Risk management in flat world projects
inevitable challenge for global project managers
The world is becoming borderless and project managers are facing increasing challenges. Project managers need to understand the imperatives of flat world projects, especially in the context of many unknown soft factors like cultural differences, etc., leading to higher risks. In today’s scenario, meeting expectations of different stakeholders in business (investors, customers, business partners, and employees) is getting tougher. One way to address this problem is to take advantage of a borderless world, which is leading to a philosophy of sourcing/manufacturing where it is the most cost effective and selling where there is a highest return. This is making the world flat and makes the job of project manager more challenging, because of several cultures, customers/partner behaviors and time zones involved. This impacts all knowledge areas of project management, but in this paper focuses on the important knowledge area, risk management, as many of the soft aspects are not very well known or defined. The concept of risk management in the context of a flat world project can be understood with an example of an IT project. The paper explains a rich experience of executing flat world projects for global clients. This also explains typical risks faced in a flat world project and best practices to address many of those issues and risks.
Currently many mid- to large-size organizations are already working in a truly global environment or they are gearing up to work in global environment. Adoption of the global environment is not enforced on these organizations; rather this change has been embraced by them. It allows them to produce/get service from least cost geographies and sell them across the geographies and hence makes them more competitive. This is making the world flat as geographical boundaries are being crossed for more and more activities within the organization.
This change brings a big complexity in how the organization works, i.e., it’s projects are now spread across geographies, there are participants from various countries, there are stakeholders from various countries, and the project impacts people from various countries. However, people working in project management for long time are aware of projects happening across geographies and country boundaries, but those used to be some projects. Because of this mentioned change, more and more projects are falling into this category. This leads to increased demand on people with experience of managing global projects.
This paper discusses the risk management approach for flat world projects.
Before we do deeper, I would like to put forth some definition/concepts, which will create right foundation for resonance with thought process outlined later in this paper.
What is Risk?
As defined in A Guide to the Project Management Body of Knowledge (PMBOK® Guide – Third Edition), project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on at least on project objective, such as time, cost, scope, or quality. A risk has one or more causes and, if it occurs, one or more impacts.
What is Risk Management?
As defined in PMBOK® Guide, project risk management includes processes concerned with conducting risk management planning, identification, analysis, responses, monitoring and control on a project. Risk management is, after all, the foundation of all advanced civilization, as described in Peter Bernstein’s 1998 classic, “Against the Gods: the Remarkable Story of Risk.”
Flat World Projects
There is no standard definition of flat world project. For this paper, I am considering a flat world project as a project that gets executed across three or more countries with two or more continents and also impacts on three or more countries spread across multiple continents. Flat world projects engage several firms and other stakeholder organizations, which all have different and even conflicting interests. One individual project, which a firm participates in, represents just one temporary activity in the firm’s overall business. Accordingly, a single project is impacted by the participating firms’ longer-term interests in running several simultaneous and sequential projects. In such projects, the management of the whole network of business value chain, coming from different business settings, is a challenge.
Since I have experience of managing multiple global IT projects for Fortune 500 companies, I will take reference of risk management w.r.t. IT project. These risks will be common thread for other industries as well and hence you can apply it widely. Industry specific tailoring can be done to these guidelines based on scope of project.
Risk Management challenges in Flat World Projects
As project management methodologies are becoming widespread, project managers have started to learn and implement risk management in their project. And when project managers were gaining confidence in managing risk by having processes for risk identification, risk analysis, risk mitigation, etc., more and more projects started to cross geographical boundaries of countries and continents.
Risk management in flat world projects presents a new set of dimension to new age project managers. Moreover, through this paper, I make global project managers aware of challenges to risk management and practical tips to overcome them.
Exhibit 1: Risk Management Challenges
Exhibit 1 depicts four cornerstones of challenges to risk management for global projects. These additional dimensions make already complex project management area risk management further complex.
Risk Management in Flat World Projects
Culture Diversity and Risk Management
The most common unique causes of failed flat world IT projects are related to unique cultural elements that are commonly ignored or misunderstood. Without the understanding of cultural differences, and identifying it’s impact on various project phases, the typical IT manager faces an uphill struggle.
People from different cultures have different points of view towards meeting project timelines. In addition, a flat world project manager needs to understand it and ensure that timeline targets are explained based on cultural context or else very well communicated timelines will not get realized. For example, in some Latin cultures, work is not the defining entity in one’s life to the extent as one commonly find in the United States. This can lead to a more casual approach to schedules that can exasperate U.S. business people, causing them to think that these people are not as industrious or do not care about their business relationships. Typically, this is untrue—these people are committed, it is just that in their culture they believe that many things are potentially more important or urgent than making sure that a meeting starts promptly at a given time. People of these cultures tend to find American preoccupation with clock watching and strict adherence to schedules to be obsessive.
When people from different cultures are involved in defining the scope, it is important to understand the implication of people’s cultural background on scope definition. In some cases, a brainstorming session on scope without importance to cultural background can become a more like communication meeting.
A fundamental deference to, and respect for, authority figures can cause some personnel from Asian cultures to not question work assignments in the same way that one would expect from U.S. employees. Whereas U.S. personnel will commonly ask questions and make recommendations as to better or more effective ways of achieving results, personnel from certain Asian cultures will have a tendency to simply go and do the work, deferring to the judgment of senior personnel. When working with team members from different cultures, it is very important to realize that you will probably get exactly what you ask for, without question, even if what you ask for is not the best possible solution. This situation places a premium on: (a) being very certain that your requirements, specifications, etc. are very well defined and thoroughly vetted, and (b) actively cultivating lines of communications with these personnel that will entice and facilitate feedback.
Country Specific Differences and Risk Management
Some factors, which are not relevant in a project being executed from one place, can get ignored in a flat world project and put the whole project under risk. Hence understanding the implication of cross-country projects on overall project risk is very essential.
Country specific risk includes the regulatory and legal environment and location factors as well as the more common issues of facilities, hardware, etc. The flat world project will require additional planning and management to resolve issues surrounding privacy, licensing, intellectual property rights, trade agreements, etc. The goal is to ensure that all project team members have the appropriate tools and access to accomplish their work. For example, it is important to review existing license agreements to determine whether access to required hardware and software can be extended to personnel outside the organization and/or at other locations—particularly if those locations are outside the home country. Further, recent regulatory changes, particularly in the health and financial industries, have the potential to affect how work is allocated and should be examined.
Communication barrier and Risk Management
As we have all come to know, communication is much more than just language. When dealing with a globally dispersed team, communication becomes rapidly more complex with special challenges of additional locations, time zones, deadlines, and simply distance. All of these factors, if not managed effectively, can quickly result in an inability to communicate the right things to the right people at the right time. It is important to establish effective communications prior to starting a flat world project.
Honest acknowledgment of the mistreatment that has taken place on the basis of cultural difference is vital for effective communication. Use this as an opportunity to develop trust. Do not assume that yours is the only right way to communicate. Keep questioning your assumptions about the “right way” to communicate. Communicate trust and build rapport by talking in different countries’ preferred mode.
Some people do spend time understanding other cultures but then use that generalization to stereotype people from that country. Hence, I suggest that learn from generalizations about other cultures, but do not use those generalizations to stereotype. Use them rather to understand better and appreciate other multifaceted human beings.
Time Zones and Risk Management
For project managers and team members working across geographies, different time zones make communication, co-ordination, and other aspects of integration very difficult. Those who work in this environment understand the challenges very well.
Teams spread out across several time zones have the following challenges:
- Less team interaction and cohesion,
- Harder to build personal relationship with the entire team,
- Some members may feel isolated and not a part of the team,
- More difficult to reach consensus,
- More people and groups to involve in planning and requirements, and
- Harder to know the major stakeholders of the various organizations.
In order to enable effective communication in global teams, establish communications infrastructure. To facilitate communication among team members use 800 numbers, direct dial extensions, and invest in high-capacity, high quality digital data/communications lines. Based on this strong communication infrastructure and using new collaboration technologies, put together a communication plan and ensure rigor in ensuring compliance to communication plan.
Meeting Risk Management Challenges in Flat World Project
For effective Risk Management in flat world projects, based on my experience, I would recommend following:
- Cross culture sensitivity: Plan, implement and keep continuing focus on building cross-cultural sensitivity in team. In team look at roles, where person’s role is linked/ dependent on people in other geographies, stress more on cultural sensitivity for these people. In addition, these need to be emphasized again and again in internal communications.
- Communication channels: Use multiple communication channels effectively. As there are challenges associated with respect to culture and time zone, reiterate messages in various forms, i.e., teleconference, video conference, email, message board, portal, etc. Over-dependence on one particular mode of communication can result into widening communication gap.
- Collaboration tools: Since the team will be spread out across locations, emphasize the usage of collaboration tools like instant messaging, team rooms, wiki, and blogs. More and more organizations have adopted the use of collaboration tools and the onus is on flat world project managers to get them accustomed to these and increase usage in their team.
- Documentation: Emphasize more and more documentation as good documentation that can be understood by people from across countries and culture. This will ensure that as one work moves from one county to another, it is not lost in transit. In addition, it sets a platform for seamless distribution of work across geography.
- Project Status and Reporting: Timely and regular project reporting is the backbone of all project managers, but it has more importance for flat world projects. It ensures the understanding of the overall status of the project and the impact of their deliverables on overall project progress. Regularity and detailing is a must for project status and reporting.
- Learning by experience: When one works for his or her first employer, he or she had a certain way of doing things. Since one does not know any differently, one accepts this as the correct way. If one stayed with that company for 20 years, their methods would have gotten pretty ingrained. It would have been very difficult to accept a different company’s way of doing something as correct. It would have been hard to admit that the new way might be better. If, however, one moved from branch to branch within the company, or went to work for another company several times in one’s career, one would learn that there are very few things that everyone does exactly the same. So one quickly adopts the habit of picking the best way, regardless of where it came from. Hence, project manager should ensure that such learning opportunities are provided to key team members so that they can better understand risks associated with global projects and ways to mitigate them
- Organization Structure: Define project organization structure with clear roles and responsibilities. While defining the organization’s structure and roles and responsibilities, one needs to ensure that appropriate balance is sought between responsibilities and authority across geographies.
When managing people from a different country, culture, or language, it is critical to remember that people will work differently. Different is not wrong; different is just different. There is nothing to fear from different, per se. In today’s world, more and more projects are being executed across geographies hence it is imperative for flat world project managers to learn the imperative of flat world projects on risk management.
This paper explains the risk management dimensions specific to flat world projects, i.e., culture diversity, country specific differences, communication barriers, and time zone differences. This area is still evolving and as more and more project managers will share their experience/understanding on this subject, this model will mature.
Bernstein, P. (1998). Against the Gods: the Remarkable Story of Risk. New York: Wiley.
Project Management Institute. (2004). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (3rd ed.). Newtown Square, PA: Project Management Institute.
© 2008, Manoj Kumar Verma
Originally published as a part of 2008 PMI Global Congress Proceedings – Denver, Colorado, USA
This standard focuses on the “what” of risk management, including: core principles; fundamentals; and life cycle.