Expert article · Start-up & plant construction · 2 min read
Other countries, other customs: why projects abroad are underestimated
Dr. Klaus-Jürgen Wolf, Founder & Managing Partner
Low labour costs and market proximity are tempting. What adds up on paper often ends in six-figure extra costs on site. The cause is almost always planning.
When mid-sized companies set up a subsidiary abroad, the complexity of the project is regularly underestimated. Following the motto “other countries, other customs”, problems arise that the budget never accounted for.
Mexico is a good example. Low labour costs and proximity to the US market are real advantages. That efficiency and productivity on site are considerably lower rarely makes it into the calculation. This applies to highly automated processes as well. Many an assumption on paper ends in an expensive, six-figure consequence on site.
Where projects tip over
A foreign partner often wants to close the deal quickly, and some things get glossed over. Or the planning leaves the other side so much room for interpretation that the result differs from what the initiator had in mind. Without a neutral country expert in concept and planning, plans emerge that only reach the goal with extra effort.
Then there is how projects are run. Our experience from many projects paints a sobering picture:
- Only about one project in ten is run with real project management.
- Almost half have no project plan, or it exists only in one person's head.
- Many others have a list of dates without showing how they were calculated.
What makes the difference
A GANTT chart with the critical path marked is rare. Yet that is exactly what separates projects that reach series production on time from those with long delays, inadequate infrastructure, patchy organisation and higher costs than planned. In our project in Mexico, this discipline secured the start of production on schedule.