PLANNING THE INTERNATIONAL PROJECT IN TERMS OF TIME, COS.docx

PLANNING THE INTERNATIONAL
PROJECT IN TERMS OF TIME,
COST, AND QUALITY
Chapter 5
THE CHALLENGE OF PLANNING AN INTERNATIONAL
PROJECT
Why planning a project?
chaos.
Issues with planning in international project.
changing international environment.
predict.
ng than
for planning standard projects.
2

THE PLANNING PROCESS
The planning process can be divided into four major tasks:
1. Planning time.
2. Scheduling under resource constraints.
3. Planning cost.
4. Planning quality.
The objective of planning is to:
3
Required inputs:
1
3
2
4
Planning
Time

Scheduling
under
resource
constraints
Planning
Cost
Planning
Quality
Planning
Time, Cost,
Quality of the
International
Project
1. Work Breakdown Structure
2. Organizational Breakdown
Structure
3. Analysis of skill sets of
available staff beyond
academic and job titles (based
on CVs and interviews)

4. Overview of holiday
entitlements of international
staff in different locations
Main output: Gantt chart or network
diagram
Required tools and
techniques:
- Project Network Diagram,
mainly Activity on Arrow
(AoA)
as basis for CPM, CPA,
PERT, PDM etc.
- Gantt chart or bar chart
1. Project Scope Statement
2. Work Breakdown Structure
3. Estimates for activity duration
4. Establishment of relationships
between single activities in form of
precedence
5. Calendar with international holidays
relevant to the international project
Main output:
Resource loaded Gantt chart

Required tools and
techniques:
- Loaded Gantt chart
Required inputs:
1. Financial objective / available budget
2. Cost estimates
3. Overview of international locations
involved in the project
4. Overview of salaries, facilities,
equipment and other costs in the
relevant international locations
5. Cost for risk mitigation or contingency
plans (cf. Chapter 4)
6. Development of currency fluctuations
Required tools and techniques:
- Step counting cost-estimating techniques
- Exponential cost-estimating techniques
- Parametric cost-estimating techniques
- Even-loading, front-loading, back-loading budget

methods
- Periodic cost spreadsheet
- Cumulative cost spreadsheet
Required inputs:
Required inputs:
1. Project scope statement incl. cross-check of
customer’s expectation level
2. Cultural gap analysis regarding perception of quality
in involved countries and cultures
3. Functionality of product/service/project result
Not
discussed
in this book
Main output:
Budget spreadsheets
- Standard quality control techniques
- Pareto diagrams
- Checklists for partner selection

- Spider diagrams for training assessments
Main output:
Definition of quality known to all project
members
Water-tight specification sheets
Final output of cycle: project master
plan (additional input needed for master
plan: OBS/responsibility chart cf. Chapter
6)
Cf.
Chapter
6
Not discussed in this
book
Not
discussed
in this
book
4

CULTURAL IMPACT ON PLANNING
National culture determines the attitude of a project member
or stakeholder towards the effectiveness of planning.
It also has an influence on the detail level and structure of
the plans.
The attitude towards planning is influenced by the external
environment, e.g. frequency of natural disasters, reliability of
infrastructure.
The following two slides will use the cultural gap tool and
apply it to the area of project planning.
5
Project managers who are rather hierarchy-
oriented tend to create a plan on their own.
More equality-oriented PMs will tend to involve
their team.
Equality Hierarchy
Project managers and members who are
afraid of risk tend to put more effort on
planning details than risk embracing project

managers and teams.
Embracing
Risk
Avoiding
Risk
Project managers and other stakeholders with
a universal background tend to create a
Master Plan which is to be applied at all sites
and to situations. Circumstantial people tend
to stick to high-level planning with flexibility.
Universal
Circumstan-
tial
Project managers and other stakeholders who
are task-oriented tend to create Work
Breakdown Structures and to-do lists.
Relationship-oriented individuals tend to
spend much more time on networking with

main stakeholders than on creating a plan.
Task Relationship
CULTURAL GAP TOOL FOR PLANNING (1 )
6
Achievement
Standing /
Status
Project managers and members with a
sequential approach tend to follow the
planning process, with the creation of
estimates of time, cost, and links to resource
availability. People from synchronic cultures
may put less effort in sequencing.
Sequential Synchronic
Project managers and members who are more
oriented towards theory tend to attach more
importance and put more effort into planning.
People from pragmatic cultures may tend to

focus on learning by doing and spend less
time on the creation of plans.
Theoretical Pragmatic
Project managers who are more
achievement-oriented tend to ‘follow the
textbook’ in order to obtain the given targets.
Project managers and members with a
stronger status orientation might have a
separate agenda partially contradictory to the
project goal.
CULTURAL GAP TOOL FOR PLANNING (2)
7
SCHEDULING
Scheduling comprises of the following activities:
Breakdown Structure.
the sequence of these activities.

overall duration of the project.
Tools used for scheduling:
The prerequisite of scheduling is the assumption that time can
be measured, and duration needs to be minimized. This
prerequisite is not given in all local cultures.
8
Integration
start
0
Finalize
new
strategy
10
Decide on
new
processes

5
Test pilot
10
Roll out
new
processes
30
Integration
end
0
Build new
intranet
14
Feed with
new
processes
7
Identify key

users among
personnel
5
Language
trainings
15
General
process
trainings
8
9
Estimating activity durations in an activity on arrow network
diagram
Activity 1 Activity 2
10
After durations have been estimated, the logical
relation between activities needs to be determined.

Determining relations between activities
Activity Name
Earliest
Start Time
Latest
Start Time
Latest
Finish Time
Earliest
Finish Time
Float or Slack
Activity Duration
1 2
34 5
11
The structure of a node of a network diagram

Integration
start
0
Finalize
new
strategy
0
0 10
1010
-
Decide on
new
process
10
10 15
155
-
Test pilot

15
15 25
2510
-
Roll out
new
process
25
25 55
5530
-
Integration
end
55
55 55
550
Build new
intranet

0
4 18
1414
4
Feed with
new
processes
15
18 25
227
3
Identify key
personnel
0
27 32
155
17
Language

trainings
15
32 47
3015
17
General
process
trainings
30
47 55
388
17
12
The complete network diagram with duration, float, and
interdependencies
Factors
impacting
international
project

scheduling
Additional time for
coordination,
communication and
training
Additional time for
local adaptations (of
processes, products,
or services)
Additional time for
team building
activities
Consideration of
different public
holidays and
vacation time
Consideration of
different calendars
and auspicious days
13
Particularities of scheduling international
projects

ADDING RESOURCES TO SCHEDULING (1)
To finalize the scheduling activities, the project manager has to
take quantitative and qualitative aspects of resources into
account:
human resources need to be available to carry out the tasks
as depicted in the WBS.
international projects:
14
ADDING RESOURCES TO SCHEDULING (2)
Staff planning involves the following main activities:
am members are 100 per cent
dedicated to the project.
-commitment of
resources:
-schedule tasks.
-prioritize tasks.

15
Peak Units:
Calendar week
Calendar week
TL: Team leader
Over-allocated
resources
Allocated
resources
16
Example of resource-loaded Gantt chart
PLANNING COST
Purpose of cost planning:
realize the

project’s objective.
Cost planning activities:
where necessary.
Types of costs:
ct the budget is planned for.
such as general administrative costs.
17
EXAMPLES OF COST COMPONENTS
Labour
Materials
Plant and equipment
Travel and transportation

Subcontract
Training
Legal support
Investment cost
Rent
Overhead and administration
Fees and taxation
Inflation
Contingency (covers oversights or unknowns as a sort of buffer)
18
Simplified Cumulative Cost Spreadsheet: Production Transfer
from Europe to China
P = Plan
Total Budget € 1 million A = Actual
Cost
categories
Period to date in months
1 2 3 4 5 6 7 8 9 10

Labour
P 20,000 45,000 75,000 115,000 200,000 260,000 330,000
410,000 480,000 550,000
A
Travel /
expenses
P 16,000 32,000 64,000 96,000 130,000 170,000 200,000
240,000 300,000 380,000
A
Others
(consulting,
supplier
dev.,
prototypes,
logistics
etc.)
P 0 3,000 7,000 14,000 20,000 28,000 35,000 43,000 61,000
70,000
A
Total 36,000 80,000 146,000 225,000 350,000 458,000 565,000

693,000 841,000 1,000,000
19
Example of budget for international project
PARTICULARITIES OF INTERNATIONAL PROJECTS
REGARDING COST
AND TIME ESTIMATES
Fluctuations of currency rates need to be closely monitored.
Travel expenses
international projects.
Selection of sites involved
additional
costs and delays.
afety. These
may incur additional costs, e.g. required translations of
documents.
20
PARTICULARITIES OF INTERNATIONAL PROJECTS
REGARDING
QUALITY PLANNING

There needs to be a common understanding about quality
among the major project stakeholders.
Never take things for granted
product/service is used?
Pay special attention to training needs and the selection of co-
operation partners.
21
IMPLEMENTING AND
CONTROLLING INTERNATIONAL
PROJECTS
Chapter 7
THE CHALLENGE OF IMPLEMENTING AND
CONTROLLING AN
INTERNATIONAL PROJECT

The efficiency and efficacy of the processes and activities in the
implementation phase highly depend on the quality of the output
of
the initiation and planning phases.
The main activities in the implementation phase follow the
Plan-Do-
Check-Act cycle:
based on the project master plan.
status
by implementing counter measures.
2
MONITORING AND CONTROLLING
Project monitoring refers to keeping track or checking a
situation
for a special purpose.
Project controlling entails an element of influence and exertion
of
power to rectify undesired situations:
bject of this chapter): Fact-based
controlling of
resources with tools and techniques.

-oriented
controlling, using stakeholder management, leadership,
motivation,
negotiation, conflict management.
The detailed inputs, and outputs of these activities will be
explained
on the following slide.
3
Required inputs:
Project Proposal and Project Master Plan , i.e.
1. Change orders
2. Change documentation supported by IT
3. Follow up of issue log in status
meetings
1
3
2
4
PLAN

DOCHECK
ACT
The
Monitoring
Cycle
1. Inadequate allowance for time in
planning phase
2. Inadequate specifications
3. Inadequate knowledge about customer’s
needs
4. Lack of discipline
5. Improvements due to technological
progress
6. Unforeseeable circumstances
1. Stakeholder Matrix
2. Cultural gap analysis
3. Diversity-Complexity Assessment
4. Project Scope Statement
5. Enhanced Risk Register
6. Resource loaded Gantt charts

7. Cumulative spread sheets
8. Quality plan incl. specs
9. Project structure
10. Contracts
Main output:
Data in form of nominal scale, interval scale, or descriptions
Required activities:
• Collection of hard data, mainly supported by IT
• Collection of soft data considering impact of cultural
diversity
Main reasons for variances:
1. Data in various forms
2. Observations
Required tools and
techniques:
1. Red/Amble/Green
2. Milestone Analysis
3. Critical Path

4. Earned Value Analysis
5. Balanced Score Card
Required inputs:
Required inputs:
1. Analysis of deviations or variances
2. Analysis of their root causes
Main output:
• Deviation analysis regarding time, cost, quality, scope,
satisfaction level
• Issue log
• Decision on countermeasures
• Claim management
• Change management
4
CULTURAL IMPACT ON PROJECT IMPLEMENTATION (1)
The application of the cultural gap analysis helps the project
manager selecting adequate controlling and monitoring

techniques.
It also raises his or her awareness regarding potential
behavioural
differences within the team in the implementation phase.
An important difference to keep in mind:
-oriented cultures, remote or virtual controlling
usually works.
-oriented cultures, personal controlling and
support is
difficult to replace by remote controlling techniques.
The following two slides give a systematic overview of
potential
behavioural differences among project members in the
execution
phase.
5
The higher the inclination to avoid risk, the more
likely it is that important decisions due to a changing
environment get delayed due to the fact that more
details are needed for decision making. If decisions
are avoided, plans cannot be modified, and
monitoring gets meaningless.

Embracing
risk
Avoiding risk
Data collection and reporting: persons from
individualistic cultures tend to feel more comfortable
responding to non-anonymous interviews or
questionnaires for data collection. They also tend to
feel more comfortable with measurement of their
personal performance compared to team members
from collectivistic cultures.
Individual Group
Individuals from rather circumstantial cultures might
feel that it does not make sense to monitor and
revise ‘old’ plans. They might feel that it is sufficient
to adapt to changes when they come, without
documenting deviations from the original plan.
Universal
Circumstan-
tial

6
Project managers from achievement-oriented
cultures may tend to invest some time in monitoring
on a regular basis in order to counteract quickly.
More status-oriented project managers might spend
their time on presumably more rewarding activities
like politics or building networks.
Achievement
Standing /
status
Prioritization of tasks under time constraints might be
difficult for individuals from synchronic cultures.
Sequential Synchronic
Individuals from more pragmatic-orientated cultures
may prefer quick action and countermeasures over
thorough analysis of the cause of deviations from the
plan.

Theoretical Pragmatic
Task Relationship
Individuals from relationship-oriented cultures could
have difficulties in reporting issues or anything bad
in order not to ruin the relationship to the person
they are reporting to.
They may also need more direct physical follow-up
in terms of encouragement rather than virtual status
meetings.
7
MONITORING TOOLS AND TECHNIQUES
Project monitoring:

oject information:
Pre-requisite:
Performance Indicators
(KPI).
Areas to be monitored:
rable quality.
clarity of goals,
establishment of clear communication, adequate project team
capabilities, project
culture.
8
PARTICULARITIES OF MONITORING INTERNATIONAL
PROJECTS
to be more complex than monitoring standard projects.

that may
be culturally impacted.
project, but
also outside of the project.
helps with
this task.
9
10
Internal
Completion
1. Resources: time, cost
2. Productivity of human resources
(due to cultural diversity)
3. Quality
4. Scope
5. Delays of input from other projects
6. Support level from HQ/top
management

7. Efficiency and consistency of
business processes across locations
1. Executive management
2. Steering committee
3. Line managers
4. Heads of subsidiaries
5. Project team members
6. Users within organization
1. Customer
2. Suppliers
3. Subcontractors
4. Consultants
5. (International) users outside of
organization
1. Economic situation of the countries
the project operates in
2. Government regulations and
approvals (changes, delays)

3. Natural disasters or untypical
weather change
4. Technological problems like power
outages
More details see Chapter 4
Satisfaction
External
Monitor matrix for international projects
CONTROLLING TECHNIQUES (1)
Low tech controlling tools:
effectiveness depends on underlying criteria (see example on
next slide).
-explanatory colour coding very suitable for
international projects.
-defined
milestones.

-building events.
11
Criteria for project status
light setting
Profitability
R&D costs
Milestone review
Specific project risks
Project resources
Red, if any of the criteria
is red.
Total project traffic
light status
Yellow, if any of the
criteria is yellow.
Green, if all criteria is

green.
EXAMPLE OF TRAFFIC LIGHT TOOL
12
CONTROLLING TECHNIQUES (2)
More complicated controlling tools:
and project performance.
-lasting, complex, international
projects.
accomplished at a certain point in time based upon the planned
or budgeted value for the work.
areas like customer’s satisfaction, internal business processes,
and
learning and growth need to be monitored.
13

Time
C
o
s
t
in
T
€
36
80
146
225
350
458
565
693
841
1.000
0

100
200
300
400
500
600
700
800
900
1.000
1.100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Planned cost in relation to
schedule
14
Example of EVA Calculation (1)
Time

C
o
s
t
in
T
€
36
80
146
225
350
458
565
693
841
1.000
36
80
160
240

390
503
610
748
900
1.059
0
100
200
300
400
500
600
700
800
900
1.000
1.100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Planned
Actual
15
0
100
200
300
400
500
600
Apr May Jun
AC = 503
Time
C
o

s
t
in
T
€
PC = 458
SVm
SV = 54
CV = -99
EV = 404
16
MANAGING PLANNED AND UNPLANNED CHANGE
Detect variations from the plan:
monitoring
matrix).
(see next
slide).

the issue
until completion.
Central version control:
administered
by a central database.
Claim management is a special form of change management.
17
Issue Log
No. Date Description
Impact (in terms
of project
completion)
Suggested
solution
Responsible
person

Date of
comple-
tion
18
Example of issue log
LEADING INTERNATIONAL
PROJECTS
Chapter 8
LEADING INTERNATIONAL PROJECTS
Leading international projects means spanning cultural,
organizational, geographical, and time boundaries.
Indirect and virtual leadership skills play an important role.
The international project manager has to lead heterogeneous
stakeholders in a sensitive and creative way.
Leading international projects means influencing, motivating,
and
enabling project members from different national cultures.
2

Context of
leading
international
projects
Geogra-
phic
dispersion
Temporal
dispersion
Cultural
dispersion
Organiza-
tional
dispersion
3
Challenges of leading international projects
LEADERSHIP AND CULTURE
According to the GLOBE study, leadership styles and leadership
preferences of each national culture vary.
Depending on the national culture of leader and followers,

different
leadership styles are effective.
The international project manager needs to adapt his or her
leadership style accordingly.
4
Leaders from hierarchy cultures tend to act
like a benevolent autocrat with absolute
authority and decision making power. Leaders
from equality-oriented cultures may prefer a
participative leadership style with shared
responsibilities including the staff into the
decision making process.
Equality Hierarchy
Leaders from collectivist cultures tend to
prefer a patriarchic leadership style giving
their subordinates the feeling of (emotional)
security.
Incentives would be rather team or group-

oriented than given to single individuals.
Leaders from individualistic cultures tend to
assume the role of a coach developing their
subordinates. They tend to take decisions
based on facts collected from the whole team.
Leaders from group-oriented cultures tend to
take decisions based on opinions of major
stakeholders.
Individual Group
CULTURAL IMPACT OF CULTURE ON LEADING
INTERNATIONAL
PROJECTS
5
For leaders from task-oriented cultures, the
project team is only a temporary organization to
accomplish the project task. For leaders from
relationship-oriented cultures, good morale and
close relationships in the project team are the

sine-qua-non for task accomplishment and hence
relationships in the team are more important.
They may also support their subordinates on
private issues.
Task Relationship
Leaders from achievement-oriented cultures tend to
measure themselves and their followers by the
accomplishment of objectives. A preferred leadership
style would be management by objectives.
Leaders from status-oriented cultures tend to focus
on networking with politically important players in
order to safeguard their status and tend to manage
subjectively.
Achievement
Standing /
Status
Leaders from conflict-oriented cultures tend to
initiate open discussions on issues when
providing feedback. They use brainstorming

sessions for constructive conflict resolution.
Leaders from consensus-oriented cultures tend to
build up networks and use them to reach
compromises. They may tend to provide indirect
feedback to give face.
Conflict Consensus
CULTURAL IMPACT OF CULTURE ON LEADING
INTERNATIONAL PROJECTS
6
NATIONAL CULTURE, ORGANIZATIONAL CULTURE, AND
MOTIVATION
Motivation is a crucial component of leadership.
Motivation highly depends on individual preferences.
Organizational culture plays an important role regarding
motivation, reflected in available HR systems.
Maslow’s hierarchy of needs (see next slide) provide the project
manager with a rough orientation regarding motivational
preferences allocated to national cultures.
7

Safety Needs
Culture influences: Uncertainty Avoidance
Physiological Needs
Social Needs
Culture influences: Femininity,
Individualism / Collectivism
Esteem Needs
Self-
Actualization
Culture influences: Power Distance
Culture influences:
Individualism Collectivism
8
National culture and motivation
DIFFERENT LEADERSHIP STYLES BASED ON GLOBE
STUDY
Charismatic / Value-based leadership.

Team-oriented leadership.
Participative leadership.
Humane-oriented leadership.
Autonomous leadership.
Self-protective leadership.
An international leader has to be able to switch between the
styles.
Charismatic / Value-based leadership style is most
appropriate for leading across geographical boundaries.
9
COMPETENCIES FOR LEADING INTERNATIONAL
PROJECTS
Competencies are consistent ways of behaving or thinking.
They can be divided into:
-concept

Important competencies for international project managers:
1.Global organizing skills.
2.Technical skills.
3.Cross-cultural skills.
4.Global communication literacy.
International project managers should have a certain personality
in order to
be effective (see next slide).
10
Traits of
effective
international
project
managers
Adaptabilit
y
Authenticit
y
Empathy

Context/
Culture-
sensitivity
Courage
Enthusias
m
Initiative
&
Innovative
-ness
Personal
stability
Open-
mindedne
ss
Patience
&
Persistenc
e
Respect
for
difference
s

11
Are you ready for leading international projects?
1 Initiating 2 Planning 3 Executing 4 Completion
1. Staff the project
2. Secure early
involvement
3. Conduct team building sessions
4. Assess
training needs
5. Provide context
6. Organize for
success
7. Continuously clarify project mission and scope
8. Foster a culture of open-mindedness and improvement
9. Build and maintain commitment
10. Ensure effective communication
Re-assess

training needs
12
Main tasks of an international project manager
THE INTERNATIONAL PROJECT TEAM
International project team:
ly with
complementary skills, who pursue a common goal together.
Criteria of a successful international project team:
-direction
ity orientation
13

1.
• Interview key players
2.
• Plan the first meetings
3.
• Decide on the contents of the first meetings
4.
• Focus on building interrelationships
5.
• Explore cultural similarities and differences
6.
• Agree on ground rules for co-operation
14
How to build a successful international project
team
MANAGING RISK AND
UNCERTAINTY IN AN
INTERNATIONAL PROJECT
Chapter 4

WHAT IS RISK IN THE CONTEXT OF PROJECT
MANAGEMENT?
Risk is an uncertain event that, if it occurs, can have a
positive or negative impact on the project.
There are risks that can be anticipated (known-unknown),
and risks that emerge during the project (unknown-unknown).
Sources of risks that can be anticipated:
Risk management is influenced by the local cultures project
members were socialized in (see next slide).
2
Individuals from equality-oriented cultures
may involve the whole project team to identify
and monitor risk. They also may involve all
relevant group members into the decision on
countermeasures. Project managers from
hierarchy-oriented cultures may identify risk

on their own and be the only one responsible
for taking countermeasures. Group members
may be very comfortable not having any
responsibility for this ‘dangerous’ task.
Equality Hierarchy
Individuals from cultures with high risk
avoidance tend to fear unfamiliarity and
ambiguous situations. They may try to ignore
risk. People from risk-embracing cultures may
be more actively seeking for risk, also to turn it
into an opportunity.
Embracing
Risk
Avoiding
Risk
People from individualistic cultures might be
more inclined to take decisions on their own in
risky and urgent situations, whereas persons

from group-oriented cultures may want to
consult with other group or network members
which is time-consuming.
Individual Group
THE IMPACT OF CULTURE ON RISK MANAGEMENT
3
THE RISK MANAGEMENT PROCESS
Risk that can be anticipated needs to be planned for.
Risk planning means identification of risk, analysis of risk
impact, planning responses to risk, monitoring and controlling
the project for risks that may occur.
These activities are also referred to as risk management.
Each step of the process contains the following sub-activities
(see next slide):
4
Required inputs:
Required Tools & Techniques:
1. Project status meetings

2. Environment scanning tools
1
3
2
4
Identifying
Risks
Analyzing &
Prioritizing
Risks
Performing
Risk
Planning
Monitoring &
Controlling
Risks
The Risk
Management

Process
1. Assess of impact of risks on main project
objectives
2. Combine impact of risks with probability
of risk occurrence
3. Prioritize risks in terms of ‘high risk’,
‘medium risk’ and ‘low risk’
Main Output: Risk register outline
1. Documentation reviews, including
lessons learnt from previous projects
2. Information gathering techniques
3. Diagramming techniques
4. Risk checklists
5. Tools to systematically analyse project
and organizational environment
1. Project scope statement
2. Work breakdown structure
3. Analysis of organization’s environment
Main Output:
Risk register with classification of risks, risk triggers,

assumptions, and risk owners
1. Probability and impact matrix
2. Probability distribution calculations
3. Sensitivity analysis
4. Expected monetary value analysis EMV
1. Select of risk response strategies for
identified risks
2. Compile of contingency plans
3. Estimate of cost and time for
contingency measures
Scheduling and costing for contingencies (cf. Chapter 5)
Required inputs:
1. Extended risk register with contingency plans
2. Change requests

3. Stakeholder management analysis
Not
discussed
in this book
Main Output:
Extended risk register including contingency plans (with budget
and estimated time)
1. Monitor risk status
2. Ensure appropriateness of response
plans
3. Monitor project environment for
emerging risks
4. Ensure proper execution of risk
management plan
Main Output: Updated risk register
5
RISK IDENTIFICATION TOOLS
PESTEL

technological, environmental and legal environment of a project
for ONE geographical market, typically a country.
with
the analysis of the sociocultural environment.
Examples of industry specific tools:
: Systematic analysis
of
process systems, equipment and procedures to identify potential
hazards to people/project stakeholders and the environment.
impacts of
fire in the context of the project.
the
construction plan.
6
Country
•Similarity of cultural norms
with organization’s home
country
•Religious habits and customs

•Quality of education
•Demographic development
•Language skills
•(Social) mobility
•Public opinion (e.g. on
environmental protection)
•Work-life balance
•Level of transportation and
communication infrastructure
•Level of innovation
•Technology clusters
•Environmental protection laws
•Availability of natural resources
•Use and reuse of energy
•Antitrust law
•Tax regime
•Health and Safety
•Labour law

•Product liability law
•Social insurance law
•Protection of intellectual
property
•Reliability of law
enforcement
•Political systems and its
stability
•Security risks like social unrest
•Sovereign risks like
expropriation
•Level and acceptance of
corruption
•Tariff and non-tariff barriers to
trade
•GNP trends
•Level of interest rates
•Inflation rate

•Volatility of currency
•Purchasing power
•Employment rate
•Capital supply
Legal Socio-
cultural
EXAMPLES OF FACTORS TO BE CHECKED WITH THE
PESTEL TOOL
7
RISK ANALYSIS
Probability and impact matrix.
-tech tool for risk prioritization.
d of risk occurrence with the effect
the risk
will have on the project objectives.
three
stage (low, medium, high) or five stage (insignificant, minor,
moderate, major, horrible).

use
colour coding:
on the project.
ject results
and/or medium to
low likelihood of occurrence.
impact on the
project’s objectives.
8
STRATEGIES TO COPE WITH
FORESEEABLE RISK
1. Risk avoidance.
2. Risk mitigation.
3. Risk acceptance.
4. Risk transfer.
5. Risk absorption or pooling.
9

Risk register
Risk
No.
Risk description
Cause of
risk
Probability
of occur-
rence
Impact
on
project
Contin-
gency
measure
Cost in
Yen
Date of

entry
Example of risk register
First, the risk needs to be identified (field ‘risk description’).
To analyse the risk and
to plan for counter measures or contingency measures, the cause
of the risk has to
be known (field ‘cause of risk’). Information on risk propensity,
impact on project
results, cost of potential counter measures, and date of risk
occurrence has to be
added
10

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