Background and historical progression
Describe about the Importance Of Culture In International Construction Projects.
Cultural differences play a key role in successful implementation of international construction projects (Eberlein 2008). The ongoing global changes in different aspects of human life and economy, including business environment, cannot be ignored. Tools such as technology have facilitated global collaboration, through transfer of knowledge and skills, and development of business networks. As a result, the number of multinational construction projects are constantly increasing. One important factor to note about these projects is that some stakeholders involved in them will be working in a new cultural environment. These cultural differences, can impact the project positively or negatively. Therefore, it is important to understand cultural differences and learn how to manage them so as to ensure successful implementation of international construction projects.
Globalization has augmented interaction between individuals from different countries thus making it important to learn how to deal with and manage cultural differences. In international construction, globalization has driven competition in the industry thus making it easier for companies to bid for projects in foreign countries. This has made international construction industry to be very competitive, requiring a functionally and culturally diverse individuals that can integrate to form an effective project team. People working on international construction projects must understand how to learn new cultures and integrate into them for smooth running of the project.
Cultural differences may be characterized by region, religion, ethnic origin, language, generation or age, gender, company, industry you are working in, education level, or job function (Elana 2010). These characteristics influence a person’s beliefs and behaviors. For Example, Anglo Saxons and Latinos have two distinct behaviors. Latinos usually listen, follows speech keenly, like generalizing and are impulsive in nature. On the other hand, Anglo Saxons are usually analytical and have impressive self-control skills (Elana 2010). However, this does not mean that there are no Latinos who are analytical or Anglo Saxons who are naturally impulsive. When these two groups of people work together on a project, it will be very easy for them to understand their cultural differences
Proper management of cultural differences requires analysis of several dimensions. These include: power distance, control, uncertainty avoidance, time orientation, masculinity vs. femininity, individuals versus collectivism, short-term vs. long-term orientation, convergent and divergent thinking, and context. It is the responsibility of project managers to analyze these dimensions and find the best way of adapting to them.
Different situations resulting from cultural differences
Disputes are common in both local and international construction projects. As the number of international construction projects increase, arguments and business interactions also increase, which are likely to lead to disputes in the construction sector. These disputes are largely contributed by cultural differences between parties involved. Therefore the disputes can be prevented if these parties take time to prepare, learn and understand the culture of the other parties involved. Dispute prevention and resolution are very essential in successful completion of construction projects because these disputes affect workers’ productivity and company resources (University Alliance 2016).
The two major causes of international construction disputes are: differences in knowledge and experience related to construction management and law between the parties; and lack of solidarity in teams involved (Chan and Suen 2004). Other causes include: imprecise contractual terms, unclear definition of project scope, project delay, variations, payment disagreements, work quality, technical specifications, allocation of risks, unrealistic expectations of the client, information availability, management/administrative problems, unfamiliarity with local conditions, poor communication, dissimilarity in methods of doing business, use of accusatorial technique when resolving disputes, conflicting laws, problems with jurisdiction, and culture (Salmon 22016), among others.
There are several mechanisms of dispute resolution. The mechanisms can either be formal or informal (Smith 2012), depending on the nature of the dispute, contractual terms and willingness of the parties to resolve the dispute. The most common mechanisms of resolving disputes arising from international construction projects include: negotiation (this is most common method where parties involved come together for a mutual agreement by discussing the issue without involvement of a third party. The method is fast, flexible, informal, and simple and ensures privacy), arbitration, litigation, mediation, dispute resolution adviser, expert determination, adjudication, and dispute review board. International construction has resulted to more focus on international arbitration as one of the best mechanism of resolving international construction disputes (Friedland 2015).
Construction conflicts can be prevented by: ensuring that contractual terms are clearly stated, defining the project scope completely and clearly, following the project schedule to avoid delays, ensuring that variations are discussed among all parties before being effected, making appropriate payment on time, ensuring that work done is of the highest quality, ensuring that all technical specifications are well understood, proper allocation of risks, setting realistic expectations, ensuring that all needed information is available on time, putting in place appropriate management/administrative structures, getting familiar with local conditions before start of the project, ensuring effective communication methods, understanding each other’s methods of doing business, resolving conflicts amicably, understanding and acknowledging each other’s laws, and avoiding jurisdiction interference. It is more advantageous to prevent disputes than resolve them. Resolving usually leads to expensive and time consuming process and sometimes create enmity between the parties involved (Price Water Coopers, 2014. But since these disputes cannot be completely prevented, resolving them as early as they occur is the best option (American Bar association, 2003).
Relation between culture and construction
There are several factors that affect success of construction projects. One of them is culture, which affects both local and international construction projects. Culture has significant impact because construction projects are usually implemented by a diversified team of persons from different companies, professions, backgrounds and regions. In addition, culture is very important in construction industry because of the kind of contracting, partnering, joint venturing and procurement in the industry (Ankrah and Proverbs 2004).
The effects of culture are even more intensified if the construction project is an international project. The project team has to work together irrespective of their cultural differences (Shore and Cross 2005). For example, a professional engineer may be explaining some details of a structural component to a supplier who does not have any engineering background or knowledge and therefore have no clue why the engineer is emphasizing on the component specifications. In such a case, the two members of the project team have to acknowledge their differences and try as much as possible to understand each other.
Culture affects different aspects of management practices of construction projects. These include: human resources management, safety management, communication management, negotiation, knowledge management and time management. This basically means that cultural different affect all stages of the project. Regarding human resources management, the company should know the needs of their staff, understand their staff’s culture, identify the capabilities of different staff members, adopt the culture of the host country or community, trust the staff and their culture, and be flexible in terms handling challenges arising from cultural differences. Effective communication management approaches entail learning new language used in the host country or community; learning and appreciating regional differences; and developing personal relationships. Language is very essential here because it can be the major cause of numerous communication problems between project participants. The company can control effects of cultural differences on knowledge management by identifying appropriate techniques of capturing, learning, sharing, transferring and managing knowledge. The company should also be ready to hire experienced staff, learn new methods of doing business, train its staff continuously and know the possibilities of losing knowledge (Kivrak, Ross and Arslan 2008).
Safety management is also a crucial factor that is affected by cultural differences. So the company should analyze the safety practices and standards of the host country so as to establish ways of ensuring safety of its staff, property, neighbors and environment. Each country also has a unique culture in relation to safety. For instance, Americans and Europeans are very strict about safety practices than most of the other countries. For proper time management, the company has to know the typical working hours in the host country, identify working requirements and be observant on personal characteristics of its staff and other participants. There are two main cultures of time: monochronic and polychronic. Monochronic culture is where only one activity is performed at a time (Rutledge 2011). In this culture, time is a valuable resource and it is seen in terms of monetary value. Most Americans, Germans and British use monochronic culture. On the other hand, polychromic culture is where numerous activities are performed at once. In this culture, close attention is not paid to schedules and time is not seen as a very crucial resource (Kemperman 2008). Most Asians, Arabs and Latin Americans use polychronic culture. Obviously, problems will arise when people from these two time cultures work together without understanding each other and creating a common ground (Abeysekera 2003).
Last but not least, the company should have good negotiation skills. It has to know how to present itself during first contact with its hosts, the communication method and language to use (sometimes there may be need to have a translator), arrangements of how they will learn the culture, possibilities of delays during to prevailing conditions on site, ways of calculating and attaining profit, and mechanisms they can use to ensure that their negotiations can earn them future projects in the host country. All these can be achieved through proper negotiations. However, negotiations in a foreign country can be very difficult because most of the negotiation techniques that work in one country may not work in another country. Successful negotiations can be affected by language barrier. These negotiations can also be used by the company as a learning opportunity of the other contractor’s or client’s culture.
It is important for companies to acknowledge that there is a strong relation between cultural differences and construction. This is for the simple reason that construction companies will in most cases work on projects in different parts of the country or world. For this projects to be done and completed, the company must involve the government, people and community in the area. This comes with a variety of challenges associated with cultural differences. But with proper understanding of cultural differences and readiness to adopt to the new cultures, it becomes easy to complete a project successfully in a foreign country.
The extent to which cultural differences will affect the success of the project also depends on several factors. These include: location of the project, cultural awareness, learning and benchmarking, experience in international projects, strategy of the company, and well-organized management system (Kirvrak 2009). The persons involved in the project should understand, accept, respect and appreciate cultural differences for the construction project to be completed successfully (Granell 2000). Companies or individuals that have substantial experience in international projects are in a better position to deal with the issues of cultural differences than beginners. The more a person participates in international projects, the more they learn how to appreciate and manage cultural differences. The best way is to employ local residents who will help you learn about the local culture, especially on the best approaches to handle people in that particular area. Interacting with people from different professions and cultural backgrounds also enhances effectiveness of teamwork when implementing an international project. Through these interactions, people are able to acquire new knowledge, learn new skills, share their cultures and develop trust among themselves (Michailova and Hutchings 2006). But one of the biggest challenges to these interactions is language barrier.
Project location is another cultural different that affects project’s success. Basically, different areas have different cultures. For example, the culture in countries within the Middle East region is very different from the culture in African countries or China. Some local cultures do not allow women to work on construction sites, others have very unique business cultures, whereas others are dominated by corruption allegations. The legal structures of the host country are also a cultural different that affect the success of the project. Therefore all these differences should be analyzed and dealt with appropriately for successful completion of the project.
The strategy that the company uses its operations also play a major role in determining the project’s success. Each company has a unique strategy, depending on its objectives, values and culture. Some strategies may work for or against international projects. The most common strategies are parochial, ethnocentric and synergistic. Parochial strategy is where the company believes that their way of doing business is the only way they can do. It means that the company is rigid and may not be ready to make necessary changes accept and appreciate the culture of the host country. This strategy usually hinders successful completion of international projects considering the cultural differences between countries. Ethnocentric strategy is where the company believes that their way of doing business is the best way to do business. Because of the cultural differences in different countries, this strategy is not suitable for international projects. The last strategy, synergistic strategy, is where the company acknowledges the differences in ways of doing business by other companies and is ready to make changes because neither of them have a perfect strategy. From the three strategies, synergistic strategy is the most effective one for international projects because it is capable of managing cultural differences (Kivrak 2009).
A well-organized management system enhances project’s success because it makes it easier to manage different people who come from varied cultural backgrounds. The management system of the company should respect cultural differences, both within the company and with its external partners. Disregarding these differences is likely to cause inefficiencies thus reducing productivity. It is also the responsibility of the top management to ensure that the company develops cordial relationship with the community where the project is being implemented.
In general, cultural differences have strong and direct effect on project’s success. All cultural differences should be acknowledged, accepted, appreciated and adopted. The company should be ready to learn the new cultures and establish an effective management system that will facilitate smooth integration of these cultural differences into the company’s operations. Ignoring cultural differences will only lead to inefficiencies, reduced productivity, conflicts and ultimately project failure.
There are several advantages of cultural differences for companies undertaking international construction projects. Some of these include:
They enhance the effectiveness of a company. Cultural differences drive people to come together and establish strong relationships. This creates a strong team that collaborates and work together to ensure that their common goal is successfully achieved. The team members share their mix of skills, including strengths and weaknesses, and help each other where necessary (Binder 2007). The fact that the company acknowledges cultural differences motivates them to work extra hard so as to overcome these differences. Through this process, the company is able to learn new approaches of increasing its effectiveness.
They enhance the company’s legislative structure. Cultural differences gives the company an opportunity to learn the legislative structures of other businesses and countries. This makes it easier for the company to obtain relevant permits and registration documents when taking other international projects.
They enhance knowledge sharing. When people from different cultural backgrounds come together, they exchange ideas, share knowledge and skills. This enables them to learn various aspects of business models and develop their ability to execute international projects more easily (Dulaimi 2006).
They drive innovation because people always have to find ways of overcoming challenges brought by cultural differences. These challenges are usually overcome through creative thinking because people’s mind become open and have to develop ideas that will help them complete the project successfully.
They increase people’s problem solving capabilities. When people with different cultures work together, there will always be challenges especially in the beginning. These challenges drive people to develop strong problem solving skills because the challenges must be overcome for the project to continue and be completed successfully (Kerzner 2009).
They make working environments to be more enjoyable. When different people come together, there is usually excitement and enthusiasm to learn new beliefs, gain new experiences and acquire new skills. All these create a generally happy environment that improves productivity.
They give the company a competitive advantage. This can be said to be the ultimate advantage of cultural differences. These differences improves the company’s organizational flexibility, creativity, marketing, problem solving, resource acquisition and cost reduction.
They help individuals and/or companies to learn new business methods that they can apply to improve the efficiency and performance of their businesses
There are also several disadvantages of cultural differences, especially if these differences are not properly managed. Some of these disadvantages are as follows:
Misunderstandings resulting from miscommunication. One of the major challenges of working with people from different cultural background is language barrier (Ellen and Anna 2008). If people are not speaking the same language, it becomes very difficult to communicate and understand each other. As a result, they may fail to understand anything, understand them differently or knowledge may get lost through translation (Ford and Chan 2003). It is also worth noting that every culture has a unique communication style (Zait 2002).
They make it more difficult to control and coordinate participants because each person will be looking at things differently. In addition, people always believe that their cultures are the best hence making it more difficult to change their mind and appreciate other cultures
They make it very challenging to maintain a cohesive team because the members have different points of references (Marquardt and Horvath 2001). At first, developing this team is a problem. When the team comes together, they may not trust each other or fail to fully support the project goals. This gives international project managers a hard time in ensuring that the team works together from start to end.
People with different cultures will always have preconceptions about others. Most of the people may not express them but these preconceptions exist. This may lead to unfair treatment of others. It is very difficult to change this kind of mindset, which affects the project negatively
When people cannot work together without serious glitches, they always develop conflicts. Cultural differences augments the possibility of these conflicts because each individual or group will have a different opinion. Failure to reach a common ground will create conflicts among participants thus affecting the project’s success.
They can lead to cultural shock thus affecting performance of new workers in the country. The main causes of this shock are lack of experience and differences in living conditions, which makes it difficult to adapt to cross-cultural differences.
China is one of the countries that have attracted participation of international construction companies. The country’s culture is still largely influenced by the teachings of Taoism and Confucianism (Chan and Suen 2004). However, the Chinese government has developed several policies aimed at attracting international companies. These include foreign direct investment, special economic zones, and Sino-foreign investment joint venture (Cheng and Qui 2002). Despite this, culture difference still affect several international construction companies that work in China. An example is during the construction of sports facilities and venues that were used during the Beijing 2008 Olympic Games. There were several international construction companies that were involved in these projects. Most of the companies did not understand Chinese culture, methods of doing business and local legal structures teamed up with local Chinese firms. This enabled them to local the cultures and develop flexible and effective mechanisms of resolving disputes.
There is also a project discussed by Mahadevan and Klinke (2012) that has demonstrated the effects of cultural differences on project’s success. This project was executed jointly by German and Indian companies between 2007 and 2008. At first, there were multiple conflicts between German top managers and Indian top managers. The main causes of these conflicts were cultural differences. Besides language barrier, which affected communication between the two parties, each party had a different way of doing business. These managers did not learn each other’s ways of doing business and change their perceptions to accommodate each other. Instead, they went ahead and provided contradicting information about the project. Some Indian top managers were fired on allegation of not providing necessary information about the project. Because of these cultural differences, the project was almost being canceled. It was until when an experienced German manager was assigned to lead the Indian site that the project became revived. The new manager used his multicultural experience to interact with Indian customers well and resolve conflicts cordially. At the end, the project attained its quality objectives but failed to achieve time and cost objectives. This case demonstrates the role played by cultural differences in international projects. Poor multicultural management was leading to project failure. However, things were revived on arrival of a new manager who had knowledge and experience on how to deal with cultural differences.
Another case study demonstrating successful implementation of effective cultural differences management strategies is the Year 2000 (Y2K) projects. These projects were implemented by private and public organizations in 180 countries (Anbari et al. 2009). The projects involved collaboration of multi-cultural teams from different industries, including telecommunication, computer engineering, construction, software development, etc. These teams respected each other’s culture and cooperated to ensure that the projects were successful. The projects provided numerous lessons regarding management of multi-cultural teams (U.S. Department of States 2001).
There is also a case study of failed international project as a result of inappropriate multi-cultural management, and that is the Iridium project. This project involved design and construction of an integrated global communication system. The project was estimated to cost $5 billion and it involved multinational technology firms, business managers, about 6,000 engineers and technicians. A total of 26 countries were involved in this mega project (Anbari et al. 2009). Even though the project attained a number of its technical, operational and delivery objectives, it completely failed in achieving its financial and commercial objectives. This resulted to Iridium LLC’s bankruptcy filing. The company was later sold at a throw-away price. Failure of this project was largely attributed to inefficient cross-cultural communications. Language barrier was among the major problems. Communication among top managers of the project was poor due to language barrier. Some managers took leave and others went for vacation without the knowledge of others, which affected project delivery. This project demonstrates that even though a project may be allocated the required amount of money and be under management of multi-national teams, problems such as language barrier can cause project failure. In this context, language barrier is an element of cultural differences. The project would probably have been successful if the persons in charge prepared adequately on how they will ensure effective communication among all parties involved.
For many years, the national culture of Australia had been said to have high protection levels, especially in form of charges and/or tariffs (Buxey 2000). This made Australia less competitive globally because the protectionism had promoted internal business only. This means that international construction companies eyeing Australian market had to deal with high tariffs as one of the cultural differences. Also, Australia largely focused on establishing policies that attracted investments from Europe than from Asia. But globalization has made Australia to change its national culture and become more diverse. The country now has formulated friendly policies that make it easier for international companies to do business (National Visas 2013). This has enabled many international construction companies to bid for projects in Australia and adapt to the country’s culture when executing these projects.
There is also a difference between Americans and Europeans in terms of their thinking patterns. Generally, Americans are said to be convergers while Europeans are said to be convergers (Anbari et al. 2009). When working on a project, Americans start by looking at the general ideas before narrowing down to specific parts, goals and solutions. This means that they usually work on well-defined projects and consider applications and implications of these projects. On the other hand, Europeans tend to be more concerned on the project philosophy. They can work on unclearly defined projects by combining different techniques and using their creativity to develop solutions along the way. These kinds of cultural differences are very important in international construction. For a company that is planning to work with Americans or Europeans, it must understand these cultural differences and be prepared on how to deal with them.
China has also intensified its construction activities in various parts of the world, especially in Africa. There are several Chinese companies that are currently executing construction projects in Africa (Moore 2014). There are several factors that have contributed to China’s success in these projects (Liu and Stocken 2012), among them being Chinese companies’ approach towards cultural differences. Chinese workers in these countries are committed to learn new languages and integrate seamlessly into local societies. This has reduced the problem of language barrier, which has been one of the major factors limiting Chinese dominance into other parts of the continent, despite their strong technical skills.
From these case studies, it is evident that one of the major challenges of doing international business is ability to adapt to different cultures. This adaptation needs a comprehensive understanding of cultural values, perception and diversity (Granell 2000). This has to start during project preparation phase.
Construction business has changed significantly following the ongoing competition and globalization (Ofori 2000). Large-scale projects are now attracting participants from all over the world. Countries are also making promotional efforts to attract more foreign direct investments (Economy Watch 2010). As construction projects constantly become complex and global collaboration augments, cultural differences will continue being a key factor in international construction, just as they have been before (Ochieng and Price 2008).
It is very important for companies to pay more attention to cultural differences. The companies should acknowledge that people are not the same thus they will always have different opinions and points of reference. However, this does not mean that people cannot work together. The most important thing is for companies and individuals in the construction industry to know that the best way of moving forward is by finding ways of dealing with cultural difference. As globalization continues, opportunities are being created all over the world. Therefore cultural differences should not be a limiting factor to participate in these projects. Companies have to develop strategies of managing cultural differences, such as professional training programs. These programs have to be implemented internally. They need to train their people about cultural differences and prepare them before departure. This will reduce cultural shock that is usually experienced by people when they encounter new cultures they have never been exposed to before. Project managers should also develop communication skills because this is the most crucial skills for international projects (Harris and Kumra 2000).
As many cities and countries continue to unveil mega construction projects, cultural differences are expected to continue being a significant factor in the implementation of these projects. This means more conflicts and disputes are likely to arise, requiring flexible and comprehensive dispute resolving systems (Hill International 2016).
Cultural differences have been there and will always exist as long as people from different regions, ethnic origins, religions, languages, generations or age, genders, companies, industries/professions, education levels, or job categories work together. These differences have advantages and disadvantages. The advantages can lead to project’s success while their disadvantages cause project failure. The most important thing is for parties participating in international construction to find ways of understanding, accepting, appreciating, and managing these cultural differences. With the ongoing globalization and global challenges, cultural differences are inevitable. Understanding the effects of these differences helps in capitalizing on their advantages and minimizing their disadvantages. Therefore any person or company that intends to take on international construction projects should invest adequate resources in learning how to manage cultural differences for successful completion of the projects.
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