The ABCs of International Practice
The market for international work has increased steadily over the past 10 years, attracting an ever-increasing number of firms, even those of small or moderate size. In some cases, U.S.-based clients are expanding their operations overseas and asking their domestic firms to undertake foreign work.
Often, significant projects be can won by competitions. Many of the major U.S. firms are actively engaged in overseas practice and have established branch offices. Associations or joint ventures are increasingly common. While the nature of the work may be similar, the protocols (and economics) are quite different, and can vary greatly from country to country. Each project opportunity should be evaluated on its own merits, especially with regard to balancing risk with reward. Here are a few tips for what to keep in mind:
In the U.S., every jurisdiction has its own unique procedures for obtaining permits and approvals, and the same is true overseas. Assume nothing, and allow plenty of time to learn about local regulations. It often helps to engage qualified native professionals to assist as facilitators, but be especially careful to follow all pertinent rules. Take no shortcuts.
Travel cost is only one factor to consider. It’s more expensive to practice overseas than domestically because of the effect of time and distance on productivity. There’s also an opportunity cost (when you’re overseas, it’s more difficult to pay attention to your domestic projects). Dealing with jet lag can sap efficiency on both ends. Be realistic when budgeting your projects and include an extra contingency for the unknowns, because they will happen.
The interpretation and enforcement of various building codes can vary widely. Become knowledgeable not only about the letter of the law, but how it will be applied and who the key decision-makers will be. Again, it can help to engage local professionals who are conversant with local codes, but make sure that they are truly experienced with the specific building type.
For international projects, collaboration is a given. Some large firms maintain a network of overseas offices, some tap into pre-established consulting networks, and others form project-specific teams that include local professionals with the requisite skills. It’s important to be especially sensitive to team dynamics. Go the extra mile to make sure that everyone is on the same page with regard to what’s expected, both individually and as a team.
Construction skills, experience, and practices can vary widely by country, region, and city. It helps to do research on the skill sets that are locally available, and to seek out the best construction managers and subcontractors. Do not assume that all the required skilled labor will be readily available, and this goes for construction materials as well. To appreciate how different building techniques can be, one only need look at a picture of bamboo scaffolding on a Chinese high rise.
It should be obvious, but successful international practice requires sensitivity and appreciation of differences in language, culture, food, music, social customs, religion, geography, business practices, and so forth. Small things can have big consequences. Before you get involved in overseas work, study up. Remember that while traveling in a foreign country, you are the foreigner! And stay patient…it takes time to get it right.
The U.S.-based system of SD-DD-CD-CA is not generally closely followed in overseas work. Most firms will provide SD or “heavy DD” documentation only with the balance being handled by local firms. Specifications are unlikely to be followed to the letter (local customs will rule). Do your best to provide detailed and coordinated documents, but be prepared for deviations that are beyond your control. It happens (a lot).
Best practice is to use a common IT platform (such as BIM) or all design and documentation, but your local partners may not be equally adept in technology. If they are not, invest in training and equipment; it will pay big dividends. Make sure that the documents you prepare will meet the actual contract requirements (which can vary widely, so read the contract closely).
This one is easier than you may think. Make it a firm policy to fully comply with the provisions of the US Foreign Corrupt Practices Act. Under no circumstances should you or any member of your project team engage in any activity about which there may be the slightest doubt. It’s far better to resign the commission that become involved with any one or anything that would put you or your firm in jeopardy. End of story.
Make sure that you check with your insurance carrier about special provisions or exclusions that may apply to overseas projects. Arrange for additional coverage as appropriate and don’t forget to budget for this in your contract negotiations. Consider taking out separate insurance policies so that there is no cross-contamination with your existing coverages.
Should legal issues arise, bear in mind that it will be very difficult, if not impossible, to litigate successfully. It’s far better (and cheaper) to invest extra energy in maintaining excellent client relations to minimize the possibility of problems arising in the first place.
Marketing overseas work is expensive, requiring lots of time, travel, and money. Lead times can be long. Focus on creating and maintaining a few key relationships and let the practice grow organically. If you decide to open a local office, be prepared to invest for the long haul. Many international projects are awarded via competitions, which is a high risk, low reward way to pursue work, and they tend to be “one-off” successes.
The construction materials that you prefer to use on your projects overseas may or may not be readily available, and may or may not be of consistent quality. Be prepared for this. Study local architecture, building customs, and construction techniques to take full advantage of what’s unique (and possible) about building on the given site.
Payment Payment for overseas projects can be dicey. It’s good practice to always request a retainer. Track your cash flow closely and be prepared to stop work if payments are not kept current. It’s also common that the last payment may be delayed or overlooked altogether, so budget your cash flow with this in mind. Clarify in advance if you will be paid in local currency or U.S. dollars, and bear in mind that there can be significant swings in currency values over the life of a project, which could affect your profitability.
Quality is an ongoing issue of concern. Except in rare instances, US firms practicing overseas have relatively little control over the quality of materials and workmanship. It’s also not common for US firms to provide CA (construction administration) services. With this in mind, it’s especially important to deal only with reputable construction managers, suppliers, and subcontractors. Insist on it.
Tax laws are complex, not only in the US but especially overseas. If possible, negotiate contracts that specify that the client will pay for any required local taxes or fees. Be aware that it may not be possible to move funds easily out of the country. It’s essential to consider tax consequences when negotiating the contract; otherwise, you stand to lose much more than you could ever gain.
Technology is one thing that crosses borders with a minimum of fuss. Make sure that all the key team members are using a common IT platform and that everyone is running the same updated version. Provide the best equipment, and train staff as needed. If using BIM, it’s especially important to create a BIM execution plan with protocols that will be closely followed throughout the duration of the project.
With a little practice, the effect of working in different time zones can be made to work to your advantage, as it stretches out the productive portion of the day. It can help to mount two clocks side by side at both the home office and the project office that display both local and remote times.
Travel is expensive and time consuming, and it can be exhausting. Jet lag can affect productivity. It also is an opportunity cost (when you are abroad, it’s much more difficult to attend to ongoing projects at home). Make sure to factor the time and expense of travel into the contract negotiations. And when you do travel, allow time for you and your staff for a day or two to see the local sights en route; it will broaden your perspective.
International work can be very intriguing, opening new doors for your firm and your staff. That said, successful firms engage with their eyes open. Each project will be different, and lessons learned will be abundant. If you decide to pursue foreign work, invest for the long haul. And remember that at the end of the day it all comes down to establishing and maintaining excellent personal relationships.
Scott Simpson is a senior fellow of the Design Futures Council and a member of its executive board. He is a Richard Upjohn Fellow of the American Institute of Architects. With James P. Cramer, he co-authored the books How Firms Succeed and The Next Architect.