Oscar A. Osores
Managing risks for a new technology project implemented overseas can be seen as a high risk and difficult undertaken due to two main factors; dealing with new technology and working on a possibly unfamiliar environment; the key for managing these types of projects is using a dual risk management undertaken; managing risks in both project locations, integrating off shore stakeholders with the project leader abroad; in order to successfully plan, update and respond to the risks, it is critical for the project leader to be familiar with both the company culture as well as the countries’ culture and become the integrating keystone for developing a realistic project risk approach.
Managing risks in overseas new technology projects
Projects involving new technologies imply challenges and a number of new risks, some of them unanticipated and very hard to identify. In addition, working overseas typically represents more risks sources for the project, because of the differences between the countries’ environments, legislations, working practices and cultural manifestations. Therefore, a successful risk management strategy needs to incorporate all the potential risks sources that can affect the project and perform an integrated analysis to evaluate its overall influence on the project results through each phase of the project’s life and develop the proper response to them. The proper risk management approach suggested in this article involves performing a dual integrated risk evaluation. The first risk analysis will be performed on the off shore portion of the project. Here it is very important to incorporate all the project stakeholders and promote their participation during the risk planning, executing and monitoring stages. It is important having contingency plans specially developed including fall back alternatives, in the event that the technology does not deliver the anticipated results. The second risk analysis needs to be performed for the on shore part of the project. When working overseas, it is recommended to have a local company representative leading all the in country works. Outsourcing services can be contracted and used as required; but having a company employee knowledgeable of the company culture as well as the country’s characteristics it is critical to have true knowledge of the site conditions where the project works will take place. The integrative risk management part consists in creating a common risk approach based on the on shore and off shore risk assessment results and effects and creating a single platform for managing the risks in the project. After this dual integrated risk evaluation is finished, the project risks can be fully identified, analyzed qualitatively and quantitatively and a proper response can follow. Continuous risk monitoring is very important to guarantee success of the risk management implemented strategy. Risk interaction potential is also high when combining new technologies and overseas works. As presented in the following pages, risks from different sources can interact and their combined effect can potentially create higher risks for the project. On shore risks can create additional off shore risks or increase their impact and probability and vice versa. For example, a political risk in the country where the project is taking place can create financial (exchange rate) problems that can compromise the project’s assigned budget; in the effort of improving cost savings, cutting project costs can affect the quality assurance programs for the on and off shore parts of the works. This is just one of the scenarios that can occur when certain risk factors combine. These factors need to be taken into serious consideration and carefully analyzed when preparing the risk management strategy.
The off shore risk strategy
Past project records