dominate the workforce and generally competitive in nature. Reasonable Variances It is also clear that Uncertainty Avoidance scores different but not but a great amount. Interestingly we note that China has a lower score and is less concerned with uncertainty. This might suggest that there are slightly more informal business rules, possibly based more on personal relationships and in the case of China short term changes are of less concern as long as the long term strategy is the key focus. It might be wise to relate how the changes this project will help to enable the long term goals. Key Differences The graph highlights the key differences between to two countries being  Power Distance,  Individualism  Long Term Orientation with widely opposing scores. These high variances suggest these cultural differences are complete opposites between the two countries and careful consideration will need to be given as to how to effectively manage these if the project is to be successful. Power Distance On inspection of the graph we can see that the Power Distance between China and Australia differs considerably and that China has a much higher score for Power Distance than Australia. This usually means that Chinese company's respect seniority and their is a strong hierarchal management chain. This is quite the opposite to Australia, with many flat management styles that empowers individuals to make decisions and work autonomously. If you are faced with this at an international project management level it might be necessary to show respect to their management and don't expect too much involvement from the employees down the line, even if they are directly effected by the project. Project Meetings will often be closed door and it is important that the Project Manager is equally seen to have a great deal of power and respect. Individualism Another key differentiator between Australia and China in our international project is the level of Individualism of the 2 countries. Again these are polar opposites and each country will require a different management style to effectively engage with the project stakeholders. In Australia, we can see a high level of Individualism, which might suggest that many team members will want to voice their opinions and have their thoughts considered in the project. They are more likely to require praise and acknowledgement for good work and a more self centred approach to work. The opposite will be true for China, where collectivism is more important that the individual and this might mean that closer consideration needs to be given to tradition and implement change slower with a focus on the group benefits. Engage with elders in the group and respect their wisdom. Long Term Orientation The Long Term Orientation scores of these comparison country's are greatly different and completely opposite and will require equally differing approaches to our international project management approach. In Australia with their short term orientation will be looking for short term wins with rapid change expected. They would expect equality and project managers should lead by example. There will be the constant focus on the next reporting period which is usually monthly and quarterly financial reporting. However in China their high Long Term Orientation will show more respect to their elders and an expectation that project managers are well educated with years of experience. The focus will be maintained on long term strategies (often years into the future) over short term wins. The secret is commitment and a respect for tradition and respecting age as well as position in both society and business. Considerations And Limitations Hofstede's Cultural Dimensions are a great way to generalize about a nation or country's cultural differences and while it is generally accurate,  it does not take into account the ideals of individuals  or the cultural differences of community groups and company cultures, that may be heavily influences by an international head office or management team. Use the tool first to provide a high level overview and understanding then tailor the needs to your individual stakeholders through effective stakeholder analysis. Lesson 3 Managing Risk and Uncertainty in International Projects Paul Berckmans Managing Risk, Uncertainty, Threat and Opportunity A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty. Sir Winston Churchill 76 What is risk in the context of project management? (1)  Risk is an uncertain event that, if it occurs, can have a positive or negative impact on the project.  There are risks that can be anticipated (known-unknown), and risk that emerge during the project (unknown-unknown). 77 What is risk in the context of project management? (2)  Sources of risks that can be anticipated:  Risk related to the management of the international project  Risk residing in the wider external project environment  Risk management is influenced by the local cultures project members were socialized in 78 The impact of culture on risk management Individuals from equality-oriented cultures may involve the whole project team to identify and monitor risk. They also may involve all relevant group members into the decision on Equality countermeasures. Project managers from Hierarchy hierarchy-oriented cultures may identify risk on their own and be the only one responsible for taking countermeasures. Group members may be very comfortable not having any responsibility for this ‘dangerous’ task. Individuals from cultures with high risk avoidance tend to fear unfamiliarity and Embracing ambiguous situations. They may try to ignore Avoiding Risk risk. People from risk-embracing cultures may Risk be more actively seeking for risk, also to turn it into an opportunity. People from individualistic cultures might be more inclined to take decisions on their own in Individual risky and urgent situations, whereas persons Group from group-oriented cultures may want to consult with other group or network members which is time-consuming. The risk management process  Risk that can be anticipated needs to be planned for  Risk planning means identification of risk, analysis of risk impact, planning responses to risk, monitoring and controlling the project for risks that may occur.  These activities are also referred to as risk management.  Each step of the process contains of the following sub-activities (see next slide): 81  Required inputs: Required inputs: 1. Extended risk register with contingency plans 1. Project Scope Statement 2. Change requests The Risk 2. Work Breakdown Structure 3. Stakeholder management analysis Manageme 3. Analysis of Organization’s Environment Required activities: 1. Monitor risk status nt Process Required Tools & Techniques: 2. Ensure appropriateness of response plans 1. Documentation reviews, including lessons learnt from previous 3. Monitor project environment for projects emerging risks 2. Information gathering techniques 4. Ensure proper execution of risk 3. Diagramming techniques management plan 4 1 4. Risk checklists 5. Tools to systematically analyze Required Tools & Techniques: project and organizational 1. Project Status Meetings environment 2. Environment scanning tools Monitoring Identifyi & ng Risks Main Output: Risk register outline Main Output: Updated risk register Controlling Performin Analyzing Risks Required activities: Required activities: g Risk & Planning Prioritizing 1. Assess of impact of risks on main 1. Select of risk response strategies project objectives for identified risks Risks 2. Combine impact of risks with 2. Compile of contingency plans 2 probability of risk occurrence 3. Estimate of cost and time for 3 3. Prioritize risks in terms of ‘high risk’, ‘medium risks’ and ‘low risk’ contingency measures Required Tools & Techniques: Required Tools & Techniques: 1. Probability and impact matrix 2. Probability distribution calculations Not Scheduling and costing for contingencies (cf. chapter 5) 3. Sensitivity analysis discussed 4. Expected monetary value analysis EMV in this book Main Output: Main Output: Extended risk register including contingency plans (with Risk register with classification of risks, risk triggers, budget and estimated time) assumptions, and risk owners 82 82  Diwali Diwali is an important religious festival originating in India. People often think of Diwali as a Hindu festival, but it is also celebrated by Sikhs and Jains. Diwali takes place annually and lasts for five days, marking the start of the Hindu New Year. The exact dates change each year and are determined by the position of the moon – but it usually falls between October and November. Risk identification tools (1) PESTEL Tool that structures the political, economic, socio cultural, technological, environmental and legal environment of a project for ONE geographical market, typically a country. The cultural gap analysis tool introduced in chapter 3 (handbook) helps with the analysis of the sociocultural environment. 85 Examples of factors to be checked with the PESTEL tool Political systems & its GNP trends stability Level of interest rates Security risks like social Inflation rate unrest Volatility of currency Sovereign risks like Purchasing power expropriation Employment rate Level and acceptance of corruption a l Ec Capital supply c Antitrust law Tariff and non-tariff barriers o liti ic onom Similarity of cultural norms Tax regime to trade P with organization’s home Health & Safety country Labour law Religious habits & customs Product liability law Legal Country Socio- Quality of education Social insurance law Cultur Demographic development Protection of intellectual En n o- al Language skills property - m v ir ch l (Social) Mobility Reliability of law en on Te ica Public opinion (e.g. on ta g environmental protection) enforcement l lo Work-life-balance Environmental protection laws Level of transportation and Availability of natural resources communication Use and reuse of energy infrastructure Level of innovation Technology clusters 86 Risk identification tools (2) Examples of industry specific tools  Hazard and Operability Study (HAZOP): Systematic analysis of process systems, equipment and procedures to identify potential hazards to people/project stakeholders and the environment  Construction Safety Study (CSS): Identifies major hazards in the construction plan 88  Anti-Bribery & Corruption(ABAC) Exercise (discuss in small groups) Mini Case 4.3 : Bribery Payments in Vietnam Question What risks did the Japanese project manager have to consider ? Risk analysis (1) Probability and impact matrix Low-tech tool for risk prioritization Combines the likelihood of risk occurrence with the effect the risk will have on the project objectives Provides stakeholders with overview of risk propensity Categorization of risks in terms of project impact can be three stage (low, medium, high) or five stage (insignificant, minor, moderate, major, horrible) 90  Probability / Impact grid is a matrix that measures the likelihood on a vertical scale against impact on the horizontal scale. Each is divided into sections ranging from very low to very high, which also contains a number between 0-1. Each of these is multiplied to create a grid that shows the severity of each project risk and priority  Summary of the risk profile. Plot of all risks on a scatter diagram Provides an overview of the aggregated project risk Risk analysis (2) For ease of control and communication, it is recommended to use colour coding: RED for risks that are likely to occur and have a big impact on the project. AMBER for risks with medium impact on project results and/or medium to low likelihood of occurrence. Green for risks with low probability of occurrence and low impact on the project’s objectives. 94 Strategies to cope with foreseeable risk 1. Risk avoidance 2. Risk mitigation 3. Risk acceptance 4. Risk transfer 5. Risk absorption or pooling 95  Example of risk register First, the risk needs to be identified (field “risk description”). To analyze the risk and to plan for counter measures or contingency measures, the cause of the risk has to be known (field “cause of risk”). Information on risk propensity, impact on project results, cost of potential counter measures, and date of risk occurrence has to be added Risk register Risk Cause of Probability Impact Contin- Date of No. Risk description risk of on gency Cost entry occurrence project measure 96 Exercise (discuss in small groups) Mini Case 4.2 : Establishing a Shared service Centre on China Question Identify which risk response strategies the company applies. Risk avoidance Risk mitigation Risk acceptance Risk transfer Risk absorption or pooling  Information Basis for Risk Analysis Use company internal information as:  Checklists of previous projects  Analyze the process and outcome of previous projects  Talk to colleagues with experience in risk management  Be open when it comes to risks and try to avoid to make the same mistakes as your colleagues before. 99  Where to Look for Risk? Check and analyze  Technology used in project  Method of project implementation  Contracts with customer (internal or external)  Suppliers, subcontractors  Staff, project organization  Commercial requirements (budget)  Environment  Particularities when doing global business 100 Planning International Projects Time, Cost, Quality Paul Berckmans  Project Management: Different Stages Traditional Project Management Project planning Project Project Project DEFINITION & Implementation Kick-Off organization completion and control Required inputs: Required inputs: Planning 1. Project scope statement incl. cross-check of customer’s expectation level Time, Cost, 1. 2. Project Scope Statement Work Breakdown Structure 2. Cultural gap analysis regarding perception of quality in involved countries and cultures Quality of 3. Estimates for activity duration 3. Functionality of product/service/project result the 4. Establishment of relationships between single activities in form of precedence Required Tools & Techniques: - Standard quality control techniques Not Internationa 5. Calendar with international holidays relevant to the international project discusse - Pareto diagrams d in this l Project - Checklists for partner selection Required Tools & - Spider diagrams for training book Techniques: Main assessments Output: 1. Project Network Not Definition of quality known to all 4 1 Diagram, mainly discusse Activity on Arrow (AoA) project members d in this as basis for CPM, CPA, Water-tight specification sheets PERT, PDM etc. book Final Output of cycle: Project 2. Gantt chart or bar chart Master Plan (additional input Planning Planning needed for master plan: Quality Time Main Output: Gantt chart or OBS/responsibility chart cf. chapter network diagram 6) Required inputs: Planning Scheduling 1. Financial objective / available Cost under Required inputs: budget resource 2. Cost estimates constraint 1. Work Breakdown Structure 3. Overview of international locations s 2. Organizational Breakdown Cf. involved in the project 2 Structure chapt. 4. Overview of salaries, facilities, 3 3. Analysis of skill sets of 6 equipment and other costs in the available staff beyond academic and job titles relevant international locations (based on CVs and 5. Cost for risk mitigation or interviews) contingency plans (cf. chapt.4) 4. Overview of holiday 6. Development of currency entitlements of fluctuations Required Tools & Techniques: international staff in Not different locations Step counting cost-estimating techniques discusse Exponential cost-estimating techniques Required Tools & Techniques: d in this Parametric cost-estimating techniques book Loaded Gantt chart Even-loading, front-loading, back-loading budget methods Main Output: Main Output: Periodic cost spreadsheet Resource loaded Gantt chart Budget spreadsheets 103 Cumulative cost spreadsheet 103 Defining the International Project What is happening at the start of an international project? (1)  With reference to the project management life cycle, we are in the initiating or definition phase.  The project starts with an idea, a customer demand, a bid issued by a government or other opportunities.  As each international project is unique, creativity is important at this stage. Special techniques are helpful (see companion website) The “ SMART” - Criteria S pecific M easurable A ccepted R ealistic T imely Goals from Customer’s Point of View How to plan a international project? Planning is always difficult - especially for the future Planning means replacing coincidence by error It is difficult to plan in an ever changing world. However, in order to be able to react to changes quickly, we need to be prepared. We need to have a plan that is flexible and easy to adapt to the new requirements. “Well begun is half done” Aristotle The challenge of planning an international project  Why planning a project?  Planning reduces uncertainty and brings structure into chaos.  Issues with planning in international project  Planning needs to be constantly revised due to a fast changing international environment  The international environment is complex and difficult to predict.  More factors needs to be included into project planning than for planning standard projects. The Planning Process  The planning process can be divided into four major tasks:  Planning time  Scheduling under resource constraints  Planning cost  Planning quality  The objective of planning is to:  Minimize project duration  To minimize the resource availability cost  To maximize quality. 111 Cultural impact on planning National culture determines the attitude of a project member or stakeholder towards the effectiveness of planning. It also has an influence on the detail level and structure of the plans. The attitude towards planning is influenced by the external environment, e.g. frequency of natural disasters, reliability of infrastructure. The following two slides will use the cultural gap tool and apply it to the area of project planning. 112 Cultural gap tool for planning (1) Project managers who are rather hierarchy- oriented tend to create a plan on their own. Equality Hierarchy More equality-oriented PMs will tend to involve their team. Project managers and members who are Embracing afraid of risk tend to put more effort on Avoiding Risk planning details than risk embracing project Risk managers and teams. Project managers and other stakeholders with a universal background tend to create a Master Circumstan- Universal Plan which is to be applied at all sites and to tial situations. Circumstantial people tend to stick to high-level planning with flexibility. Project managers and other stakeholders who are task-oriented tend to create Work Task Breakdown Structures and to-do lists. Relationship Relationship-oriented individuals tend to spend much more time on networking with main stakeholders than on creating a plan. 113 Cultural gap tool for planning (2) Project managers who are more achievement-oriented tend to ‘follow the textbook’ in order to obtain the given targets. Standing / Achievement Project managers and members with a Status stronger status orientation might have a separate agenda partially contradictory to the project goal. Project managers and members with a sequential approach tend to follow the Sequential planning process, with the creation of Synchronic estimates of time, cost, and links to resource availability. People from synchronic cultures may put less effort in sequencing. Project managers and members who are more oriented towards theory tend to attach more Theoretical importance and put more effort into planning. Pragmatic People from pragmatic cultures may tend to focus on learning by doing and spend less time on the creation of plans. 114 Scheduling (1)  Scheduling comprises of the following activities:  Estimating the duration of the activities outlined in the Work Breakdown Structure  Determining the sequence of these activities  Optimizing the sequencing of activities to minimize the overall duration of the project  Tools used for scheduling:  Gantt chart  Network diagram (see following slides) Scheduling (2)  The prerequisite of scheduling is the assumption that time can be measured, and duration needs to be minimized. This prerequisite it not given in all local cultures 116  The Work Breakdown Structure WBS (1)  The milestones typically are the pillars of the so- called Work Breakdown Structure.  It structures the entire project into little, manageable chunks.  The WBS creates a linked, hierarchical series of activities, which are independent units but at the same time part of the whole The Work Breakdown Structure WBS (2)  The Work Breakdown Structure typically looks like a tree diagram (see companion website). It can also take the form of a check list.  The process is as follows:  State the project scope and make sure that all stakeholders have the same understanding  Decompose the project into major elements of work  Decompose each level 1 work element into detailed tasks  Write a task description for each task The structure of node of a network diagram 1 2 Earliest Earliest Start Time Activity Duration Finish Time Activity Name 4 5 3 Latest Latest Start Time Float or Slack Finish Time  Estimating activity durations in an activity on arrow network diagram 14 7 Feed with Build new new intranet processes 0 10 5 10 30 0 Finalize Decide on Roll out Integration Integration new new Test pilot new start strategy processes processes end 5 15 8 Identify key General Language users among process personnel trainings trainings 120 Particularities of scheduling international projects Additional time for team building Additional time activities for local adaptations (of Consideration of processes, different public products, or holidays and services) vacation time Factors impacting Additional time internation Consideration of for coordination, al project different communication scheduling calendars and and training auspicious days 122 Adding Resources to Scheduling (1)  To finalize the scheduling activities, the project manager has to take quantitative and qualitative aspects of resources into account:  Quantitative aspects means that sufficient financial and human resources need to be available to carry out the tasks as depicted in the WBS.  Qualitative aspects are extremely important for scheduling international projects: Availability of qualified staff Limited mobility and flexibility of staff Task allocation to minimize interfaces Adding Resources to Scheduling (2) Staff planning involves the following main activities:  Determine whether the team members are 100% dedicated to the project  Perform resource levelling in case of over-commitment of resources: Re-schedule tasks Re-prioritize tasks Negotiate for additional time or resources Reduce the scope of the project Planning Cost (1)  Purpose of cost planning:  Minimization of financial resources needed to realize the project’s objective  Cost planning activities:  Estimating cost  Putting cost into a budget  Controlling/monitoring cost in order to revise estimations where necessary 126 Planning Cost (2)  Types of costs:  Direct costs o Solely linked the project the budget is planned for  Indirect costs o Cost that cannot clearly be allocated to one single project, such as general administrative costs. Examples of Cost Components  Labour  Investment Cost  Materials  Rent  Plant and Equipment  Overhead and  Travel and Transportation Administration  Subcontract  Fees and Taxation  Training  Inflation  Legal Support  Contingency (covers oversights or unknowns as a sort of buffer) Particularities of International Projects regarding cost and time estimation  Fluctuations of currency rates need to be closely monitored.  Travel expenses  There is the tendency to underestimate cost for travel in international projects.  Selection of sites involved  Check infrastructure level of sites involved to avoid additional costs and delays  Pay attention to local laws, e.g. on Health & Safety. These may incur additional cost, e.g. required translations of documents  Example of resource-loaded Gantt chart Calendar week Calendar week TL: Team leader Over-allocated resources Allocated resources Peak Units:  Planning cost Purpose of cost planning:  Minimization of financial resources needed to realize the project’ objective. Cost planning activities:  Estimating cost.  Putting cost into a budget.  Controlling/monitoring cost in order to revise estimations where necessary. Types of costs:  Direct costs. Solely linked to the project the budget is planned for.  Indirect costs. Costs that cannot clearly be allocated to one single project, such as general administrative costs. 131 Examples of cost components Labour Materials Plant and equipment Travel and transportation Subcontract Training Legal support Investment cost Rent Overhead and administration Fees and taxation Inflation Contingency (covers oversights or unknowns as a sort of buffer) 132 Example of Budget for International Project Simplified Cumulative Cost Spreadsheet: Production Transfer from Europe to China P = Plan Total Budget € 1 million A = Actual Period to date in months Cost 1 2 3 4 5 6 7 8 9 10 Categories P 20,000 45,000 75,000 115,000 200,000 260,000 330,000 410,000 480,000 550,000 Labour A P 16,000 32,000 64,000 96,000 130,000 170,000 200,000 240,000 300,000 380,000 Travel / Expenses A Others P 0 3,000 7,000 14,000 20,000 28,000 35,000 43,000 61,000 70,000 (consulting, supplier dev., prototypes, A logistics etc.) Total 36,000 80,000 146,000 225,000 350,000 458,000 565,000 693,000 841,000 1,000,000 CRM Project Japan – COST Breakdown Particularities of international projects regarding cost and time estimates  Fluctuations of currency rates need to be closely monitored.  Travel expenses  There is the tendency to underestimate cost for travel in international projects.  Selection of sites involved  Check infrastructure level of sites involved to avoid additional costs and delays.  Pay attention to local laws, e.g. on Health and Safety. These may incur additional costs, e.g. required translations of documents. 135 Particularities of International Projects regarding quality planning  There needs to be a common understanding about quality among the major project stakeholders  Never take things for granted  Are the specifications clear?  Are the specifications comprehensive?  Is the applied measurement system commonplace?  Are the specifications adapted to the markets OR where the product/service is used?  Pay special attention to training needs and the selection of co-operation partners. CHAPTER END CASE: GAMING IN SPAIN (see Toledo) What are the particularities in this case in terms of planning time, cost, and quality, due to the fact that this is an international project? Organizing the International Project The challenge of organizing an international project Purpose of organizing international projects:  Reducing complexity by simplification of structure and organizational design. Forms of organizing an international project:  Functional structure.  ‘Projectized’ structure.  Matrix structure.  Virtual structure. ‘Organizing the project’ is a set of activities that have to be finished in the planning phase of the project. 139 Selection of suitable project structure The following factors need to be considered with regard to the selection of the most suitable project structure:  Size and duration of project.  Strategic importance of project.  Novelty and need for innovation.  Need for integration.  Environmental complexity.  Budget and time constraints.  Project location. 140 Example of a functional project structure Chief Executive Head of R&D Head of Production Head of Marketing Functional Functional Functional Functional Functional Functional Functional Manager Manager Manager Manager Manager Manager Manager Project Project coordination 141  Chief Executive Example of a ‘projectized’ structure Head of R&D Head of Production Head of Marketing Functional Functional Functional Functional Functional Functional Functional Manager Manager Manager Manager Manager Manager Manager Project Manager PM Team PM Team PM Team Member Member Member Project Team Member 142 Selecting the right project structure Seven factors can influence the choice of project structure :  Size and duration of the project  Strategic importance  Novelty and need for innovation  Need for integration (# of departments involved)  Environmental complexity (# external interfaces)  Budget, time constraints or resource availability  Project location International projects = Strong matrix organisation combined with a virtual structure  Example of a matrix structure Chief Executive Engineer- Human Consul- Operations Finance Controlling Marketing Others Suppliers ing Resources tants Functional responsibility Project 1 Project 2 Project responsibility Project Manager Project 3 144  Cultural impact on project organization Individuals from equality-oriented cultures tend to prefer flat and lean organizational structures. People Equality from hierarchy-oriented cultures tend to favour Hierarchy pyramid-like tall organizations with a high degree of formalization and centralization. Individuals from group-oriented cultures tend to work better in permanent functional organizational structures because of the continuity to work in the Individual same group. People from individualistic cultures tend Group to welcome temporary organizational structures like projects. Individuals from cultures with high uncertainty avoidance tend to welcome structure as an orientation frame. They tend to accept precise Embracing guidelines for co-ordination and rules. People from Avoiding risk risk low uncertainty cultures tend to feel at ease with matrix organizations offering more flexibility, but also ambiguity. Individuals from status-oriented cultures tend to see and use an organizational structure to show and increase their personal standing. Tall organizations with many hierarchy levels are preferred because Standing / Achievement they offer good opportunities to be perceived as status important. In achievement-oriented cultures, structures tend to be tailored to suit best organizational objectives. 145 Mini Case : EADS Astrium’s project structure Questions 1 How would you classily the kind of matrix that EADS Astrium uses for organizing its projects 2 Why would using a functional structure not make sense? Internal and external co-ordination of an international project Means of internal project co-ordination:  Project office.  Steering committee.  Project champion.  War room.  Dual leadership.  Minimization of interfaces and communication nodes. Means of external project co-ordination:  Systematic stakeholder management (see chapter 3).  Contracts : Fixed price contracts. Cost reimbursement contracts. Incentive contracts.  Informal means Institutionalized high-level meetings. Continuity in personal relations. 147  Example of a mechanism for internal co-ordination: The Project Office Project Manager Administration Controlling Project Office Human Resource/ Quality Assurance Change Management Project Management Project Realisation (depending on the nature of the project) Software Manufacturing Process Engineering Assembly Logistics Development Procurement Reengineering 148 Contracts in international projects It is recommended to use industry-wide global standards if available. A good starting point is the United Nations Commission on International Trade Law (UNCITRAL). It is also recommended to refer to INCOTERMS as a common language and reference frame in order to reduce misunderstandings. 149  Contracts as special forms of external co-ordination high Incentive Contracting Cost Reimburse- ment Involvement Cost Plus Fixed of customer Fee (CPFF) Firm Fixed Price (FFP) low Degree of risk for customer high 150 The RACI Matrix Example of a responsibility matrix 153  Checklist for organizing international projects  Try to visualize the structure as much as possible  Integrate key stakeholders in the organization's activities.  Create organization charts.  Explain and clarify what is meant by roles and responsibilities.  Be flexible regarding individual or group responsibility.  Make a list containing all the project members, their photos, contact details and their respective responsibilities and/or expertise.  Ensure that all the project team members know about the organizational structure.  Provide access to all organization related documents Implementing and Controlling International Projects Paul Berckmans Project Management Lifecycle International Organizatio environment n Strategy, Project portfolio Initial state (company internal idea, customer P requirement) R 1 Initiating. 2 Planning O. 3 Executing/ Controlling J. 4 Completion E. C T Objective (product, service, result) The challenge of implementing and controlling an international project The efficiency and efficacy of the processes and activities in the implementation phase highly depend on the quality of the output of the initiation and planning phases. The main activities in the implementation phase follow the Plan-Do-Check-Act cycle:  Implement activities based on the project master plan.  Check the status of the project at regular intervals.  Compare the results of these status checks with the plan.  Act in case of deviances between the plan and the actual status by implementing counter measures. 157 Monitoring and controlling Project monitoring refers to keeping track or checking a situation for a special purpose. Project controlling entails an element of influence and exertion of power to rectify undesired situations:  Direct control (subject of this chapter): Fact-based controlling of resources with tools and techniques.  Indirect control (subject of other chapters) : Person-oriented controlling, using stakeholder management, leadership, motivation, negotiation, conflict management. The detailed inputs, and outputs of these activities will be explained on the following slide. 158  Required inputs: Required inputs: 1. Analysis of deviations or variances The Project Proposal and Project Master Plan , 2. Analysis of their root causes Monitoring i.e. 1. Stakeholder Matrix Required activities: Cycle 2. Cultural gap analysis Decision on countermeasures 3. Diversity-Complexity Assessment Claim management 4. Project Scope Statement Change management 5. Enhanced Risk Register 6. Resource loaded Gantt charts 7. Cumulative spread sheets Required tools and techniques: 8. Quality plan incl. specs 1. Change orders 4 1 9. Project structure 2. Change documentation supported by IT 10. Contracts 3. Follow up of issue log in status meetings ACT PLAN CHECK DO Main reasons for variances: Required inputs: 1. Data in various forms 2. Observations 1. Inadequate allowance for time in planning phase 2 2. Inadequate specifications Required tools and 3 3. Inadequate knowledge about customer’s techniques: needs 1. Red/Amble/Green 4. Lack of discipline 2. Milestone Analysis 5. Improvements due to technological 3. Critical Path progress 4. Earned Value Analysis 6. Unforeseeable circumstances 5. Balanced Score Card Required activities: Collection of hard data, mainly supported by IT Main output: Collection of soft data considering impact of cultural Deviation analysis regarding time, cost, quality, scope, diversity satisfaction level Issue log Main output: Data in form of nominal scale, interval scale, or descriptions Cultural impact on project implementation (1) The application of the cultural gap analysis helps the project manager selecting adequate controlling and monitoring techniques. It also raises his or her awareness regarding potential behavioural differences within the team in the implementation phase. An important difference to keep in mind:  In task-oriented cultures, remote or virtual controlling usually works.  In relationship-oriented cultures, personal controlling and support is difficult to replace by remote controlling techniques. The following two slides give a systematic overview of potential behavioural differences among project members in the execution phase. 160  Cultural impact on project implementation (2) The higher the inclination to avoid risk, the more likely it is that important decisions due to a changing Embracing environment get delayed due to the fact that more Avoiding risk risk details are needed for decision making. If decisions are avoided, plans cannot be modified, and monitoring gets meaningless. Data collection and reporting: persons from individualistic cultures tend to feel more comfortable responding to non-anonymous interviews or Individual questionnaires for data collection. They also tend to Group feel more comfortable with measurement of their personal performance compared to team members from collectivistic cultures. Individuals from rather circumstantial cultures might feel that it does not make sense to monitor and Circumstan- Universal revise ‘old’ plans. They might feel that it is sufficient to adapt to changes when they come, without tial documenting deviations from the original plan. 161  Cultural impact on project implementation (3) Individuals from relationship-oriented cultures could have difficulties in reporting issues or anything bad in order not to ruin the relationship to the person Task they are reporting to. Relationship They may also need more direct physical follow-up in terms of encouragement rather than virtual status meetings. Project managers from achievement-oriented cultures may tend to invest some time in monitoring on a regular basis in order to counteract quickly. Standing / Achievement More status-oriented project managers might spend status their time on presumably more rewarding activities like politics or building networks. Prioritization of tasks under time constraints might be Sequential difficult for individuals from synchronic cultures. Synchronic Individuals from more pragmatic-orientated cultures may prefer quick action and countermeasures over Theoretical thorough analysis of the cause of deviations from the Pragmatic plan. 162 Mini Case : Production transfer from Denmark to India. Monitoring tools and techniques Pre-requisite:  Existence of relevant performance indicators, called Key Performance Indicators (KPI).  Set up a radar matrix ( see next slide 11) How to collect data ?  Frequency count or nominal scale data (count of occurrences e.g. request changes, …  Raw numbers or interval scale data ( €, time,..)  Verbal characterization ( ! Interpretation) How to report ?  Routine reports.  Special analysis reports.  Exception reports. Reporting guidelines 166  Monitor (radar) matrix for international projects Completion Satisfaction 1. Resources: time, cost 1. Executive management 2. Productivity of human resources 2. Steering committee (due to cultural diversity) 3. Line managers Internal 3. Quality 4. Heads of subsidiaries 4. Scope 5. Delays of input from other projects 5. Project team members 6. Support level from HQ/top 6. Users within organization management 7. Efficiency and consistency of business processes across locations 1. Economic situation of the countries 1. Customer the project operates in 2. Suppliers 2. Government regulations and 3. Subcontractors External approvals (changes, delays) 4. Consultants 3. Natural disasters or untypical weather change 5. (International) users outside of 4. Technological problems like power organization outages More details in Chapter 4 Managing Risk 167 Monitoring tools and techniques Areas to be monitored:  ‘Hard’ facts: Time, cost, measurable quality.  ‘Soft’ facts : Goal commitment of project team and initial clarity of goals Establishment of clear communication, adequate project team capabilities, project culture. 168 Particularities of monitoring international projects  Tends to be more complex than monitoring standard projects.  Context plays a big role.  Reports need to be customized to expectation of recipients that may be culturally impacted.  Attention needs to be paid to developments within the project, but also outside of the project. 170 Controlling techniques (1) Low tech controlling tools:  Traffic light system: Rather a visualization method than a generic control tool. Its effectiveness depends on underlying criteria (see example on next slide). Due to its self-explanatory colour coding very suitable for international projects.  Milestone analysis: Review meetings are conducted around pre-defined milestones. Important to have clear criteria to pass a milestone. Approach is easy to use and easy to learn. Can be combined with team-building events. 171  Example of traffic light tool Criteria for project status light setting Total project traffic Milestone review light status Red, if any of the criteria Profitability is red. Yellow, if any of the R&D costs criteria is yellow. Project resources Green, if all criteria is green. Specific project risks 12 R&D and production transfer from the UK to Germany Controlling techniques (2) More complicated controlling tools:  Earned Value Analysis (EVA): Shows the relationship between variances in cost, schedule and project performance. Suitable for controlling long-lasting, complex, international projects. Earned value is the value expressed in a currency of the work accomplished at a certain point in time based upon the planned or budgeted value for the work.  Automation of control by the use of expert systems: Expert systems are IT based. Input relies on traditional data collection methods.  Balanced Score Card (BSC): Apart from financial control, more intangible performance areas like customer’s satisfaction, internal business processes, and learning and growth need to be monitored. 178 Managing planned and unplanned change Detect variations from the plan:  Identifying of issues through context scanning (e.g. with monitoring matrix).  Entering the issue into a special forma called an issue log (see next slide).  Allocating resources to solving the issue.  Following up the progress of implementing change to solve the issue until completion. Central version control:  Change requests of changes in progress need to be administered by a central database.  Transparency and accessibility of change data is important. Claim management is a special form of change management. 182 Example of issue log 183 Lesson 8 : Communicating in International Projects Paul Berckmans  Communicating in international projects Communication is the key to increase value – in all types of projects. Up to 90 per cent of the time of project managers is spent with communication. Good communication in international projects means:  Being aware of the importance of communication in such a complex environment.  Overcoming language barriers.  Dealing with different communication styles.  Using a variety of communication modes and channels.  Planning for structured communication in the frame of a communication governance system.  Having communication guidelines as a common reference frame for all project members. 185  Process of intercultural communication Medium transmits message with selected medium Nois Sender e Receiver encodes meaning decodes meaning Culture Feedback 186  Language and communication Language (natural, functional, and technical languages) differences tend to be overlooked. However, they have a big impact on the Insufficien efficiency and efficacy of t project international projects. feasibility Loss of Impact of Loss of creativity language speed diversity on internation al projects Misjudge- Unexpect ments and ed underuse misunder- of standings resources 187 Challenges of intercultural communication We all bring associations to the communication process based on values and norms. Verbal AND non-verbal communication can differ among cultures. Communication is an unconscious process.  Awareness building is the prerequisite for understanding differences in communication. 188 Communication styles Communication not only differs by language, but also can be clustered into different styles. A wide-spread differentiation is:  High-context: feelings and thoughts are not explicitly expressed to maintain harmony and not to cause offence to the receiver. versus  Low-context: feelings and thoughts are clearly expressed in words and information is given in a comprehensive way. 189 Differences in communication styles Direct communication style  Typically used in low-context cultures.  Example: ‘Please modify the plan based on the last week’s changes.’ Indirect communication style  Typically used in high-context cultures.  Example: ‘Maybe we have new figures…’ or ‘It is so important to always have the latest figures.’ 190 Hall’s (Edward T. Hall) concept of low-context and high-context cultures Arab Swiss Mediterranean Scandinavian Latin American German Japanese North-American South European Other Central and North South Asian Europeans Chinese Low Context/ High Context/ Explicit Messages Implicit Messages 19 1 Cultural impact on communication People from hierarchy-oriented cultures tend to hesitate to communicate especially negative messages to higher ranks and will tailor their communication style a lot to the Equality addressee. Individuals from equality-oriented cultures Hierarchy tend to share openly negative messages with seniors and focus on the content of the message rather on the addressee. People from group-oriented cultures tend to put numerous persons from their network on CC. People from individualistic cultures tend to minimize CCs to the persons directly affected or responsible. Individual People from group-oriented