Page 71 - DMGT521_PROJECT_MANAGEMENT

Project Management

Notes dispute? I would say given enough education on local issues and the likelihood that the
project would only directly financially benefit residents of one of the two communities,
the dispute could have been foreseen. How to address the issue is another story. There
may or may not have been something the mining company could have done to avoid the
conflict but they should at least have anticipated the risk of this happening and if no
mitigation strategy was feasible they could then have decided whether they wanted to
assume the risk. The object lesson for project managers here is that the exercise of risk
identification must be expanded to include not only the risks of a culture clash between
the foreign country hosting the project and the corporation’s country, but those of different
stakeholder groups within the host country. So how would a project manager go about
identifying those risks? The answer is that the investigative work required surpasses the
activities we normally associate with risk identification. Speaking to members of both
communities would have revealed pre-existing conflicts, examining back issues of local
newspapers and interviews with local officials would be other sources for the information.
The lesson here is that you may have to expand your risk identification exercise to include
mining the information that would help you identify risks.
There is another issue that has plagued corporations doing business in foreign countries
long before anyone ever heard of CSR, namely the issue of a clash between the laws
governing the corporation in the country of origin and the laws and cultural norms of the
country hosting the project. The classic example of this clash is the solicitation and payment
of bribes. In many countries outside of North America and Europe the solicitation of
bribes is not only legal, but is actually encouraged by the local governments. Laws in
North America make it illegal for corporations to pay bribes even in foreign countries
where doing so is not illegal. This creates a Catch-29 situation for these corporations. If
they fail to pay a bribe when one is solicited, they risk incurring costs that might far
exceed the bribe solicited. Let’s take the case of a bribe solicited to pass imported equipment
through customs. The bribe doesn’t violate local laws or norms. Failure to pay the bribe
will mean that the equipment languishes on a loading dock or customs shed until the
project manager either finds an alternative solution that doesn’t require the equipment or
the project fails. In either case the effect on the project budget is catastrophic. Alternatively,
the project manager could pay the bribe and incur criminal charges in North America,
which will probably include fines the corporation has to pay. So what do you do if you
find yourself in this situation?

The answer is simple; don’t find yourself in that situation. The situation described above
is untenable and no project manager should be asked to expose themselves to that level of
risk, regardless of your views on bribes. You can avoid this situation by investing a little
time during the initiation phase of your project to investigate the risks. What are the
applicable laws of the country the project, or portion of the project, will be performed in?
Will the project call for the importation of any equipment? What are the laws in the
corporate headquarters country pertaining to conducting business in a foreign country?
What are the international laws pertaining to labour and human rights? Perhaps the best
way to approach the investigation is to look at the project scope and your project
management approach and determine which questions you should ask. Know the risks
going in. Normally, we think of risk identification as a project planning process, but there
are some risks which will have a bearing on whether the corporation wants to undertake
the project, or whether you want to undertake managing the process. These are the risks
that will be identified by asking the right questions. Once the risk has been identified,
such as the risk of being solicited for a bribe, you can then make the decision as to whether
there is a mitigation strategy that might work. If you can’t identify a workable mitigation
strategy, does the corporation want to undertake the project? Do you want to undertake
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