Introductions
International projects and outsourcing have become major topics within many organizations over the last several years due to the advent of high speed conductivity and the increased cost of resources in the United States. The .com bubble was a major cause in that it pushed IT costs to ever-increasing levels demanding that IT organizations diversify in order to seek ways to lower the costs of doing projects.
The initial fundamental steps found in the Guide to the Project Management Body of Knowledge (PMBOK® Guide) are applicable to all projects. A Project Manager who runs projects nationally would assume this paradigm is appropriate for running projects with an international scope. Fundamentally, the running of an international project is identical to a national project. However, the challenge becomes not that this is just a larger project, but that the complexities are multiplied by time and distance as well as cultural factors.
These challenges can represent some of the greatest news for Project Managers in that they afford an opportunity to demonstrate value to the corporation. International projects, and specifically off-shoring, are very visible and if not done correctly can prove expensive for the company. A Vice President of IT at a large wireless firm said, “Outsourcing an international project is a spectacular opportunity for project managers to emphasize and redefine their value in the organization”. (Personal communications, July 14 2004) This opportunity, if taken, will give high visibility not only to the Project Manager and the process, but continue to create value for the profession in general.
Although there are many different types of outsourcing agreements and arrangements, as well as many different ways that outsourcing can be accomplished, it is important to recognize that this paper will examine general project management principles for the development of a product or software on an international basis. I will also speak about outsourcing of product by a company to a foreign entity for cost savings purposes. The majority of these discussions will be specifically in the information technology and development arena, but the lessons can be applied to almost any major outsourcing situation.
While a project management process exists in most organizations, it must be refined to address the complexities and greater risk inherent in international projects, as well as the inability for one person to see the complete organization at any given time. This paper will be broken down into sections covering the additional complexities of an international project, the contractual nuances, the role of a project office, as well as personnel and security concerns.
If the project requires international support and, therefore, contractual arrangements with other companies, they should be undertaken with the understanding that these companies are in business to make money and you don't want to undermine your objective. If the contracts are too tightly negotiated, it cannot be a win-win situation. Either the supporting company will go under or that company will find other ways to increase profitability. Jane C. Linder, in an article entitled “Metrics and Incentives in Outsourcing: Driving Peak Performance,” suggests a more radical approach for a long-term agreement with an outsourcing customer. The article suggests that instead of having an arm's length agreement they actually create a link in both the public and corporate lives so that the success of each company is tied to the other, thereby encouraging the people to find solutions to problems instead of legal ramifications.
Off-shoring has become very popular lately because of its ability to provide a relatively low-cost labor substitute for the higher cost in the United States. On a straight dollar volume this may look like a good financial move, but for several reasons it needs to be looked at carefully. As Randy Petway, Vice President of Customer Service for VISTA International (a software development firm) said, “If your organization expects to save 60% to 70% on hourly rates by off-shoring technical skills, the actual savings in real dollars will fall far short of that number. This is due to the additional investment of time for knowledge transfer, resource management, scope management, and “beneath the surface” costs. On that basis the success or failure of an off shoring activity depends heavily on effective project management throughout the entire lifecycle of the project.” (Personal communications, August 14, 2005).
Assuming that wage pressure is the driving force in the decision to off-shore, this may be only a short term solution. Using Keynesian economic theory, wage pressure will increase within the less expensive countries, therefore, bringing them closer and closer to the cost of American resources. We are already seeing evidence of this upward pressure in India, indicating that off-shoring may not have a long-term life expectancy due to wage pressure within the off-shoring countries.
Once an outsourcing partner has been identified, it is important to understand the reactions within the corporation to this announcement. When a corporation makes an outsourcing decision, it is important that the organization first understand their core competencies so they can effectively determine what functions they will keep in the company and what function they will farm out to a third party. Once this is understood, an advertising and information campaign needs to be established within the organization, reassuring the people and presenting an appropriate face to the public and the shareholders. This information campaign needs to be done not just when the announcement is made, but for the next year to ensure that information continues to flow and people who are concerned or affected are aware of what is going on and not influenced by rumors.
Time Zones
In all international projects, one of the great difficulties is the distance between various entities of the project. Team members work better when they are in close proximity to each other. Therefore, it is important to consider that time zones can make a substantial difference in the cost and productivity of an organization working on an international project. A Project Manager must recognize that if the organization is spread out over more than eight time zones productivity, communications, and production will be detrimentally influenced if not managed closely. As it relates to this, a group of international Project Managers created the “Rule of Eight.”
The Rule of Eight:
Projects that have members in countries with greater than eight time zones between them must institute
exponentially greater control and communications or inconvenience certain groups for the good of the project.
In a situation where project members are within eight time zones difference, the Project Manager must think differently and shift paradigms in order to compensate for team members not being available during a standard project day. In many off-shoring contracts this is a considerable boundary that is sometimes fixed by the off-shoring company actually working evenings to coincide with the time zone difference.
A major misconception of international projects is organizations believe that there is some advantage to “following the sun” development. Theoretically it makes sense to have a group of developers working on code for eight hours and then pass it off to the next set of developers that will work the next eight hours, therefore doubling the amount of productivity in a specific period of time. This theory works well if all the programmers are of the same skill level and completely understand what is being done, what has been done, and what needs to be done. Regretfully, this does not come instantaneously – it takes discipline and structure to make it happen. For this protocol to work, it is first and foremost important to have a strong requirements definition and specification with all of the assumptions clearly defined. This is usually more than most organizations have and more than most writers of specifications or business analysis people have ever done. Assuming the requirements and specifications are in pristine condition, it is critical that each one of the programmers working on the process has a clear understanding of what they're supposed to be doing and what the people who are handing off the software have completed. Most of the time, this is accomplished through a teleconference where the programmer takes the subsequent group through the software. While this works to a degree, it is much more efficient to have the information documented and a change control procedure implemented so that any issues can be identified immediately. If such a process is put in place and you assume that people are working an eight hour day, probably one to two hours of that time per programmer will be absorbed in the understanding of what was done before and hand-over to the next group of people. So without taking into consideration any of the other time requirements on a professional coder, realistically you may be looking at five to six hours of productive time per day per coder instead of eight due to the documentation requirements.
Tested and Approved Procedures
As the example above demonstrates, the distance and time zone nature of international projects, the difficulty in language, communications, and the challenges with intercultural behavior deem it critical that tested and approved procedures be in place before the project even begins. Further, it must be clear to all parts of the organization how these procedures are going to be used and how such procedures will be controlled and tracked for compliance.
It is important for such procedures to be approved and prescribed by senior management, as well as the complete project team. Most Project Managers will do an initial training session to help people understand the appropriate procedures and how the documentation is going to be used. Then the Project Manager will rely on the Project Office to continue to track, monitor, and correct any inconsistency within the practice. It is best to have appropriate templates and guidelines for documentation. Project Managers must have all processes and procedures, as well as any agreements and events, documented during the project. At the very least, this will aid in the closedown procedure going that much more smoothly. While most Project Managers understand the vital importance of documentation, many organizations and Project Managers do not like to complete the documentation as it is time consuming and a tedious process, especially when you're in the midst of a major project.
Project Personnel
The more countries and nationalities a project has, the greater the complexity in moving people across international borders. It is important to recognize the added complexity of various immigration and working visa requirements in the multiple countries where project work may be undertaken.
It is important to consider the travel time dynamics required for a project. There should be a central repository, usually in the Project Office, with all the travel and scheduling requirements. If there needs to be changes due to project needs or external forces, it is then relatively simple to locate all project personnel and be able to get in contact with them in order to reroute them efficiently.
Part of all projects is contingency and risk management. It is important when working in more volatile countries to have several plans for evacuation of personnel, and thresholds by which these plans will be triggered. Close communications with representatives from the United States within an organization is important, but also close communications with key people on the ground is necessary to make sure that evacuation, including transportation and security, has been planned for.
Schedules and Calendars
In the international arena schedules and calendars become much more critical than in a single country. As the Project Manager, you need to understand not only when you have people working, but also when there are major holidays or traditional times when people take vacation because this will influence the schedule and flow of work throughout the project. It's easy to identify the scheduled and legal holidays within a given country, but a Project Manager must also deal with the more intangible areas such as vacation time and the unspoken time off, possibly before or after a major holiday.
Cultural considerations including whether the country has any rules or traditions around working overtime must be identified. A Project Manager needs to know if he/she can require people to work overtime, to come in early, or to work through a lunch break either from a legal or a cultural standpoint. It is very simple for an American Project Manager to assume that these things are acceptable in other cultures and may learn very quickly that the project can fall off track because of a lack of understanding of the cultural norms within the organization and country.
In some countries a strong part of the culture stems from the major religious practices. These religions can have different requirements and certainly do influence the cultural and political ethos of a country. It is important to understand what these influences are and how they will impact the project. There may be religious restrictions involved in the time one can work or socialize afterwards. Proper recognition of religion can become a positive aspect of the working organization and reflect well on the company and the Project Manager making the effort.
Project Office
A well-designed and effective project office can be the greatest tool for process implementation, tracking and control of an international project. It is important to have control and local presence in most of the major areas as a Project Manager is only one person and must have a supporting organization they can trust to ensure requirements are processed fully.
The project office should be a central control hub with members of the project office seconded to various major work areas of the project. This allows the Project Manager to have eyes and ears physically located at each of the areas of work, lending to substantially more control on the project and ensuring he/she is aware of issues much more effectively.
This project office also should be allowed much more autonomy than most project offices in that they will have to work independently and make decisions if senior management or the Project Manager is not available. This is a large and different step compared to the normal responsibilities of a project office. Because of this unusual arrangement, it is important to identify the people who will be working in the project office early on. Also, it is preferable that they have some knowledge of the project management process and/or be encouraged to go through Certified Associate in Project Management (CAPM) training. But, it is even more important that they are detail-oriented and understand that processes need to be followed and tracked. Several project managers I've known have recruited people from the accounting and auditing areas of corporations to serve as the interface for the project office and complemented their skills with some technical resources if necessary.
As stated above, this is a slightly different use and iteration of a project office. This project office serves as the central repository for all project information as well as the controller and commander of all processes. It serves as an auditing body to confirm that processes are followed, and it's used to identify any errors or improvements necessary in the project process.
In summary, a project office set up correctly and appropriately can be one of the greatest assets to a Project Manager in an international situation. The project office can keep track of the project while the Project Manager focuses on the prime area tasks. The project office can also provide support with all of the auditing and data retrieval and input areas as well as providing a backup for the Project Manager in decision making as long as guidelines are created appropriately. If these critical items are not in place, the project office can be a major stumbling block and problematic to the completion of a project.
Dispersed Project Teams
Because of the nature of an international project, a diverse project team spread out over many countries and/or time zones makes it difficult to create a single, united project front and organization. Regretfully, a Project Manager and project sponsor will bear the brunt of the responsibility for bringing a project team together and keeping them as a cohesive group throughout the project. This is no easy task in centrally located projects with people that have worked together for many years. It becomes exponentially more difficult when you bring cultural biases, time zones and languages into the mix. A Project Manager, along with the senior management of the organization, needs to understand the benefit of creating a cohesive project team and come up with a plan that will continue to increase the cohesiveness of the team over a period of time, without endangering the project or incurring significantly increased financial requirements.
If the project is large enough, and can support moving high-end resources to other parts of the organization, this also can be an effective way of continuing to increase group dynamics. If a specific lead person can travel to the various areas to have conversations with their particular organization as well as being present to give them some understanding of group cohesiveness, this usually works quite well. Another, more effective, way is to actually transfer resources between areas of organizations. This can be done for several weeks at a time, or for a year or two, depending on the preference and needs of the project.
The above options work quite well if the project is long-term. However, if it is short term, communications need to be done much more effectively and efficiently than flying people back and forth. One effective means has been to take digital photographs of each member of the team and put them up on a project web site so people can at least place a face with the names of other team members.
Technology
We, as Americans, fall into the assumption that technology has become ubiquitous across the world. This is far from true. Both infrastructure and climate conspire to degrade or not provide the level of technology that we've come to expect in the United States. Therefore, when working outside the United States, planning and understanding technological barriers is vitally important.
These technological barriers can be as basic as not having a phone in a hotel room or as critical as not having access to a high speed Internet connection to transfer and access data. In the United States we access the Internet through a very robust telecommunications grid supported by two or three major corporations and, even if that failed, we could access the Internet via a dialup line with relatively no charge for this service. In countries where a monopoly still exists, this may not be the case.
Understanding the infrastructure of a country also includes identification of whether there are viable roads and the ability to move material in and out of the country. This, of course, may be addressed by trading areas within the country, but is something that needs to be examined before identifying an appropriate place for an International project or off-shoring endeavor.
Technology can frustrate us even in its simplest forms. Another assumption many Westerners make is that there will be continuous electrical power and temperature controlled areas in which equipment can be used. This is not always the case in that some countries have brownouts and blackouts with no apparent warning resulting in temperatures where computer equipment and other technology have a tendency to malfunction much more readily. Further, the adapters required to actually access the power grid in countries can be vastly different and require many such adapters. Certain equipment may only run on 110 power rather than the 220 available in Europe or the 240 in other areas. Also, the RJ 11 standard plug for our telephone network is not always used in other countries. In fact, at one point, there were almost 46 different plugs to access telephone networks worldwide. And, of course, the United States primarily does not use the same mobile phone system as the rest of the world.
These issues seem relatively minor but can become highly frustrating parts of international travel and must be evaluated and planned for or you can send a whole team to a country and not be able to actually do work and/or communicate. As a general rule of thumb, the cutting edge technology that exists will not be as functional in other countries due to infrastructure and technological limitations. Therefore, it probably would be prudent to have some tried and true technological methods available as backup for any high tech or high risk elements of your project.
Security
Project security can be the subject of a paper all in itself. There are so many different issues that need to be considered when dealing with projects outside the continental United States that we do not have to consider on a national project. Safety and security can be broken into several areas: country specific, human resource/personnel, and company assets.
Security within the country
When considering working on an international project and determining partners in foreign countries, the first thing to do is take a look at the safety and security of that country overall -- including the history of internal and external conflicts, the economic situation and the political climate. This can be somewhat of a crystal ball endeavor at times because trying to predict the future of some political organizations is exceedingly difficult – but you can look at trends and the political stability. Happiness of the workers in the country is a good indicator into the political stability of the country. Political stability can be a critical factor in that if the government changes rapidly, the organization may be in danger of losing any fixed assets as well as any intellectual or physical property that exists in the country. Also, if the political environment changes, expatriates may not be welcome or be used as political capital – therefore, it is vital that the organization continues to monitor the political and social interactions within the company and the country.
In many foreign countries it is not just the overall political process that needs to be understood, but also some of the underlying class and classification structures. In many countries there is an overall political system and then a more subtle social class system that has great influence on what happens in the community. An excellent example of this is where most African countries have both a political structure, as we're used to in the West, but also a tribal structure that works sometimes in conjunction with or opposition to the political structure of the country. Western organizations that ignore this secondary structure do so at their own peril. In some countries around the world, the political arm of the country may not be nearly as powerful as the social arm and, therefore, it is important to understand the interaction between the two, not only for project survival, but to get various items done within the country.
Political stability/instability within the country is not the only thing that needs to be considered. On several occasions countries have taken an aggressive stance towards other adjoining countries. If civil unrest breaks out, it will certainly influence the local and expatriates population is interest in working in the country. If an all out war breaks out between two countries, there need to be contingency plans on how to either keep the organization moving ahead or how and who should be evacuated from the country and where the backup location will be if they are managing a critical component of the project.
When selecting organizations outside of your own country, it is also important to understand the legal requirements for foreigners working in that country. If the country does not work well with the United States and allow business people entry on a work visa, it could create enormous problems for the project including major legal issues if people need to get into the country to complete a project. Being able to get in and out of the country with relative ease may be more important than a country that has a lower cost of doing business. Productivity and morale can be seriously influenced when people, who are trying to do work within a foreign country, are stopped and detained for long periods of time because of visa or working violations.
Security of Company Assets
Securing corporate assets in a foreign country is sometimes problematic owing to laws and regulations changing from country to country and international law is not as clear as it could be in some situations. In fact, in several countries, one ought to assume that a percentage of company assets will disappear based on cultural norms and build that into the budget on a yearly basis. Securing assets does not necessarily only mean the desks, chairs and computers, but the intellectual assets of the company as well. And the latter can be much more tricky. The evacuation plan must not only include how to evacuate personnel, but also how to retrieve all intellectual property and information from the country and reestablish operations in some alternate location on a timely and concise basis. This planning should be done ahead of time and tested on a regular basis. It is a relatively simple protection, but regretfully most corporations do not go to this extent until some major disaster happens and they find out their backup system is inadequate.
Reliable Backups
When thinking about backups it never hurts to be exceedingly pessimistic. The more people and organizations the Project Manager interacts with, the greater the opportunity for some minor or major errors to occur. These errors will, of course, be exacerbated during crunch time when people are tired and not paying attention. Therefore, backup procedures need to be that much more focused during these times.
Many organizations have a relatively good IT backup plan with remote storage, etc., but regretfully, that is usually not where the problems occur. Most organizations do not have a good backup system for critical areas such as their personnel's desktop or notebook computers. Also, any hardcopy documentation that exists should have some sort of storage and backup plan so that when accidents happen it is available for recovery.
Conclusion
In conclusion, the role of the Project Manager in an international project cannot be underestimated. In an international project it is important to remember that people are the greatest asset. The Project Manager, therefore, needs to be flexible and understanding of multiple cultures and differences, languages, and timeframes. An international project provides the Project Manager an opportunity to not only redefine project management in its organization, but also demonstrate the value of the project management profession. International projects are usually high visibility, but also carry high risk given the additional issues often times overlooked by many managers more familiar with doing business nationally. Even though off-shoring may not be viable in the long term, the processes and procedures you put in place will be a valuable resource and serve the company well in operating and competing in the global market. Finally, a good Project Office can be a tremendous asset to the Project Manager on an international project as it can be the infrastructure glue to support the entire process.