International Project Management

Kathrin Köster

• Publisher: SAGE Publications Ltd
• Year: 2009
• ISBN:
  9781446243237
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios internacionales

With project management becoming an increasingly global endeavour, a comprehensive and international student text that reflects this reality is essential.

International Project Management does just that, systematically linking the key elements of cross-cultural management and the particularities of an international context, with the tools and techniques of project management.

Key features include:

- A wide variety of examples and illustrations, including an in-depth, end-of-chapter case study with case questions;

- Student exercises and review questions;

- Detailed further reading

- The full support of a Companion Website, featuring a Teacher?s Manual

INTRODUCTION TO INTERNATIONAL PROJECT MANAGEMENT

1

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LEARNING OBJECTIVES

After studying this chapter, you will be able to:

• grasp the concept of a project
• comprehend the main characteristics and components of project management
• identify the major project stakeholders
• understand the concept of a program
• know the historical development and theoretical underpinnings of project management
• assess the constraints of project management methods
• differentiate between a ‘standard’ project and an international project
• elucidate the characteristics of international projects
• discuss the key success criteria for the management of international projects.

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INTRODUCTION

1.1 For three decades globalization has been increasing at an ever faster pace. Huge economies in Asia, China and India have opened up and become very successful competitors to the Western world and the Japanese. Russia, Brazil, and the Gulf region are following suit. Organizations need to become increasingly cost efficient due to fiercer global competition. Global markets were deregulated, allowing for production capabilities to be shifted to low-wage countries. The realignment of global business forces was enabled by advances in technology that have had an enormous impact on how business is done. Most significant were the innovations in telecommunications and computing. Organizations now have the ability to replicate their infrastructure in many different locations. One internationally operating retail chain boasts that it can build up a new outlet on each continent within 60 days (Lientz and Rea, 2003). Organizations can also control remote locations on a real time basis. Thanks to the internet, all entities of an organization scattered around the globe can exchange information easily – at least in theory – due to standardized hardware and software.

Globalization has brought us a more integrated and interdependent world economy. To adapt to this new environment, and to thrive in it, organizations need to undergo major changes. All kind of organizations will initiate a whole range of different international projects in order to implement the necessary adaptations to a changed environment.

Although ubiquitous, international projects are not necessarily leading to organizational success. In 2004, PricewaterhouseCoopers analysed a broad range of companies, large and small, in 30 different countries, which carried out 10,640 projects with an overall value of 7.2 billion US$. They found that only 2.5 per cent of global businesses achieved project success (Stanleigh, 2006). The measure of project success may be debatable, but this is still an alarming number. More needs to be done to make project management more efficient and effective on a global scale. This book aims at providing advanced students and practitioners with hands-on knowledge to enable them to contribute to the future success of international projects.

I will start laying the foundations by explaining the relevant terminology and defining a project, project management, and the main project stakeholders. I will also discuss the relationship between a project and a program. We will also take a look at the historical and theoretical roots of project management to help us assess the global applicability of project management. Based on this foundation, we will dive into the topic of international project management, starting with a differentiation between a ‘standard’ project and an international project. The emphasis of this chapter is a detailed discussion of the main characteristics of an international project as project management methods need to be attuned to those characteristics. We will also examine the major critical success criteria for international projects. I will wrap up the chapter with an outline of the structure of this book, following a project management knowledge area approach and an open systems approach.

WHAT IS A PROJECT?

1.2 There are a variety of definitions regarding what exactly a project is. For the purpose of this book, I will follow Turner’s definition. He sees a project as ‘an endeavour in which human, material and financial resources are organized in a novel way, to undertake a unique scope of work, of given specification, within constraints of cost and time, so as to achieve beneficial change defined by quantitative and qualitative objectives’ (1993: 8).

In contrast to the routine work in an organization, which could also be called processes or operations management, the objective of a project is usually a new state that is different from normal work. Operations typically are ongoing and repetitive, whereas projects are temporary and unique.

Within the family of projects, however, there are big differences, for instance in size. A project can involve only two people and a relatively small amount of money, like a honeymoon trip to Hawaii. Or it can be a so-called mega-project like one of the biggest cross-national infrastructure projects of the world, the 15.5 kilometres long Oresund coast-to-coast link connecting Denmark (Continental Europe) with Sweden (Scandinavia) which was opened in the year 2000 and built at a cost of roughly 2 billion Euros (Flyvberg et al., 2003).

Projects can also differ in the kind of organization initiating the project, the industry the project belongs to, and the purpose and scope of the project. There can be different stakeholders and customers. Project duration can be long or short. The project can be part of primary activities like Research and Development, Manufacturing, Marketing and Sales, or it can belong to secondary activities of the value chain, such as Information Technology (IT) or Human Resources (HR). You can find a systematic overview of different types of projects on the companion website.

Regardless of the type of project, each project has three main characteristics in common, although these characteristics may be of a different weight for different projects as can be seen in Figure 1.1. Accordingly, projects are limited, unique, and risky. In the following, I comment on each criterion.

LIMITED

A project is intended to have a temporary character, which in reality may take a very long time. According to the research of Cooke-Davies (2002), a project, or at least a well-defined part of a project, should not exceed three years. In general, each project should have a clearly defined beginning and end. A project produces an output which usually is clearly defined, for example a new tangible or intangible asset. This may be abstract, like a higher competence level of managers, or more concrete, like the development of a new drug which has the potential to be a blockbuster. A project typically delivers beneficial change. The value of the outcome of the project should justify the resources invested in that project.

FIGURE 1.1 The main characteristics of a project

UNIQUE

Different projects can have different objectives, can be embedded in a different context, and can usually be launched by different organizations or different entities of an organization. In general, the uniqueness is based on the fact that projects are non-routine endeavours. This is even the case with projects which seem to be repetitive like the establishment of new outlets of a retail chain. They all give customers the same brand feeling; however, the establishment of each outlet will be different and needs to be planned with the legal requirements of the respective country in mind, for instance regarding hygiene regulations and safety standards.

RISKY

Since projects comprise non-routine work, they do involve uncertainty. This means risk which has to be managed. For instance, the requirements of consumers can change quickly. Nowadays, mobile phones without a camera are hard to sell compared to the beginning of this decade. Giving another example, a competitor might launch a similar product earlier at a lower price, as happened with Nintendo’s home video game console ‘Wii’ which was launched in December 2006, much to the chagrin of Sony whose launch of PlayStation 3 had been delayed to spring 2007. To give yet another example, a pharmaceutical company may have discovered dangerous side-effects of a newly developed drug after nine years of research. Hence, it has had to abandon the whole project.

WHAT IS PROJECT MANAGEMENT?

1.3 Section 1.2 defined projects as bringing beneficial change to an organization. In other words, the results of projects should bring value to an organization, rather than destroying value. Consequently, that organization needs to manage the resources used for projects carefully. Project management deals with what it takes to manage projects to create value for organizations. The Association of Project Management (APM) (2006a: 3) defines project management as ‘the process by which projects are defined, planned, monitored, controlled and delivered such that the agreed benefits are realised’. This definition indicates that project management takes a staged approach to reduce complexity and ensure efficiency. Several phases connect the beginning of a project with its end. This is also known as a project life cycle or project management life cycle. According to the Project Management Institute (PMI) (2004: 20), ‘There is no single best way to define an ideal project life cycle’. Depending on the organization and the nature of the business it is operating in, there may be sub-phases such as the development of prototypes, the approval of such prototypes and the ramp up for mass production in a manufacturing project. Frame (2002) postulates that the project life cycle should by default include after sales service in order to increase customer satisfaction with the outcomes of projects and to smooth the interface between projects and operations management. Typically, the project life cycle consists of four main phases as depicted in Figure 1.2. Let me briefly explain the main tasks of the four phases.

PHASE 1 INITIATING

The initiating phase is also often called the front-end or kick-off phase. The need or the opportunity is confirmed. The project concept is developed after the overall feasibility of the project has been carefully considered and determined. In this phase, the business case for the project is developed. I will discuss the details of this phase in Chapter 3.

PHASE 2 PLANNING

The essence of project planning is to decide what needs to be done in order to deliver the project objectives within the given organizational constraints. As a result of this phase, the so-called project management plan or project master plan is delivered, along with the identification of resources required for the implementati...