motivation and success factors of global virtual...
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Motivation and Success Factors of Global Virtual Engineering Teams in EPC Companies for
Strategic Geographic Expansion
Dissertation
Presented to
The Graduate School of Business
University of Cape Town
In partial fulfilment
of the requirements for the degree
Master of Business Administration
Submitted by:
Scott Alexander
Supervisor:
Professor Timothy London
December 2016
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I. Abstract
This research outlines the motivation and success factors for Engineer Procure Construct
companies to use Global Virtual Engineering Teams for strategic geographic expansion. A
literature review has been completed showing that literature exists concerning the
motivations and success factors of Global Virtual Engineering Teams in a project context,
however there was a gap in research concerning the use of Global Virtual Engineering Teams
for strategic geographic expansion. A mixed methods approach, through survey and semi
structured interviews, was employed to research and gather data to fill this gap. The results
of this research were analysed and produced conclusions applicable to Engineer Procure
Construct companies in making the decision to use a Global Virtual Engineering Team over
traditional project structures, how to motivate this decision both internally and externally to
clients, as well as how best to execute a project in the virtual environment. The influence
portfolio level concerns impose on Global Virtual Engineering Teams has also been
incorporated into the analysis, producing insight into company structures and organogram
considerations. The research shows that the understanding and implementation of Global
Virtual Engineering Teams has the potential to reduce a company’s risk, enable otherwise
unfeasible projects, and increase competitiveness in the global environment.
Key Words
Global Virtual Team, Global Virtual Engineering Team, Geographic Expansion, EngineerProcure Construct, EPC, Portfolio Diversification, New Market Development
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II. Plagiarism Declaration:
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and
pretend that it is one’s own.
2. I have used a recognised convention for citation and referencing. Each
contribution to, and quotation in this report from the work(s) of other people
has been attributed, and has been cited and referenced.
3. This dissertation is my own work.
4. I have not allowed, and will not allow, anyone to copy my work with the
intention of passing it off as his or her own work.
5. I acknowledge that copying someone else’s assignment or essay, or part of it,
is wrong, and I declare that this is my own work.
Signature
Name: Scott AlexanderCopyright UCT
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III. Acknowledgments:
I would like to thank all of the industry professionals who donated their time and insightto make this dissertation possible, as well as my supervisor, Timothy London, for hisguidance in navigating the murky waters of dissertating. Finally, and most importantly, Iwould like to thank my family and friends for their support, understanding, and motivationthis year.
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IV. Contents
I. Abstract .......................................................................................................................2
Key Words........................................................................................................................2
II. Plagiarism Declaration: ...............................................................................................3
III. Acknowledgments: ..................................................................................................4
IV. Contents ...................................................................................................................5
V. List of Figures .............................................................................................................8
VI. List of Tables ...........................................................................................................9
VII. List of Abbreviations .............................................................................................10
VIII. Introduction ...........................................................................................................11
Background: Research Area and Problem .....................................................................11
Research Questions and Scope.......................................................................................12
Research Assumptions ...................................................................................................14
Research Ethics ..............................................................................................................15
IX. Literature Review ..................................................................................................17
Projects and the GVET...................................................................................................17
Motivation ......................................................................................................................22
Expansion...................................................................................................................23
Diversification and Portfolios ....................................................................................24
Success Factors ..............................................................................................................26
Conclusions of Literature Review..................................................................................32
X. Research Methodology and Data ..............................................................................33
Approach & Strategy......................................................................................................33
Design, Data Collection Methods, Instruments .............................................................33
Sampling.........................................................................................................................35
Research Criteria: Reliability and Validity ....................................................................35
Data Analysis Methods ..................................................................................................36
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XI. Research Findings & Results.................................................................................38
Motivation..................................................................................................................40
Success Factors ..........................................................................................................43
XII. Analysis and Discussion........................................................................................50
Motivation ......................................................................................................................50
Geographic Expansion & Diversification ..................................................................50
GVET Selection .........................................................................................................51
Success Factors ..............................................................................................................53
Work Breakdown Structure .......................................................................................54
Agency/Portfolio conflict and the Resource Hub ......................................................57
Teambuilding, Trust, & Communication...................................................................60
Tools ..........................................................................................................................61
Risk Management ......................................................................................................63
Generalizability ..............................................................................................................64
Limitations .....................................................................................................................65
XIII. Conclusion .............................................................................................................66
Future research ...............................................................................................................67
XIV. References .............................................................................................................68
XV. Appendix 1: Ethical Release for Survey................................................................72
Introduction to Research ................................................................................................72
Participation ...................................................................................................................72
Contact ...........................................................................................................................72
XVI. Appendix 2: Ethical Release for Interview............................................................73
Introduction to Research ................................................................................................73
Participation ...................................................................................................................73
Contact ...........................................................................................................................73
XVII. Appendix 3: Survey Template ...........................................................................74
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XVIII. Appendix 4: Survey Results...............................................................................75
XIX. Appendix 5: Semi Structured Interview Analysis .................................................90
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V. List of Figures
Figure 1 Phases in a Project Lifecycle ...............................................................................17
Figure 2: Project/Product Lifecycle Stages and Milestones ..............................................18
Figure 3: Influence of Organizational Structure on Projects .............................................19
Figure 4: Teambuilding Phases..........................................................................................20
Figure 5: Factors of influence on performance of global projects.....................................27
Figure 6: Global projects success factor model .................................................................28
Figure 7: Global Virtual Team Performance Model..........................................................30
Figure 8: Respondent Job Function ...................................................................................38
Figure 9: Respondent Industry...........................................................................................39
Figure 10: Global Branches ...............................................................................................39
Figure 11: GVET Global Branch Composition .................................................................40
Figure 12: Project Perspective Motivations for GVET......................................................41
Figure 13: Multi-Stakeholder Motivations in Employing GVET......................................42
Figure 14: Perceived Impact of GVET ..............................................................................43
Figure 15: Geographic Market Expansion Success Measurement ....................................43
Figure 16: Success Factors to GVET Implementation ......................................................45
Figure 17: Teambuilding Obstacles ...................................................................................46
Figure 18: IT Infrastructure Implementation .....................................................................47
Figure 19: WBS Allocation ...............................................................................................49
Figure 20: GVET Staffing Responsibility .........................................................................49
Figure 21: Resource Forecasting .......................................................................................49
Figure 22: Workflow Funnel (RP1810).............................................................................50
Figure 23: GVET Team Structure......................................................................................56
Figure 24: GVET Lifecycle Headcounts ...........................................................................57
Figure 25: WBS Staffing Plan ...........................................................................................58
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VI. List of Tables
Table 1: Electronic Interaction Technologies ....................................................................20
Table 2: Owner and EPC Contractor Drivers for the use of Global Virtual Engineering
Teams.......................................................................................................................................22
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VII. List of Abbreviations
BIM Building Information ModellingEPC Engineer Procure ConstructEPCM Engineer Procure Construct ManageGVET Global Virtual Engineering TeamLSTK Lump Sum Turn KeyMBA Masters of Business AdministrationMEC Means End ChainPEP Project Execution PlanPMBOK Project Management Body Of KnowledgePMI Project Management InternationalWBS Work Breakdown Structure
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VIII. Introduction
Background: Research Area and Problem
As a result of localized business cycles, which in the Engineer Procure Construct (EPC)
industry are often impacted by the global commodity and business cycles, EPC companies
must adopt new methods to remain competitive in existing markets while simultaneously
expanding into new regions in an effort to achieve growth. Despite these cycles, global
infrastructure spend in EPC projects is projected to grow from the current $4 trillion per
annum to an estimated $9 trillion by 2025 as emerging markets enter the developed economy,
resulting in further motivation for geographic expansion (“2016 Engineering and construction
industry trends,” 2016). The combination of communication, transportation, and
technological advances, along with the natural business cycles of the EPC environment, has
created an opportunity for the Global Virtual Engineering Team (GVET) to reshape a
company’s Project Execution Plan (PEP), and thus the company’s internal structures, to
emerge more competitive in the global market. "Virtual teaming between offices is actually
the way of the future, if we don't embrace it and actually get very good at it, our competitors
will have a major edge over us” (Appendix 5, RN0111). This migration is motivated by both
internal and external factors influencing the decision to move away from the traditional co-
located project team.
A project, specifically in the EPC environment, is defined by the Project Management
Institute (PMI) as a “temporary endeavour undertaken to create a unique product, service, or
result” (Project Management Institute, 2013, p. 3). This concept is expanded when operating
on a globally integrated environment as “a transnational project, a temporary endeavour with
a project team made up of individuals from different countries; working in different cultures,
business units, and functions; and possessing specialized knowledge for solving a common
strategic task” (Adenfelt & Lagerström, 2006, Marmer, 1998, Schweiger, 1998, as cited by
Anantatmula & Thomas, 2010, p. 60). The modern understanding of a project team has been
expanded by Jarvenpaa and Leidner in the context of global projects and global teams to
include geographic and cultural diversity as well as utilization of electronic communication
mediums (1999, as cited by Anantatmula & Thomas, 2010). The misalignment between the
nature of a project (a temporary endeavour) and a company (permanent organization) creates
the need for multiple projects to create a company’s portfolio (or programme) for continuity
of work (Project Management Institute, 2013).
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The existing model of outsourcing, or “offshore outsourcing” has been used on specific
work packages of a project by contracting an external entity to perform a portion of the
project work, typically at a reduced cost (Messner, 2006, p. 3). Contrary to this model, a
GVET is a technique used by a company or group of companies operating together through
the combined efforts of geographically dispersed employees in which workflows can be
integrated, more loosely defined, and multidirectional as the global company portfolio pushes
multiple projects through the GVET environment. These individuals are “organized through
communication and information technologies that need to overcome space, time, functional,
organizational, national and cultural barriers for the completion of a specific engineering
task” (Chen & Messner, 2010, p. 208).
Further to the concerns of existing operations, new and emerging markets are common
destinations for companies pursuing growth targets. Concerns involved in entering emerging
markets or new geographic regions involve the requirement for a local presence to interact
with the client as well as understanding of the local business climate and cultures. This local
presence requirement creates a juxtaposition between the external client-focused concern of
tendering for a project and proving capability for execution against the internal organizational
concern of hiring staff to complete the project before workflow has been secured. Additional
GVET concerns originate in project lifecycle progression from engineering and procurement
to the ultimate transition from the virtual space into the construction stage with a permanent
physical location.
Current research on the motivation or success factors of GVET primarily focuses on the
perspective of a specific project within an existing organization. A gap in literature was
identified in organizational strategies at a portfolio level or considerations in expanding into
new geographical markets, which the researcher has attempted to fill.
Research Questions and Scope
The primary research question is “What are the motivations and success factors of using
GVET as a strategy in EPC companies for strategic geographic expansion?” This question
explores the reasons a company may choose to look to new geographic markets as well as the
basis for adopting a GVET structure to do so. For the purposes of this investigation, strategic
geographic expansion within an EPC company is defined as a motivation at the management
level of a company to enter or establish an ongoing business presence in a new geographic
market, potentially requiring a trade-off to other business considerations. This may be
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initiated through a demand-pull strategy where a project contract is signed before entry into a
market or in a supply-push strategy where a branch office is established prior to project
award (Gibson, 2015). Further to this, the factors influencing the success of projects, as well
as the company’s strategic expansion goal, will be investigated. The outcome of this
question will be relevant for EPC companies wishing to reduce risk in strategic geographic
expansion initiatives and assist in long term strategy planning.
This question will be supported with the following sub questions:
Are the internal and external motivations for GVET the same?
This sub question explores the differences in motivation between an EPC company’s
internal perspective and the justification used to clients. The researcher realizes that these
motivations may not be the same, and areas of conflict may arise.
Are programme and portfolio level and long term strategic considerations included in
the motivation to use a GVET?
Though many motivations are expected to arise from the research, this sub question
specifically explores the effect of GVET on a higher level strategic perspective. Potential
motivational factors include unsystematic risk and diversification. The researcher wishes to
investigate whether the motivation for GVET is focused on project objectives or whether
programme and portfolio level concerns are incorporated.
How are the organizational structure and Work Breakdown Structure (WBS) within
the GVET determined?
This sub question explores the way GVET are structured in terms of allocation of work.
This is a key consideration when setting up a GVET, and due to cost and programme
considerations, the implications on the full project lifecycle needs to be understood to ensure
success. It is expected that factors of both project and portfolio management may come into
play.
These questions motivated the structural breakdown of the dissertation, with the
overarching headings of motivation and success factors guiding the Literature Review
Research Findings & Results, and Analysis and Discussion. The sub questions influence the
remaining headings, though the exploratory nature of this research, as well as the
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interconnectedness of the concepts, governs how the researcher deemed best to present the
information in order to effectively transmit learnings.
Research Assumptions
The assumption that GVET motivations and success factors for geographic expansion
will be universal has been made. This assumption implies that the same motivations and
success factors will apply regardless of a company’s home location, making project
manager’s GVET experience comparable. A further assumption in the universality of GVET
is that the motivations and success factors will not be wholly company or industry specific.
Both of these assumptions allow respondents from a variety of sectors and geographic
locations to be interviewed and results integrated, and this must be taken into account when
considering generalizability of analyses.
The Project Management Institute (PMI), which is the international standard and
certification body for project management professionals, is assumed to be the industry
accepted source for project management information. This is based the depth of professional
membership with 2.9 million members across the globe, the body of knowledge repository on
the PMI.org website, referencing throughout project management literature, as well as the
researcher’s experience in its application throughout the world in the EPC industry (Project
Management Institute, 2016). Alternate project management references such as the British
standard or ISO were consulted, though due to their respective lack of industry prevalence,
PMI remained the primary reference for this paper. Project and portfolio considerations,
stakeholder perspectives, survey and semi-structured interview questions and interpretations
thereof, as well as discussions will use vocabulary and terminology based on PMI’s book, the
Project Management Body of Knowledge, or PMBOK, to ensure consistency and clarity.
Though the researcher may not be considered an expert in GVET for strategic expansion
of EPC companies, the researcher does have an understanding based on past experience and
knowledge gained in the literature review. This experience and understanding was assumed
as sufficient to approach the inductive research. Though all respondents to the survey must
indicate experience with GVET in past or previous projects, the extent of experience varied.
Despite this, an assumption was made that all responses could be evaluated the same and no
correction or weighting was necessary for varying degrees of education or experience.
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Research Ethics
A mixed methods data collection process was used including an online industry survey
with participants selected through nonprobability sampling. This was supported by five
select interviews used to further clarify survey responses and provide sufficiently rich data.
Data gathered for both surveys and interviews was not company specific nor were the names
of participants’ respective companies collected. Individuals were selected and interviewed on
the basis of their relative roles in the EPC industry, specifically project managers and general
management, rather than a position within a specific organization. Subjects were surveyed
using hypothetical and generalized questions focusing on questions raised by the literature
review and researcher experience rather than project specific queries to ensure no
organizational conflicts occur. An example of these questions is included in Appendix 3:
Survey Template. Interviews were semi structured with hypothetical and generalized
questions which focused on ideas from the literature review and researcher experience, but
also based on preliminary interpretations of the survey responses.
Each interview subject was informed of the conditions of participation in writing or
electronically and was required to indicate consent verbally according to conditions approved
through UCT Research Ethics Committee. An example of the ethical release and survey
questions are included in Appendix 1: Ethical Release for Survey. Subjects were required to
indicate acceptance of this form prior to completing online surveys, or were required to
verbally consent on recorded audio in the case of phone interviews, prior to starting the
interview. This demonstrated a subject’s willingness to participate as well as an
understanding of the purpose and use of data collected as explained to him or her.
Due to the fact that qualitative research was performed which relies on the opinions of
participants, records of surveys and transcripts of interviews were kept by the researcher
purely for the purposes of this research and not made available for any other purpose.
Neither identities, companies, nor projects are identifiable in the final report.
An agency conflict or bias existed for the researcher to frame questions or statements in a
way which would encourage participants to respond in alignment to the researcher’s own
viewpoint. The knowledge that the conclusions drawn from this dissertation may influence
human resources or organizational practices, potentially resulting in job losses, was also
prevalent on the researcher’s mind. Both of these considerations were analysed by the
researcher prior to embarking on the data collection phases, and after assessing the ethical
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perspective and the belief that unbiased data would be most useful in a global competitive
market, the researcher made all efforts to remove personal bias from the research by framing
survey questions in a neutral manner. The use of semi-structured interviews further promoted
the reduction of bias as the questions could be reviewed by the researcher to ensure that either
individually or collectively they did not lead the respondent to certain conclusions. The free
response nature of this method also allows the respondent to guide the conversation,
lessening the researcher’s influence (King, 1998).
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IX. Literature Review
The basis for understanding the motivations and success factors of GVETs in strategic
geographic expansion originates with an understanding of the objective, considered the
project in the context of the EPC industry, as well as the definition and composition of
GVET. A review of literature enables a baseline for this understanding as well as many of
the concepts investigated in combining GVET with EPC company geographic expansion
strategies.
Projects and the GVET
A project, as defined by PMI, is a “temporary endeavor undertaken to create a unique
product, service, or result. The temporary nature of projects indicates that a project has a
definite beginning and end” (Project Management Institute, 2013, p. 3). An alternate
definition, by Turner and Müller, uses a different interpretation of the purpose of a project;
“to deliver beneficial objectives of change” (Turner & Müller, 2003, p. 2). Turner and
Müller’s view aligns closer to the British project management standard with a “is broader
than that of the PMIs, since the outcome of a project could include the creation of a product
in order to achieve certain beneficial changes” (Yu, Flett, & Bowers, 2005, p. 431). The
combined understanding of a project from both PMI and Turner and Müller, when expanded
for GVET, has many implications.
Figure 1 Phases in a Project Lifecycle
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(Project Management Institute, 2013, p. 38)
An alternate perspective on the project lifecycle, seen in Figure 2: Project/Product
Lifecycle Stages and Milestones, may be adopted by certain industries according to need.
Noting changes to terminology, the underlying concepts are consistent with PMI’s lifecycle
in Figure 1 Phases in a Project Lifecycle as the levels of certainty, commitment, and risk
change throughout the project (Yu et al., 2005, p. 433).
Figure 2: Project/Product Lifecycle Stages and Milestones
As seen in Figure 1 Phases in a Project Lifecycle, a project is composed of four distinct
yet overlapping phases known as initiating, planning, execution, and closure. As a project
progresses through these stages, changes occur in many considerations including the project
team composition (Project Management Institute, 2013). A fifth phase, not shown on PMI’s
diagram, is that of monitoring and controlling, which is an ongoing action present through the
entire lifecycle of a project (Burke, 2013). Project teams are composed of a project manager,
the project office staff responsible for managing the work, as well as members who perform
functional aspects such as core engineering, procurement, or construction tasks (Hyvari,
2006). Project staff may be either directly involved in the operations of the project or staff
who indirectly contribute through company operations, business considerations, and even
advisory positions. The project manager, as well as direct and indirect project staff, come
together to form the construct known as the Project Management Office (PMO). All
members of the project team, including the project manager, may be either permanently
assigned to the project or allocated on a part time basis (Project Management Institute, 2013).
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Figure 3: Influence of Organizational Structure on Projects
(Project Management Institute, 2013, p. 22)
The role of the project manager within an organization may also vary. As seen in Figure
3: Influence of Organizational Structure on Projects, the degree of control or authority a
project manager has over the project considerations ranges from a functional level with little
to no personal control, relying heavily on company policies and operational practices, to a
fully projectized level in which the project manager may have complete control. The level of
control is imbued on the project manager through a document called a project charter, in
which management authorizes a specific level of authority. All project management
considerations, from the decision making process to risk mitigation strategies, are then
outlined in a project specific construct known as the Project Execution Plan (PEP) (Project
Management Institute, 2013).
From the perspective of a company, including the specific case of an EPC project
company, the temporary nature of a project requires a more broad approach when factoring in
the desire for longevity or a permanent existence. This results in EPC companies taking on
multiple projects to remain an ongoing business enterprise. Also borrowing on the
understanding that a project creates a “unique product, service, or result,” no two projects are
the same (Project Management Institute, 2013, p. 3). This concept has led to the integration
of programme and portfolio management with project companies. Programmes are viewed as
collections of projects which share a similarity or collaborative aspect. A portfolio is “a
collection of projects, programs, subportfolios, and operations managed as a group to achieve
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strategic objectives” (Project Management Institute, 2013, p. 4). The portfolio perspective is
generally used as the highest level perspective in managing an EPC project company with
many simultaneous workflows (ISO, 2012). Segmenting projects and workflows in this way
allows management to integrate present workflows, marketing strategies, and future forecasts
to maintain the company as a going concern.
Simultaneous to project teams being created and disbanded as projects move from
initiation to closure is the evolution of the project team. While all project teams do not
necessarily make it to the final stage, four distinct phases classify the manner in which a team
functions including forming, storming, norming, and performing, each corresponding to a
different level of performance as seen in Figure 4: Teambuilding Phases (Baxter, 2015).
Figure 4: Teambuilding Phases
Distinguishing a GVET from a traditional project team is a key component in
understanding the motivations and success factors; as described by Chinowsky and Rojas as
“a group of people with complementary competencies executing simultaneous, collaborative
work processes through electronic media without regard to geographic location” (2003, p.
98). A key understanding of GVET from Chinowsky and Rojas is the collaborative nature
and simultaneous workflow inherent in GVET, and dependence on technology to facilitate
these differentiators. The role and mediums of technology are broken down in Table 1:
Electronic Interaction Technologies. This shows the increasing role of modern technologies
such as video conferencing, data sharing, and virtual teaming in creating an environment
where collaboration and simultaneous work is possible.
Table 1: Electronic Interaction Technologies
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(Chinowsky & Rojas, 2003, p. 99)
From a company perspective, work processes, organizational infrastructure,
communication techniques, quality, and technology are all considerations which much be
considered when implementing GVET. Similarly, a project perspective shows the additions
of work sharing, project controls, contractual requirements, team selection, and management
techniques combine to form the framework for integrating GVET into operations (Chen &
Messner, 2010).
Expanding on the project office concept discussed previously, GVET theory uses the
terms lead office and support office to differentiate between geographical locations in a
GVET. A lead office may be where the project manager or main workforce is located, or it
may be a branch from a company’s central office in a different geographical location
collocated with clients. Support offices are composed of “subsidiaries, affiliates, alliance
partners, or subcontractors” or secondary branch offices within a company which report back
to the lead office (Chen & Messner, 2010, p. 212).
Much the same as the way the definition of a project identifies a “temporary nature” with
a “definite beginning and end,” GVET’s are also temporary human resources constructs
whose lifecycle is dependent on their respective projects (Project Management Institute,
2013, p. 3). Team members may be added or removed during the various stages of a project
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as the project lifecycle progresses through the stages seen in Figure 1 Phases in a Project
Lifecycle
and project team requirements evolve.
Motivation
The speed with which the international engineering market is evolving, due to advances
in communication and technologoy as well as the globalization trend, are prime factors in the
decision to use GVET. Both direct and indirect factors have influenced the decision to
incorporate GVET in a company’s organizational structure, with motivations or “drivers”
coming from both the owner or client side as well as the EPC project company (Joseph, 2005,
p. 117). The advent of global virtual teams showed the early drivers as “flexibility,
responsiveness, lower costs, and better utilization of resources,” though this understanding
has since been expanded (Mowshowitz, 1997; Snow, Snell, & Davison, 1996).
Research for the Construction Industry Institute (CII), investigated both the owner and
EPC contractor motivations as shown in Table 2: Owner and EPC Contractor Drivers for the
use of Global Virtual Engineering Teams. This study identified and ranked fifteen drivers for
utilization of GVET for the construction industry. It is important to note both the similarities
and differences between the owner and EPC contractor motivations.
Table 2: Owner and EPC Contractor Drivers for the use of Global Virtual Engineering Teams
(Joseph, 2005, p. 117)
The primary motivation driving GVET, cost, is universal to owner and EPC contractor
and is based on capitalist economic theory which states “the social responsibility of a
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business is to increase its profits” (Friedman, 1970, p. 1). A straightforward requirement of
GVET is the creation of a positive net NPV for the organisations of both the owner and the
EPC contractor. A more onesided motivation occurs in the owner’s common desire for the
EPC contractor to shoulder more risk for the use of GVET, while simultaneously expecting
decreasing schedule parameters (Joseph, 2005; Messner, 2006). Schedule or programme
efficiencies and savings are increasing due to the increase in productive work hours in each
day; both time zone differences and the ability to “employ more people since there are no
space constraints [to a virtual office]” (Anantatmula & Thomas, 2010, p. 61). Supporting the
ranking of number two, Church et al. view competition as a key driver, noting that failure in
organizations to evolve can have catastrophic consequences to business health (1996).
Expansion
Inspection of the other drivers included in Table 2: Owner and EPC Contractor Drivers
for the use of Global Virtual Engineering Teams shows that five items (ranked three, four,
seven, eight, and ten) involve benefits derived through a physical presence in dispersed
geographic locations. Items two and three, “global customers” and “the need to locate
services close to project location,” are synonyomous with a marketing stragety for expanding
into new geographic markets following the supply push marketing strategy and are the key
focus of this research (Gibson, 2015; Joseph, 2005, p. 117).
Colocating a branch office to client and project sites which is capable of executing
projects as a GVET allows a company to leverage it’s global presence, taking on larger
projects with a lower level of risk or commitment due to sunk costs in real estate or
underutilized human resources. In the case of US firms expanding into China and India to
gain exposure to the market’s recent rapid growth, creating a local presence allowed
companies to “gain regulatory approval, perform market research, and customize their
products and services accordingly in a timely manner” (Lieberman, 2004, p. 19).
Subsequently, this local presence was a significant competitive advantage over firms which
did not embrace the advantages of GVET.
Proximity to clients and projects (or potential clients and projects) is seen as a key
advantage in entering new markets. Direct exposure to client base provides a company with
both the client and market specific information which allow EPC companies to both provide
the correct offering as well as react timeously to changes in the market (Johanson & Vahlne,
2010). Communication between EPC contractor and external stakeholders, such as clients or
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regulatory bodies, is key to establishing and maintaining positive relationships. Cultural
barriers to this relationship are exacerbated, as noted by Evans and Movondo, by “the
distance between home market and a foreign market” (2002, p. 519). Beyond time zone
discontinuities, a desire to communicate in one’s native language is also a prevalent factor
influencing business relationships (Sarker & Sahay, 2002).
Sizing a branch office can be done using real option theory by incorporating an
assessment of the probability of potential projects in determining resource requirements to
mitigate risk and cost by creating an office for the purposes of market and client exposure,
and only after contract award resizing the office for execution purposes while leveraging the
GVET to reliably carry out workflow (Firer, Ross, Westerfield, & Jordan, 2012; Johanson &
Vahlne, 2010). A secondary consideration for locating branch offices in areas with high
concentrations of project work (or potential project work) comes from country-specific
labour practices involving requirements for local labour contribution. Though it may not be
realistic or advantageous to open a branch office at the scale required for the full capabilities
of executing the project, local content requirements can still be met through a reduced
capability branch office (Lee, Jeon, Kim, & Kim, 2011).
Diversification and Portfolios
International EPC companies may have offices throughout the world, each exposed to
different micro-cycles due to the localized commodity specific industry (unsystematic risk),
while the global company presence is exposed to international macro-commodity cycles. The
presence of booms and slumps in commodity or business cycles directly impacts project flow
for EPC companies. Between 1865 and 2010, four super-cycles have reshaped the
commodity industry with average prices declining after each slump and successive boom
period (Cashin, Mcdermott, & Scott, 2002; Ocampo & Erten, 2012). This relative decline
through cycles, compounded with the fact that end of booms or slumps is independent of
time, indicates that perseverance, or waiting for the change in cycle, is not a viable long term
solution (Cashin et al., 2002).
Throughout these economic cycles, an EPC company must focus on achieving a
breakeven revenue stream with profit margins meeting shareholder expected returns.
Expected returns for a business are governed by the amount of risk undertaken in the
investment and this risk is composed of both systematic and unsystematic risk. Systematic
risk originates in the broad market while unsystematic risk is industry specific and can be
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reduced through diversification (Firer et al., 2012). A project office performing work which
originates only in its local market will have a higher degree of unsystematic risk than an
office whose workflow comes from a more diverse global market.
The motivation for diversification of an EPC company’s projects is more directly
explained through portfolio theory by Han and Dickmann:
“The basic concept of portfolio management is to reduce the
overall risks associated with a portfolio of projects through
diversification. If each project investment has a given risk and return,
then by combining investments where the risks are not closely
correlated, variance reduction and a lower risk level can result” (Han
& Dickmann, 2001, pp. 301–302)
Through the conscious analysis of an EPC company’s project portfolio, both at present
and historically, management can assess the level of exposure to cyclic risk a company has at
any specific point in time. This is expanded by Lee, Jeon, and Kim, stating:
“It is crucial for developing countries to prepare for the future by
determining the turning point when competitive assets like labor must
be overlapped and exchanged with efficient management and the latest
technology. The latter must be done consequently with financing
ability. If this is not undertaken, market shares of companies in
developing countries may shrink” (Lee et al., 2011, p. 469)
This presents another key to the portfolio management of EPC companies in using boom
times in economic cycles (and more readily available finance) to expand into new markets to
stabilize workflow during slump times (Lee et al., 2011).
The inclusion of GVET in an EPC company’s organizational structure allows this
geographic market expansion as the concept of market commitment is redefined. The
understanding of a resource’s home market is based on “the difficulty of finding alternative
use for the resource and transferring them to it” (Johanson & Vahlne, 2010, p. 27). Through
the use of GVET, the ability to transfer resources to new markets is made a reality, creating a
much more loosely held concept of a home market.
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Success Factors
Once a decision to utilize GVET has been made, or during a feasibility review for
potential implementation, knowledge and understanding of the factors influencing and
enabling success or failure are of vital importance for management and personnel alike.
Subtle differences between projects run by GVET, as well as the obvious changes such as a
lack of face to face meetings, need to be managed in order to steer projects to realisation.
Anantatmula and Thomas segmented twelve broad areas of influence, seen in Figure 5:
Factors of influence on performance of global projects (2010). These factors have also been
mapped in a process diagram included in Figure 6: Global projects success factor model
(Anantatmula & Thomas, 2010, p. 66). These success factors may focus on actions and
management practices performed by the project manager or extend beyond the project
manager’s sphere of influence in organizational considerations as is largely dependent on the
organizational structure described in Figure 3: Influence of Organizational Structure on
Projects.
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Figure 5: Factors of influence on performance of global projects
(Anantatmula & Thomas, 2010, p. 64)
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Figure 6: Global projects success factor model
(Anantatmula & Thomas, 2010, p. 66)
Contrary to Anantatmula and Thomas’s process map shown in Figure 6: Global projects
success factor model, Verburg, Bosch-Sijtsema, and Vartiainen view the establishment of
trust between team members as the first step in establishing a GVET geared to performance
(2013). Verburg et al. do acknowledge that culture within an organization is also vitally
important, though do not place the same prominence on culture as Anantatmula and Thomas
who have depicted culture as a higher order factor than trust in Figure 5: Factors of influence
on performance of global projects. Culture is succinctly defined as “the way we do things
around here” and has many influencing factors which shape it (Kaliprasad, 2006, p. 29).
Factors such as the values imposed on an organization by its founders, personal values of
employees, experience, and local customs may each play a role in shaping employee
behaviour (Zofi, 2012). To mould a culture for success, or a high performance culture, a
strategic focus, clear view of reality, commitment rather than compliance, aligned behaviour,
and a view that the project is the responsibility of all members of the project team are
required (Juechter, Fisher, & Alford, 1998; Katzenbach & Harshak, 2011).
GVET also allow companies to tap into additional talent pools at branch offices, with
GVET functioning as the link between a geographically isolated supply of engineering talent
and demand for a specific project (Gartside & Sloman, 2014). Incorporating the
organization’s culture into the human resources plan, and carrying this process through to an
organization’s global hiring process, is vital for management’s cultural views to carry
through into employee actions. Task accomplishment, or the motivation originating in
achieving high levels of performance as measured against cultural norms, is viewed as a
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specific aspect of organizational culture which is one of the critical success factors for
members of a project team (Schwartz, 1992).
Gartside et al. note that additional factors specific to a company’s human resources
division in regards to GVET include “developing global leaders at all levels, using analytics
to become an expert advisor on the global talent map, using talent across the globe, and
fostering global talent mobility” (2014, p. 38). In order to develop leaders suited to GVET,
experience is key. Exposing potential leaders, regardless of current role, to the global
organization, accompanied by coaching and mentoring, will increase chances of success
when managing GVET. Exposure will also unify the dispersed organization through the
evolution of a common management language, or a “commonality of terms and
understandings and values” (2014, p. 38). The use of analytics becomes vital when
forecasting resource usage, allocating actual resources to project teams, and succession or
termination planning. These analytic decisions evolve to the concepts “make talent (by
training people), where to buy talent (by hiring people with the desired skills, where to move
talent (by developing stronger internal mobility programs for employees), and where to
borrow talent (hiring contingent labor or partnering with another company such as an
outsourcing provider to obtain the skills needed)” (Gartside & Sloman, 2014, p. 39).
Following an organization’s intended global cultural model, the nature of GVET, being
dispersed, results in high inherent diversity among project teams and subcultures which
merge to create a diverse entity. This diversity may come from demographic variations,
though it can also originate in workplace factors such as varying levels of experience with
GVET (Verburg et al., 2013).
The structure of a GVET is important in galvanizing the project constituents into a team.
This structure, imposed by the organization or project manager, impacts the way team
members interact and integrate to accomplish the project task. A project structure is
dependent on strategic objectives, performance constraints, and work characteristics, shown
in Figure 7: Global Virtual Team Performance Model (Prasad & Akhilesh, 2002). According
to Prasad and Akhilesh, these three factors must be determined before a project structure can
be selected in order to enable success. Once the cornerstones or project structure have been
laid, project teams are enabled through the clarity gained on “how different groups and tasks
share precedence, coordination, supervision and rework interdependence” as well as
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impacting the decision making process, communication and reporting methodologies vital to
planning and control of a project (Kunz et al, 1998, as cited by Joseph, 2005, p. 41).
Figure 7: Global Virtual Team Performance Model
(Prasad & Akhilesh, 2002)
As success factors branch off from those inherited by the EPC company to the workings
of the project team, the involvement of the project manager in these success factors becomes
more frequent, if not universal. In an organization utilizing GVET, it is incumbent on the
project manager to understand cross-cultural differences and integrate this into management
practices, specifically through clear and transparent communication to and from project team
constituents in a manner respectful of cultural variances (Zofi, 2012). Movement of
personnel between branch and lead offices propagates cultural awareness through the project
team (the organisation as a whole), breaking barriers to effective communication (Chen &
Messner, 2010).
Communication is viewed as the largest portion of time spent by a project manager, and
when extended to communication between members of the project team, the EPC company,
or general project stakeholders, this is justified as it is viewed as the primary success factor
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by EPC contractors and clients alike (Diallo and Thuillier, 2005 and Tavcaravbi, Verlinden,
and Duhovnik, 2005 as cited by Anantatmula & Thomas, 2010). In order to accomplish
effective communication, tasks may be separated into routine and irregular occurrences. For
routine tasks, company organogram structures can be exploited to facilitate dissemination of
information. Irregular tasks, however, are better handled through a case-by-case analysis by
the project manager, aggregating information and disseminating as the project requires
(Ahuja & Carley, 1998). An often overlooked role of the project manager, in facilitating
communication, is to share the successes of dispersed team members with the global network.
Celebrating successes of the project team as a whole, including rewards and recognition,
encourages further collaboration between employees as well as boosting motivation to
perform (Chen & Messner, 2010).
A primary enabler of communication, and likely the component driving globalization
which has had the most effect on GVET, is technology. Technology has removed barriers to
communication and is the link between team members; in many cases technology is the basis
for building relationships between team members as they may never meet face to face
(Maruping & Agarwal, 2004, as cited by Beise, Carte, & Price, 2010). The ability to forge
relationships through technology has grown as the means of media transfer increase,
simultaneously increasing trust levels between team members and enabling integration of
workflows (Burgoon et al., 2002, as cited by Verburg et al., 2013). From the early stages of
virtual teams, the evolution, enabled by technological advances, to an integrated and
simultaneous workflow or real-time collaboration was viewed as “the future” of the industry
(Chinowsky & Rojas, 2003).
Acknowledging the interplay between project tasks, company structure as seen in Figure
3: Influence of Organizational Structure on Projects and the components of Figure 7: Global
Virtual Team Performance Model, as well as stakeholder concerns, a project manager is able
to plan and control a project to reduce risk and ensure all stakeholders’ goals are met. To be
effective, this planning and control must not be exclusive of the culture and values of the
organization or its employees, as a fully encompassing approach will also assist in breaking
down barriers to cohesion of the dispersed team, subsequently increasing integration (Hertel
et al., 2005; Maznevski, 1994; Van der Vegt and Janssen, 2003, as cited by Verburg et al.,
2013).
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Conclusions of Literature Review
Investment in research and development, as well as marketing, is correlated with the long
term performance and growth of businesses, supporting a proactive and conscious change to
incorporate GVET in an EPC organization whether an absolute requirement of a project or as
a strategic initiative (Han & Dickmann, 2001). Addditional motivations for GVET range
from direct cost or time savings to indirect aspects such as portfolio management. Spreading
project work globally, rather than increasing resources in local offices to meet specific project
demands, diversifies the global EPC company’s risk to localized business cycles, resulting in
an internal business case for the GVET in portfolio management. The transformation to a
organizational structure utilizing GVET may be best accomplished in a proactive manner
during boom times in economic cycles to enable EPC companies to withstand slumps.
Research on the success factors of GVET primarily focuses on the perspective of a
specific project within an existing organization rather than organizational strategies of
expanding into new geographical markets, creating a gap in knowledge relevant for EPC
companies wishing to reduce risk in strategic expansion initiatives. Further, at the conclusion
of projects, many GVET are immediately disbanded, resulting in the loss of experiential
knowledge in ensuring the success of future GVET which may be captured through this study
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X. Research Methodology and Data
Approach & Strategy
The research approach and strategy employed in this study was inductive, or following
the “logical process of establishing a general proposition on the basis of observation”
(Adams, Khan, & Raeside, 2014, p. 28). This inductive research was performed through an
exploratory methodology in order to identify and correlate ideas to literature, as well as each
other, based on the research question and sub questions. The exploratory method was
selected because it is adept at describing “social systems and relationships between events,
providing background information, as well as stimulating explanations” (Adams et al., 2014,
p. 20). The nature of projects, involving interactions between many people and involving the
integration of a complex multitude of tasks, correlates with Adams et al.’s summary of
exploratory methods and was implemented to generate explanations spanning the complex
social dynamics of the EPC industry. Due to the gap in research identified surrounding
expansion initiatives, primary data collection was employed to generate new data.
Design, Data Collection Methods, Instruments
Primary data was collected through a survey of people with experience in the EPC
industry and GVET, specifically focusing on project managers and marketing managers or
individuals responsible for strategic direction of an organization, and created a base of
information in relation to the research question and sub questions (Anantatmula & Thomas,
2010). Accepting benefits and drawback inherent to either qualitative or quantitative
research, the combination of qualitative and quantitative research was selected, according to
Webb et al.’s concept of triangulation to use both methods in a complementary manner
(Webb et al., 1966 as cited by Jick, 1979). Triangulation was better explained by Denzin
who stated that “the combination of methodologies in the study of the same phenomenon”
(Denzin, 1978, as cited by Jick, 1979, p. 602). The survey included both quantitative and
qualitative questions, with questions both organically formulated by the researcher as well as
questions drawn from surveys performed in literature previously referenced in order to
“capture a more complete, holistic, and contextual portrayal of the unit(s) under study”
(Anantatmula & Thomas, 2010; Jick, 1979, p. 604; Joseph, 2005). Questions were in the
form of multiple choice, Likert scale, ranking, and open response and may be viewed in
Appendix 4: Survey Results (Adams et al., 2014). Each question was designed to evaluate
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one topic or idea, avoiding situations where multiple concepts could overlap and influence
each other (King, 1998).
The quantitative portion of the survey required participants to respond according to a
uniform framework by predefining potential answers, allowing results to be directly
compared. This standardization of responses was also believed to increase response rate due
to ease of participation (Joseph, 2005, pp. 9–10). In cases where the researcher intended to
compare many factors against each other, the factors were assessed by participants
individually using a Likert scale to deter participant bias in creating a ranking priority in
prioritizing one factor over another, despite both factors corresponding the same level of
influence. Results of all participants were combined and ranked based on average Likert
scale responses.
Subjects were also qualitatively surveyed using hypothetical and generalized questions
rather than project specific queries to ensure no organizational conflicts occur. An example
of these questions is included in Appendix 3: Survey Template. During the surveying
process, a Means End Chain theory (MEC) and subsequent laddering technique, as described
by Reynolds & Gutman, was implemented to explain the connections between actions and
intended outcomes (1988). This was accomplished through first inquiring as to the outcomes
of using GVET rather than the specific success factors used to realize these outcomes. Once
the outcomes or motivations had been established, success factors enabling these outcomes
were discussed. MEC was selected as research technique to remove bias by minimizing the
impact of overconfidence in a subject’s previous judgement in making the decision to use
GVET (1988).
Qualitative interviews were used to clarify analysis of survey results and provide
sufficiently rich data, specifically in regards to interconnectedness between factors measured
in the survey (Anantatmula & Thomas, 2010). A semi structured approach was used to focus
the conversation on subject areas pertinent to research questions or areas of uncertainty based
on survey results (Bryman & Bell 2007). The basis for these questions followed MEC
questioning technique by identifying a respondent’s particular survey response and analysing
the results. Areas provoking further study were used as the basis for question formulation in
the semi-structured interview stage, thus continuing the laddering process.
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Sampling
The sample group for surveys or interviews was identified as members of the EPC
community who have experience in managing GVET directly as well as individuals who
have experience in the proposal or company management of organizations utilizing GVET
for strategic geographic expansion. An effort was made to include international subjects,
though following convenience sampling methodology, focus was made on the South African
population (Adams et al., 2014).
Research was not restricted to a specific industry within the EPC project space, however
the industries of mining and mineral processing, oil and gas, and renewables were identified
as relevant in segmenting the population of companies meeting research requirements.
Approximately 45 people were approached directly for the survey through the researcher’s
extended work network. International subjects were included through online professional
bodies of which the researcher is a member, such as the Project Management Institute, the
Engineering Council of South Africa, and the Society for Mining, Metallurgy, and
Exploration. These professional bodies have forums and information groups, specifically for
sharing professional knowledge, and these were used as a medium for sourcing additional
respondents. An advantage of these professional bodies is that members must be qualified
professionals, corresponding to the targeted approach desired for this research.
Nonprobability sampling was used to focus interviews on subjects who both indicated
willingness to be interviewed and had relevant experience or knowledge to areas of
uncertainty or requiring further detail. The researcher ultimately exercised judgement in
determining which subjects to use.
Research Criteria: Reliability and Validity
Survey questions were designed to be easily understood and straightforward for subjects,
however a pilot study was also performed with a colleague from the MBA to ensure the
researcher’s intentions are translated accurately. This colleague did not participate in the
final data collection process. Reliability, or the ability of a research method to produce
consistent results, was established through comparison between survey and interview results
and the application of the test and retest method in which questions targeting the same idea
are expected to produce similar results when asked repeatedly (Adams et al., 2014).
Correlation between responses demonstrates reliability. Utilization of the MEC in interviews
also increased validity, or the accuracy of results, as bias introduced by the researcher in
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formulating questions for the survey or semi structured interview was reduced as subjects
were given open ended questions and allowed to freely formulate responses (Verburg et al.,
2013).
Data Analysis Methods
Descriptive statistics, as well as visual charting techniques, were used to analyse
quantitative data and assist in comprehension (Adams et al., 2014). The results from both the
surveys and interviews were incorporated in an exercise of visual charting or process
mapping, with a similar output to the process of Interpretive Structural Modelling (ISM), to
highlight the most important and influential components. Visual charting was chosen
because it allows the links between many factors influencing success to be broken down.
Incorporating visual charting techniques into analysis of the data provided a new perspective,
encouraged understanding of relationships between factors, and subsequently reduced issues
due to complexity of data (Anantatmula & Thomas, 2010; Malone, 1975; Waller, 1975).
Survey responses were analysed prior to interviews taking place to allow application of a
laddering technique used to highlight MEC relationships by first identifying actions, followed
by consequences, and finally the underlying themes behind the ideas being expressed
(Verburg et al., 2013). These techniques were intended to “describe the content of your
respondents’ comments systematically and classify the various meanings expressed” (Adams
et al., 2014, p. 162). The results of this preliminary analysis were used to formulate questions
for qualitative interviews, again applying the laddering technique to reinforce findings from
the survey. Following Adams, Khan, and Raeside, interviews were recorded but not fully
transcribed. Rather the researcher listened to interviews and transcription was limited to
“main points and key or interesting verbatim quotes” (2014, p. 156).
Data from qualitative responses in semi structured interviews was analysed to determine
themes in responses. Direct transcribing was considered, though a process identified by
Adams et al. was determined to be more effective for the purposes of this research (2014).
This technique involved taking notes and direct quotes which were then separated into
individual points. These points were then grouped by theme using an excel spreadsheet to
allow analysis between interviews. This regression into groupings and integration of all
interview data by individual points allowed “classifications and order will [to] emerge from
the initial chaos” (Adams et al., 2014, p. 157). This data is included in Appendix 5: Semi
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Structured Interview Analysis and a filtering function in Excel was used when analysing
individual themes.
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XI. Research Findings & Results
Survey results, gathered over a one month period using Google Forms, are included in
Appendix 4: Survey Results. Direct results, prior to any interpretation, are presented in the
Research Findings & Results section with analysis and discussion of the survey reserved for
the Analysis and Discussion section.
Though approximately 45 people were approached directly to participate, it is believed
that roughly half completed the survey, though due to the anonymity the exact response rate
is unknown. Combined with respondents who accessed the survey via indirect channels such
as online professional body forums, 31 responses were obtained. Respondents ranged in
demographic backgrounds, with 84% of responses coming from project managers, project
engineers, and owner/client representatives as seen in Figure 8: Respondent Job Function.
While 74% of respondents work within the mining and mineral processing industry, data was
also gathered from energy and utilities, oil and gas, infrastructure, and consulting sectors of
the engineering workforce, seen in Figure 9: Respondent Industry. 33% of these employees
have used GVET on five or more projects, indicating the significant role GVET play in the
global engineering landscape.
Figure 8: Respondent Job Function
39%
32%
6%
23%
Respondent Job Function
Project Manager Project Engineer Business Development Consultant
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Figure 9: Respondent Industry
The companies employing these individuals are located in both developed and emerging
market countries, though it should be pointed out that 71% of these entities have a presence
in emerging markets. The vast majority of these companies have three or more offices, with
58% involved in five or more branches seen in Figure 10: Global Branches. Despite having a
high number of potential offices to include in GVET, as seen in Figure 11: GVET Global
Branch Composition, only 23% of GVET use resources from more than three branch offices.
Regardless of the number of offices used, a common theme emerged with 70% of companies
favouring a strong or projectized organizational matrix structure when employing GVET,
indicating that organizational power within a project remained with one project manager.
Figure 10: Global Branches
6%
74%
6%0%
3% 6% 3%
Respondent Industry
Energy & Utilities Mining & Mineral Processing
Oil & Gas Renewables
Infrastructure Consulting
Other
9%0%
23%
10%
58%
Global Branches
1 2 3 4 5+
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Figure 11: GVET Global Branch Composition
Motivation
In assessing the decision to use GVET for a project, the prevailing viewpoint with 67.7%
of survey responses is that the needs of the current project are the prime factor in whether to
use a GVET or alternately higher locally, seen in Appendix 4: Survey Results. From this
perspective, eight factors were assessed and the mean and standard deviations of responses
determined, seen in Figure 12: Project Perspective Motivations for GVET. Interestingly,
though 38% of respondents believe that a GVET should only be used when it was the most
cost effective solution, cost considerations ranked sixth in motivations to use a GVET.
Availability of resources and engineering quality were seen as the largest factors with the
least standard deviation between respondents, subsequently followed by programme
considerations.
The same factors were investigated from the alternate perspectives of the EPC company
as well as the Client to better understand the multi-stakeholder considerations in making the
decision to employ a GVET. For comparison, the perspectives were combined in Figure 13:
Multi-Stakeholder Motivations in Employing GVET. As explained previously in Projects
and the GVET, the views at a portfolio level differ from the project level despite the fact that
they originate from the same company. Also, from a simple perspective, because a client’s
ultimate profit is separate from the EPC Company’s, motivations will again differ. This can
create conflicting priorities, which are exposed in the comparison; the client perspective
favours programme and cost considerations while the project and portfolio perspectives focus
on engineering quality and availability of resources.
13%
23%
42%
13%
10%
GVET Global Branch Composition
1 2 3 4 5+
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Figure 12: Project Perspective Motivations for GVET
- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50
Cost ReductionProgramme/Schedule Optimization
Understand Local Market, culture, practices,…Understanding of regulatory requirements
Local content requirementsProcurement strategies
Availability of resources/personnelEngineering quality
0 = Not Relevant, 5 = Extremely Impactful
Fact
or
Question: From a PROJECT perspective, rate theimportance of each factor in the decision to use a Global
Virtual Engineering Team
Standard Deviation Mean
- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00
Cost Reduction
Programme/Schedule Optimization
Understand Local Market, culture, practices,…
Understanding of regulatory requirements
Local content requirements
Procurement strategies
Availability of resources/personnel
Engineering quality
ImpactNot Relevant (0) to Extremely Relevant (5)
Fact
or
Stakeholder Motivations in Employing GVET
Client Perspective StdDev Portfolio Perspective StdDev Project Perspective StdDev
Client Perspective Mean Portfolio Perspective Mean Project Perspective Mean
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Figure 13: Multi-Stakeholder Motivations in Employing GVET
As demonstrated by the standard deviations which vary from 0.4 to 1.29 (as measured by
levels on the likert scale) in Figure 13: Multi-Stakeholder Motivations in Employing GVET,
there remains a discrepancy between using local resources or GVET. When making this
decision on a resource by resource basis within the GVET, the primary factor reverts to an
easily quantifiable cost consideration. Fifty percent of respondents believed that a GVET
resource could only be justified if it was more cost effective than hiring in a local resource.
A secondary consideration in this comes in continuity of workforce and the desire to maintain
core skills within a global company, which supports using a GVET resource rather than
hiring a new local employee.
Prior to making the decision to implement GVET, expectations based on the experience
of respondents, seen in Figure 14: Perceived Impact of GVET, suggest +10%, no change, or -
10% changes to the project variables of project manager’s time, engineering, construction,
total project team headcount, and project risk. The two categories which indicate the largest
changes are increased time spent by the project manager and decreased engineering cost.
- 1.00 2.00 3.00 4.00 5.00Cost Reduction
Programme/ScheduleOptimization
Understand Local Market,culture, practices,
languages
Understanding ofregulatory requirements
Local contentrequirements
Procurement strategies
Availability ofresources/personnel
Engineering quality
Stakeholder Motivations in Employing GVET
Project Perspective Mean Portfolio Perspective Mean Client Perspective Mean
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Figure 14: Perceived Impact of GVET
Contradictory to the prevailing motivation for implementing a GVET, the method of
measuring success in using of GVET to enter a new geographic market focuses on future
revenues from that market, as seen in Figure 15: Geographic Market Expansion Success
Measurement.
Figure 15: Geographic Market Expansion Success Measurement
Success Factors
After embarking on a project utilizing GVET, the factors influencing success at both the
project level and at the level of geographic expansion success (a concern of the broader
portfolio) were included in the survey with results seen in Figure 16: Success Factors to
0
5
10
15
20
25
30
Resp
onde
nt F
requ
ency
Project Variable
Perceived Impact of GVET
10% 0% -10%
0
5
10
15
20
Employee andresource utilization inthe new branch office
Project profit Future revenue fromthe new market
Freq
uenc
y
Measurement Type
Geographic Market Expansion SuccessCopyright UCT
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GVET Implementation. These responses highlight the factors which GVET team members
can prioritize in order to increase the likelihood of achieving project goals. The second chart
in this figure, a radar chart, adeptly depicts the relationship between project success and
geographic expansion success, which do not always correlate. Stakeholder and customer
satisfaction, as well as communication and trust, emerge as key factors to include in a Project
Execution Plan, not to mention the operating philosophy of an expansion effort for new
branch offices.
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Global business environment
Communication
Cultural values
Integration and Data Management Systems
Project Organizational Strucutre
Global Procurement Structure
Leadership through Planning, Execution, and Control
Trust and Team Environment
Time-Zone Differences
Employee Rotation Between Global Offices
Stakeholder and Customer Satisfaction
GVET Model Pre-established
ImpactNot Relevant(0) to Extremely Impactful (5)
Succ
ess F
acto
r
Success Factors to GVET Implementation
Project Success Factor StdDev Geographic Expansion Success Factor StdDev
Project Success Factor Mean Geographic Expansion Success Factor Mean
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Figure 16: Success Factors to GVET Implementation
Specifically addressing the trust and team environment factor, survey respondents were
requested to determine the largest obstacle to progressing through the teambuilding phases
discussed in Projects and the GVET. Somewhat circular, as seen in Figure 17: Teambuilding
Obstacles, the prime obstacle to teambuilding was communication, and good communication
is an output of the teambuilding process. General communication quality accounted for 39%
of responses, which, combined with direct face to face communication to achieve 58% of
responses, demonstrates the importance industry professionals place on communication
within GVETs.
Respondents were then asked to qualitatively expound on her or his selected obstacle,
focusing on methods to overcome and enable teambuilding. The results of this question, seen
in Appendix 4: Survey Results, show that 56% of respondents highlighted communication as
the key, with 30% of these responses further clarifying that active facilitation of early stage
communication to be key. This facilitation should preferably be face to face, and can be used
as an alignment session to ensure all constituents of the GVET have a clear view of the
project objectives and methodologies to be employed in achieving them. Intertwined with
frequent, clear, concise, and focused communication is the need to incorporate mutual respect
0
1
2
3
4
5
Global businessenvironment
Communication
Cultural values
Integration and DataManagement Systems
Project OrganizationalStrucutre
Global ProcurementStructure
Leadership throughPlanning, Execution, and…
Trust and TeamEnvironment
Time-Zone Differences
Employee RotationBetween Global Offices
Stakeholder and CustomerSatisfaction
GVET Model Pre-established
Success Factors to GVET Implementation
Geographic Expansion Success Factor Mean Project Success Factor Mean
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for all parties. This initial communication may be supported by IT infrastructure throughout
the life of the project, though a high quality or expensive virtual system is no replace for
personal interaction and relationships.
Figure 17: Teambuilding Obstacles
Moving beyond the internal workings of the project team and EPC company, the primary
challenges to managing clients using GVET involve engineering competency, perceived loss
of control by the client, establishment of trust, time zone delays, a lack of local content, along
with the most prevalent being communication, seen in the responses to the question “What
obstacles are introduced in managing clients when using GVET and how are they managed?”
in Appendix 4: Survey Results. These factors are managed using an increased presence to the
client through what has commonly been referred to as a “client facing team” and regularly
scheduled virtual and face to face interaction. The client facing team is generally composed
of key members of the EPC company’s project team, specifically including the critical
engineering role players. These client facing team members act to mitigate the clients
concerns about having the proper resources employed, and also focus on maintaining the
clients’ influence on the project, quelling concerns over a lack of client control occurring
with virtuality. Despite efforts and techniques, trust remains a continuous concern which has
no quick fix. Project teams proactively implement face to face meetings at early stages of the
project lifecycle to facilitate trust and relationship building with clients. This not only breaks
down communication barriers, but also builds these relationships prior to them being tested in
the project execution phases.
39%
19%
29%
0%3%
10%
Teambuilding Obstacles
Communication Quality Face to Face Communication
Trust Cultural Values
Time-zone differences Project organizational structure
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The concepts of teambuilding and trust extend beyond an individual project and are
prevalent factors in balancing the success of the next project with organizational
considerations, such as the future revenues used to measure the success of expansion efforts.
This dovetails into the final phase of a project; project closure. Maintaining the same project
team allows higher performance at an early stage for the next project, and trust within the
team will be pre-established, though there are other trade-offs as well. 32% of respondents
believe that these other trade-offs, such as the organizational flexibility gained from having
dynamic and constantly changing project teams, justify intentionally disbanding members of
a GVET, while the remaining 68% prefer the continuity of the team.
With communication repeatedly highlighted as the pivotal success factor, IT
infrastructure is a key enabler which influences uptake of teambuilding within GVET. As IT
communication and information sharing mediums have evolved, so too have the virtual
capabilities of GVET. Respondents indicated her or his usage of selected virtual mediums,
seen in Figure 18: IT Infrastructure Implementation, with qualitative answers repeatedly
returning to the importance of availability and implementation throughout the lifecycle of
projects.
Figure 18: IT Infrastructure Implementation
Despite the opportunities afforded by these mediums, respondents maintain face to face
communication as most effective and suggested that face to face remained as the base to
which IT infrastructure is used to further foster teambuilding.
0% 20% 40% 60% 80% 100%
Teleconference
Video conference
Live virtual design review
Project specific websites (Sharepoint,…
Data analytics
Knowledge management systems
Lessons learned databases
Respondents Using Infrastructure
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ure
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Though Project Management International’s guide to project management does outline
the framework and necessity for a formal Project Execution Plan, there is no guideline
specifying the way a company must handle the implementation of a GVET. Respondents
were posed the question whether this should be a formal process, framed as “A formal and
standardized GVET implementation plan should be used across the organization” or whether
the project manager should have the flexibility to determine the best implementation method
as “The Project Manager should create his or her own GVET implementation plan specific to
each project.” 55% believed that a formal method of GVET implementation was required in
order for a company’s global operations to be able to function as a GVET.
Whether formal or informal, the Work Breakdown Structure (WBS) must be clearly
defined and a decision must be made how to allocate work between the GVET. This division
may be any combination between phases of the project, engineering discipline, office
location, or project component, though the predominant view from respondents is a fully
integrated model as seen in Figure 19: WBS Allocation.
This allocation also filters down to the level of direct employees forming part of the team.
Though the scope may be integrated between offices and the most common organizational
matrix was a strong matrix, according to respondents and seen in Figure 20: GVET Staffing
Responsibility the engineering discipline manager within each office is most often
responsible for selection of project team members. Despite many factors influencing the
selection of employees, the prevailing theme correlates with one of the initial motivations for
using a GVET; availability of resources. This factor overshadows all others, with 65% of
respondents confirming this was the basis for their GVET staffing decisions. Considering the
importance of resource availability as a driver for both the use of GVET as well as staffing,
the availability of resource forecasting plays a significant role in the project and portfolio
management of an EPC company. Despite this, as seen in Figure 21: Resource Forecasting,
48% of respondents had no direct insight into the resource forecasting beyond his or her own
GVET.
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Figure 19: WBS Allocation
Figure 20: GVET Staffing Responsibility
Figure 21: Resource Forecasting
58%
39%
3%
Division of Project Scope
The scope is integrated between all offices, phases, and disciplines
Split between offices according to components or engineering discipline
Split between offices according to project phases
29%
23%
45%
3%
GVET Staffing Responsibility
Project Manager Portfolio Manager Engineering Discipline Manager HR Department
48%
34%
10%8%
Resource Forecasting
My current project team only
All employees in my local branch office
All employees in my organization, regardless of location, upon request
All employees in my organization, regardless of location, in real time
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XII. Analysis and Discussion
Five semi structured interviews were used to supplement and validate findings based on
analysis and interpretation of literature review and survey data. The data collected in the
semi structured interviews will be presented as an integration with the analysis findings.
Motivation
An understanding of the drivers, both internal to an EPC company and external from a
client’s perspective are valuable in assessing or motivating the use of a GVET as well as
evaluating the success thereof.
Geographic Expansion & Diversification
The motivation to explore new markets discussed in the literature review is supported by
industry findings. The desire to expand into new markets is motivated by a workflow funnel
concept, seen in Figure 22: Workflow Funnel (RP1810). This concept uses the rule of thumb
that, ceteris paribus (all other things equal, excluding special cases such as longstanding
client relationships, etc) only one in ten prospective opportunities will actually produce an
opportunity for the company to tender for a project, and only one in ten of these tenders will
materialize into an executable contract. This means that one hundred prospective
opportunities must enter the funnel for each contract signed (Appendix 5, RP1810). This
concept also successfully demonstrates the link between portfolio considerations at a business
development level with project considerations at an execution level as described by the
PMBOK Guide referenced in the literature review (2013). If a local market slows, as in
South Africa between 2014 and 2016, firms will look to new markets to fill the funnel
(Appendix 5, RP1810 and RE2609).
Figure 22: Workflow Funnel (RP1810)
100 Opportunities
10 Tenders
1Contract
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This desire to expand to new markets is combined with the need to have a physical
presence in those markets in order to access opportunities. One respondent stated that a
branch office was necessary to establish a "presence in Africa and an ability to deliver jobs in
Africa, not just in Morocco but everywhere in Africa" (Appendix 5, RT2209). This
correlates with the research presented in the literature by Johanson and Vahlne which found
that a local presence to clients increased the quality of services and ability of EPC companies
to react to changing needs (2010).
The diversification gained by expansion into new markets is also a conscious action to
reduce the risk profile of a company (Appendix 5, RE2609). This demonstrates that Han and
Dickmann’s portfolio theory is applied on the micro level of individual companies as well as
a macro market level (2001).
A tertiary consideration for expansion is that of human desire. This applies to existing or
potential employee preferences to live in certain geographic areas. In the case of one
respondent, a branch was opened in a new city specifically to retain internal talent which had
expressed a desire to relocate. This branch then was able to lure prospective clients to co-
locate at the new branch office due to the attractiveness of the geographic location (Appendix
5, RR0610).
GVET Selection
"We just don't have the army to do what has to be done” (Appendix 5, RR0610). This
was a common theme discovered in offices which would be classified as non-head offices,
but also the most important factor selected by respondents in choosing the GVET model from
both a project and portfolio perspective. Without the availability of the GVET for project
execution, the size of project a branch office could feasibly undertake would be limited to a
direct match with the current company resources available (or hiring in new resources, which
also takes time). Incorporation of GVET allows competition for larger projects, evidenced in
one interview with the director of a branch office who stated that of the past three projects
executed by the office, none would have been possible without the use of GVET. This
supports the idea present by Johanson and Vahlne that an office can be sized according to
workflow and that GVET can be used as a buffer to receive the shocks of changes in that
workflow (2010). This was specifically due to resource availability. The most recent of
these projects, comprising a project team of over 330 individuals, utilized only 7.5% of this
headcount from the local branch (Appendix 5, RR0610).
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Following the second most important factor for GVET selection in the survey, the
importance of engineering quality in a project team is highlighted by specialized resources
being pulled onto project teams globally; “Most of the people here are the cleverer ones, so
they're generally in demand globally” (Appendix 5, RR0610). Upon embarking on a project
in an office recently opened through a strategic geographic expansion initiative, a project
manager stated "there weren't resources to be had in the local offices, but now we can get the
best people from around the world [with GVET]" (Appendix 5, RT2209). This supports the
assertion by Chinowsky and Rojas that the “complementary competencies” of GVET
resources allows simultaneous workflows which are not dependent on geographic location
(2003, p. 98).
“It's no use going to an overseas office and putting up a brand and thinking everything is
going to work by just hiring in new people. It's definitely a recipe for disaster” (Appendix 5,
RE2609). The subject explored in this quote highlights the difficulty in expansion of existing
business models. The underlying issue, which correlates directly with Anantatmula and
Thomas’s success factors seen in Figure 5: Factors of influence on performance of global
projects, is that of scalability of company culture. “The driver is more towards making sure
we can replicate the same cultural attitude towards our projects, and trying to utilize that
globally” (Appendix 5, RE2609). This effort to scale a company’s culture must also take
cognisance of Verberg et al. findings concerning diversity within a global company (2013).
Having also experienced the same challenge, another interview suggested that attempts to
shorten or circumvent the time intensive process of instilling a company culture may be
difficult. “Putting processes and procedures in doesn't mean you will replicate what we're
currently doing” (Appendix 5, RR0610). Similar to teambuilding, the intangible aspect of
company culture requires tangible actions to replicate successfully.
The perspective of the EPC company is viewed as being more task oriented in
comparison to the client perspective which, seen in Figure 13: Multi-Stakeholder Motivations
in Employing GVET, prioritises both cost and programme. Due to the financial concept of
the time value of money, the importance given to programme can also be viewed as being
based on a cost consideration (Firer et al., 2012). Having accepted the necessity of GVET for
resourcing purposes, difficulty may still arise (especially with the EPCM contracting model)
as clients may lack experience with GVET or a cognizance of the true value created by
proactive expenditures required for GVET success. According to one interview, the
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consequence of this client interaction "cost us a lot of money. It cost our client a lot of
money" (Appendix 5, RT2209).
The data presented both by survey results in Figure 13: Multi-Stakeholder Motivations in
Employing GVET and the semi structured interviews suggest that availability of resources
and engineering quality are the primary motivations for utilizing GVET, followed by
programme and cost considerations. This is a contradiction to previous research by Joseph,
seen in Table 2: Owner and EPC Contractor Drivers for the use of Global Virtual
Engineering Teams, which ranks cost as the number one driver, programme as fifth, and
availability of resources and engineering quality as twelfth and thirteenth, respectively. The
difference in this data is believed to be explained by the evolution of the GVET and the
timing of data collections. The data presented by Joseph was gathered in 2005, a time when
GVET was emerging (or diverging) from both traditional collocated teams and the
outsourcing model discussed by Messner (2006), whereas the current survey data is based on
2016 responses which have an additional 11 years of GVET advancement influencing the
data. The researcher believes that as GVET evolved, the emergence of additional (and less
quantifiable) benefits came to fruition, which also encouraged increased usage.
Success Factors
Due to the level of specialization and scale of many projects in heavy industry, EPC
companies which compete in this space are generally stalwart entities with a long history
which has led to the current version of the company. This evolutionary timeline often means
that operating models, as well as individual employee mental models, originate prior to the
advent of the GVET. As one respondent stated, “In a company that's been around for 32
years, nobody has said "we are going to go into a global virtual environment, and what do we
need to do that?" because it didn't exist. If we’re going to do it, there needs to be a conscious
decision. And a plan” (Appendix 5, RR0610). The survey has demonstrated that GVET are
currently prevalent throughout the EPC industry, as well as an acknowledgement of the
importance of identifying and implementing success factors.
In assessing the stumbling blocks and challenges experienced by EPC companies, the
conditions created by GVET increase the ability to enter new markets, though the actual
goals of this must be clearly accepted by all stakeholders. From a narrow perspective, an
expansion initiative will “always depend on financial success of the immediate project”
(Appendix 5, RT2209). In some cases, reduced financial targets may be imposed to
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acknowledge the challenges of expansion activities, though performance measurement
against these targets is just as rigorous. Learning curves are not washed away because a
GVET is used, and the trade-off between risk and reward inherently means there must be
some degree of risk of failure in order for a reward to be present. For this reason, an
expansion initiative must meet the risk/reward profile pursued by the EPC company on a
project level, but long term success should also be factored. Portfolio questions such whether
“we have more work coming in, are we able to provide and integrate with virtual engineering
teams, etc.” (Appendix 5, RT2209).
Work Breakdown Structure
Upon implementation of GVET in any stage of the project lifecycle, the standard project
team model changes. “You can't take your traditional project organogram and say we're
going to farm it out” (Appendix 5, RR0610). An early stage assessment of the project scope,
yielding the high level functional and administrative roles, as well as any specialist
engineering tasks, must be performed by the project manager. Acknowledging the difference
between colocation and GVET, selecting a project manager with GVET experience is
necessary to allow these roles to be redistributed in a GVET structure. This enables the high
level GVET to become involved in a project from feasibility or initiation, increasing the
personal ownership and responsibility of GVET members (Appendix 5, RE2609).
Correlating with the understanding of a project as “temporary endeavour undertaken to
create a unique product, service, or result,” it follows that the organizational structure of a
project team would be more projectized as a weaker structure lends itself to repeated or more
operational acts (Project Management Institute, 2013, p. 3). The survey response, seen in
Figure 20: GVET Staffing Responsibility, produced a conflicted perspective of the best
GVET structure. This was used as a semi structured interview question, and the varied
responses in surveys were explained. The changes to the team structure for GVET, seen in
Figure 23: GVET Team Structure, show how the survey question responses were both correct
but initially misinterpreted by the researcher. The key structural changes originate from
blending of the projectized and weak organizational structures, along with the introduction of
a specific client facing team, indicating that there are elements of multiple structures within a
single GVET.
“They [clients] want to be able to go down the passage and grab a process engineer, grab
a project engineer, whatever. So they want to be able to sit and talk about it. So those leads
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need to know what's going on, and be the client facing engineer, but at the end of the day the
client doesn't really care who does the actual drawings” (Appendix 5, RR0610).
Acknowledging the concerns and benefits of direct high level interaction with clients (as well
as client mandates for this function to exist), the client facing team embodies the individual
GVET members who are both technically competent and personally responsible for project
deliverables.
These members are typically collocated, but may also be remote with frequent face to
face or alternate communication directly with the client. In selecting these team members,
“you've got to have guys [and ladies] that know the difference between best practice and
doing what looks attractive and shiny at the time. It’s easy to have rational ignorance”
(Appendix 5, RT2209). Further, “having international experience is the only way to get
people capable of delivering projects, especially for the project team [client facing], who are
capable of delivering projects with GVET. Being a great PM delivering jobs of $50m
Pennsylvania, USA is a very different thing than a $50m job with project team in India and a
job site in Texas, USA. It’s not the same thing. It’s not the same issues” (Appendix 5,
RT2209). Separating these roles from the rest of GVET team members allows a division
within the team between organizational structures to occur.
The balance of GVET team members may (or may not) be members of the virtual portion
of GVET, located in either the local office or branch offices and participating as part of a
weak organizational structure in which his or her local functional manager assumes
responsibility for deliverables, authority over local team members, and reports to the GVET
project manager. This is a break from the projectized structure of the client facing team in
which the project manager carries responsibility and authority over all team members.
The position of the integration manager may not be a definitive role, however this
demonstrates the additional layer of complexity required on either end of a virtual link. The
engineer, drawing office section leader, checker, administration, or even project manager
may fill this role for different functional areas of the project, but neccessity of the function
remains. The existence of this potentially unofficial role is supported by the survey question
depicted in Figure 14: Perceived Impact of GVET which shows the increased time
requirement of the project manager in using a GVET.
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Figure 23: GVET Team Structure
Though this GVET model was the result of exploratory qualitative research and is
applicable in many instances, a GVET model should not be created in a mandatory or
prescriptive way. “Project teams need the freedom of decision making in order to keep them
accountable. It's not a production line, it's a project. Everything is unique by definition”
(Appendix 5, RE2609). 55% of survey respondents support the idea that scope should be
divided through the GVET from initiation, fostering lifecycle accountability rather than point
deliverables with no global ownership besides the project manager.
A company may, however, influence the shape of a GVET structure by mandating how a
project manager reports back to the company. “If you ask him [or her] to report in a certain
way then he's [or she’s] going to react in a certain way. He's [or she’s] going to get controls
in place to create certain results” (Appendix 5, RE2609). This idea may also be extended
through the GVET into branch offices, ensuring that the change in organizational structure
from projectized to weak matrix maintains alignment of deliverables and methodologies.
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The result of this split between client facing team and (potentially) virtual members is that
the cost and staffing levels required vary during the life of the project according to Figure 24:
GVET Lifecycle Headcounts. “The most recent of GVET projects, comprising a project
team of over 330 individuals, utilized only 7.5% of this headcount from the local branch”
(Appendix 5, RR0610). Despite the high skew to virtual team members during the execution
phase, the degree of dispersion in the virtual team is not infinite according to both survey and
interview research.
The perspective of having the ability to overflow into other offices is limited.
Cognizance must be taken for the number of geographic locations involved in the GVET.
The survey data demonstrated that most GVET do not exceed more than three geographic
locations; 77% of respondents’ most recent projects utilized three or fewer branch offices
indicating a limit to the degree of virtuality present conditions allow. One respondent offered
an explanation for this, suggesting that the layers of complexity, and risk, increase with each
additional office. In opposition to this increase in risk, additional management interaction
must be made, which would be made redundant as the number of branch offices involved
were scaled down (Appendix 5, RR0610).
Figure 24: GVET Lifecycle Headcounts
Agency/Portfolio conflict and the Resource Hub
The variation in staff headcount depicted in Figure 24: GVET Lifecycle Headcounts is
common to both collocated or GVET, and creates the need for a continuous project pipeline
to maintain efficiency and usage of resources. This concept has been discussed in the context
Planning
Execution
ClosureInitiating
Cost
& S
taffi
ng Le
vel
Time
GVET Headcount
Client Facing Team Virtual Team
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of expansion and diversification as a motivator, however it also plays a role in organizational
staffing considerations when hiring, transferring, or uplifting existing employees. These
decisions follow a process which, though customized for each project, follow a similar
process flow to that shown in Figure 25: WBS Staffing Plan. This process flow is supported
by the motivations determined in the survey, shown in Figure 13: Multi-Stakeholder
Motivations in Employing GVET, in factoring availability of resources, specialization, and
cost. The other motivational considerations investigated are less prevalent, falling into the
stage of complexity management in which these factors are juggled between the accountable
members of the projectized and weak matrix components of the project team.
Figure 25: WBS Staffing Plan
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An agency conflict, or situation in which a local office factors its own profit or resource
utilization over that of the EPC company portfolio, is inherent in the formulation of a GVET.
This conflict manifests itself further in the desire to internalize or collocate roles in a local
office, potentially hiring new resources which are underutilized in branch offices. The
staffing plan shown in Figure 25: WBS Staffing Plan merges both agency and portfolio
considerations by first prioritizing work for existing local resources (especially the client
facing team) before a decision is taken at a portfolio level to utilize global resources, hire new
resources, or uplift existing resources. Considerations suggested by Prasad and Akhilesh,
including strategic objectives, performance constraints, and work characteristics, are included
both in the first stage of identifying GVET roles, as well as the complexity management
which occurs when the ultimate staffing decisions are made.
Confirming prevalence of this agency conflict is the belief, shared by 50% of survey
respondents, that the project level GVET organogram must be determined by the most cost
effective option. It should be noted that this prioritization of cost occurs subsequent to the
decision to use a GVET and pertains to the composition, or WBS, of that GVET. Satiating
both the agency desire for cost effectiveness and the portfolio consideration for high resource
utilization, the concept of a low cost resource hub comes to fruition and has been evident in
many companies which have embraced the GVET model. This resource hub model is
supported by the economic theory of comparative advantage, suggesting that one entity may
be able to produce an output at a lower opportunity cost than another, contributing to cost
considerations motivating the GVET (Ricardo, 1821).
Resource hubs are widespread as low cost centers, but also as engineering specialization
centers. In many situations, resources become so specialized that the local market cannot
generate enough workflow to support them (Appendix 5, RR0610). In these instances, the
inclusion in a global EPC company which exploits the GVET model increases the workflow
to these resources, justifying their specialization. The subsequent step in achieving
successful amalgamation of resource hubs is communication and awareness; “Having that
knowledge of where your smarts are globally needs to be managed and driven, otherwise you
are going to miss those opportunities” (Appendix 5, RR0610).
Another form of agency conflict, occurs when a project reaches closure. At this stage, the
project team may be disbanded, ensuring resources are flexible enough to re-join new teams,
or teams may remain together for new projects, exploiting existing team dynamics and trust.
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Though 68% of survey respondents confirmed a desire to keep a project team together, the
reality of a “focus on billability means they have to move people around through teams and
projects” (Appendix 5, RT2209). A validity issue may be present in the statistic of 68%, as a
corresponding 71% of survey respondents are project focused (project manager and project
engineer) rather than portfolio focused, resulting in a bias to project performance over
portfolio performance. Regardless of a team staying together or being disbanded, the
inclusion of the GVET has a secondary positive effect on employees who may otherwise
behave in a protectionist manner: “knowledge that there is succession to the current team
reduces agency conflict” (Appendix 5, RT2209).
Teambuilding, Trust, & Communication
From an organizational perspective, the degree of control a project manager has over
personnel in the project team, in a weak or projectized matrix organizational structure, plays a
vital role. Soft skills, or EQ on the part of a project manager, has emerged as a vital
component for a GVET to enter the performing stage of teambuilding. Active involvement,
early in a project to incorporate all stakeholders into the project team is required. This
includes managing “preconceived notions that are personal issues, but they get dragged into
the office [and into GVET]” (Appendix 5, RT2209). “You have to have people who are
willing to go to those places and pull these pieces together. So you can establish a good
GVET, but you've got to spend money early on in establishing a personal relationship in the
leadership of those places” (Appendix 5, RT2209). These quotes directly translate to the
concepts suggested by Zofi, Chen, and Messner, who highlighted the reality of cross-cultural
differences, as well as the necessity to actively integrate cultural awareness into company
culture (2010; 2012).
Failing to fully comprehend the importance of teambuilding and trust can have drastic
effects on performance which are magnified in a virtual environment, and also much more
difficult to overcome (Appendix 5, RT2209). This results in a treatment mode, which an
understanding of quality management suggests as significantly less effective and more
resource intensive than prevention.
One respondent highlighted that project managers repeatedly “underestimated the
importance of involving more individuals at different levels early on,” and also indicated that
the scale of teambuilding was being expanded to include both upper level clients and lower
level subcontractors to increase lifecycle project performance. In acknowledging the
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importance of early stage teambuilding and communication, the respondent is realizing the
prediction made by Chinowsky and Rojas that increasing communication frequency and
mediums will be the future of GVET (2003). “Trust emanates from the relationship between
ourselves and clients. This takes time. The client team also has quite a bit at stake as well.
That’s why in repeat business, everything goes smoother because trust has been established”
(Appendix 5, RE2609).
Repeated throughout the qualitative responses to survey questions and interviews in
Appendix 4: Survey Results and Appendix 5: Semi Structured Interview Analysis was the
integral need for communication as the link between factors affecting success. This includes
teambuilding and trust as presented in the literature review, but also direct task specific
activities (Maruping & Agarwal, 2004, as cited by Beise et al., 2010; Burgoon et al., 2002, as
cited by Verburg et al., 2013). The importance of time in building relationships is difficult to
overcome, however the frequency and quality of interaction is an area that project managers
can control. “There is a huge amount of merit to sitting face to face. You can eventually
build up these relationships, but at one point in time you need to get the whole team together
for a project kickoff rather than doing a skype call or something. Engineers are still..
Strangely enough, human" (Appendix 5, RR0610).
Determining the correct frequency and means of communication is a project decision,
however lessons learned demonstrate the danger imposed by GVET if this is incorrectly
assessed. A GVET incorporates many workflows into one, and the time between interactions
allows each path to diverge. This makes a transparently communicated project scope and
frequent communication key for an integration manager to achieve detail level success and
avoid wastage or inefficiency.
Tools
In discussing the enabling factors which have brought GVET into mainstream practice for
EPC companies, Information Technology (IT) advances are viewed as the lynchpin which
allow virtual teams to take hold. “Infrastructure is going to be one of the things to impact it's
[GVET] effectiveness” (Appendix 5, RR0610). Facilitating communication, IT infrastructure
has also increased performance in GVET as well as increased possible deliverables. Current
software, such as Building Information Modelling (BIM), is able to “Incorporate all
stakeholders and information sharing” and is “no longer bounded by software but by
relevance/desire from the user” (Appendix 5, RE2609). The spectrum of stakeholders
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involved in BIM also includes subcontractors, increasing the transparency between all
parties. Unfortunately, limits still exist in both technology and logistical realities of office
locations; “try doing a 3D model review in Cape Town or China and you wait 5 minutes for a
view to load. There is that kind of internet speed out there, but it's not in Africa” (Appendix
5, RR0610).
Survey respondents confirmed the usage of IT in their GVET, seen in Figure 18: IT
Infrastructure Implementation. Taking into account the work of Chinowsky and and Rojas,
published in 2003 and included in Table 1: Electronic Interaction Technologies, the usage of
technology has a link to the duration of exposure of that technology to the EPC industry
(2003); the most prevalent technologies (email and teleconference) have been in the market
longer. This is potentially foreboding of the future; the technologies that have been around
the longest are most widely used, though viewing the usage of new entrants such as data
analytics in regards to its relative lifespan shows that uptake has been rapid. In the context of
the EPC environment, data analytics involves “tracking your hours, tracking your
efficiencies. Essentially project controls. If you're not datamining your project controls
across projects, you're missing out on a lot of opportunities. And guess what, a lot of
companies aren't” (Appendix 5, RT2209). Data analytics provides a window into the
execution GVET and is an important tool for project managers to determine what to change
on both future, as well as current, projects.
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Risk Management
Along with the revised project execution plan and changes to the organogram, GVET also
introduce new considerations to the risk profile of a project. These considerations act to alter
the risk in the risk/reward equation, potentially enabling a company to pursue opportunities
which would otherwise be outside of the company’s mandate. These considerations include
the additional layers of complexity previously mentioned, but also extend to exchange rate
considerations, engineering risk changes, cultural factors, and legacy employment issues, all
of which may act positively or negatively.
The revised organogram and staffing models, depicted in Figure 23: GVET Team
Structure and Figure 25: WBS Staffing Plan, show considerations for assigning resources
include that of cost. When crossing office boundaries to access resources in alternate
branches, country boundaries are often also traversed. Along with the new national identity,
currencies are also changed, indicating a potential windfall or money pit as the pay spectrum
across the world is not an efficient market, and hourly rates for resources are not universal.
This idea is exploited in an EPC company’s favour in the low cost resource hub, however this
creates a one directional relationship for the GVET global model. "We've got issues with
Australia because the rates are much more. Australia can happily outsource to us [South
Africa] because our rates are much cheaper, but we can't just push it the other way"
(Appendix 5, RR0610). This also creates the possibility for the introduction of the negative
risk that exchange rates may change during the course of a project with the difference either
adding to or subtracting from project profits.
One respondent identified the engineering experience and quality gained through GVET,
especially when applying a GVET to early initiating stages of a project. This was also
supported in the survey with the engineering quality selected as the second most influential
factor in choosing the GVET model. “In early stages, you get more senior people and they
also communicate better, it’s a more focused team, so yea at that level and from the company
perspective it [GVET] lowers risk because you also have access to more specialized
resources” (Appendix 5, RR0610). The ability to involve a broader spectrum of senior
individuals exposes a project team to both more engineering skills and more past experience.
The benefits of an overlap of company culture in expansion activities through GVET has
been discussed in GVET Selection. Expanding on this from a risk perspective, one interview
respondent stated that the “combination or grouping of new and existing employees in a
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GVET gives you have a better chance of success because people with the parent company’s
way of doing things are able to guide the team, reducing the risk profile of project”
(Appendix 5, RE2609).
The final risk discussed acts in converse to the primary surveyed motivation of
availability of resources; creation of legacy resources. Following fluctuation in headcount
shown in Figure 24: GVET Lifecycle Headcounts, the question of what to do with an
employee after a project is over is prevalent. In collocated team, this employee would either
need to be assigned to a new project (if a new project required that resource), carried as a
administrative expense with no benefit to the company, or terminated. The latter two options
create obvious negative effects, though the implementation of GVET in an EPC Company’s
global model increases the opportunity for option 1: redeploying a resource onto a new and
billable project.
The correct combination and management of risk considerations in GVET has the
potential to lower the overall risk of both projects and portfolios.
Generalizability
Findings of this research may be industry specific and not transferrable to non-EPC
oriented project companies. No control has been introduced for the type of engineering,
degree of specialization, scale of project, or the extent of construction phase required by the
GVET. Additionally, no control has been implemented for the change in technology during a
participant’s experience with GVET, which may influence the comparison of one
participant’s experiences against another.
The degree to which individuals have used GVET to expand geographically was assessed,
with 65% of respondents having experience with both expansion and GVET. Experience
with GVET was required for participation in the survey, though in order to obtain a
meaningful sample for understanding motivation and success factor dynamics, a lack of
experience with expansion did not preclude a respondent from participating.
The degree to which responses may be skewed by industry should be considered. 74% of
responses came from the mining industry, and when combined with oil and gas this
proportion becomes four out of five respondents. Both industries are highly dependent on the
global commodity cycle, and it should be noted that the timing of the survey occurred in the
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end of 2016, a time when the global commodity cycle is in the second year of a slump,
specifically in the prime domicile location of respondents in South Africa.
The motivations and success factors may change when market dynamics change. An
example of this could be during boom times in the macroeconomic or commodity cycle in
which the price for resources significantly overshadows cost, which will push programme or
timeline considerations above the cost or engineering quality motivations experienced during
troughs in the cycle.
Limitations
The limitations imposed by utilization of convenience sampling as well as the time
available to complete the study have limited the sample, and validity or reliability may be
impacted accordingly. Client specific concerns are included to the extent that they have been
interpreted by management in the EPC company or through literature review and may be over
or understated. The impact of future technology advancement may result in changes to
GVET and EPC company structure which limit the translation of learnings from this study to
future practice. Though interviews were semi structured, the structure was custom for each
interview and determining a common theme through coding was not the intention of this data
collection method. Interviews were used to support and verify the researcher’s findings after
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XIII. Conclusion
The unifying question which inspired this dissertation was “What are the motivations and
success factors of using GVET as a strategy in EPC companies for strategic geographic
expansion?” Through literature review, industry survey, and semi structured interviews, an
appreciation was gained which may assist members of the EPC community in navigating
decisions in whether to implement GVET in a company’s structure, as well as the means of
ensuring success. The potential benefits to geographic expansion, through increasing markets
or diversification of revenue sources, pose an opportunity which companies cannot afford to
overlook. Understanding the inputs and integrative influence between these inputs prior to
making the decision to use a GVET, as well as proactively incorporating the operating
considerations which are different from collocated teams, will increase the chance of success
for these companies as the competitive landscape changes.
Along with understanding the key factors both influencing the decision to use a GVET
and those factors which enable success, high level themes emerged which are important for
management in the EPC industry to recognize; both internally and externally with clients,
hard or quantitative factors are more influential in motivating the uptake of GVET while soft
or qualitative factors are most impactful on its success. Cognizance of these factors needs to
be integrated into an EPC company’s project execution plan. This enables all employees,
from project manager and client facing team level operating in a projectized manner to the
engineering discipline manager and branch team which operate in a weak matrix manner, to
seamlessly and efficiently integrate into a GVET team.
The overarching company portfolio management must transparently exude these success
factors as they extend into core of company culture, enabling success at both project and
portfolio levels. The use of GVET may add layers of complexity to an EPC company’s
global model, however if done in a planned manner in alignment with best practices, GVET
can simultaneously mitigate risk and increase competitiveness, enabling projects as well as
strategic market expansion initiatives which would otherwise be impossible.
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Future research
As literature reviews, survey, and interview data suggest that GVET are expected to
increase in the future, additional research will be vital to ensuring the maximum benefits are
achieved. Areas of potential further research include:
Research which was found lacking during the literature review involving team
constituents below management level. This could be accomplished by studying a full
GVET project team, or selectively concentrating on employees who form part of the
lower structure of the teams, and understanding how the shift from collocated to
GVET has affected these people, and more specifically what can be done to make the
transition and new reality more successful
The relationship between managers who may never actually meet face to face is
another area of interest as the importance of soft considerations plays a large role in
the success of a GVET; how are softer, or factors complimented by the emotional
quotient of managers, affected in these relationships and what can be done to foster
this in absence of face to face meeting.
Repeating motivational questions during a boom in the commodity cycle would create
an interesting comparison to determine whether the trade-off evaluation, partly
motivated by cost savings allowed by GVET, still points to virtual as a component of
the project team structure or whether a collocated team re-emerges as the best
alternative.
Researching direct client concerns and experiences when working with EPC
companies would provide an insight into how these companies could better serve
clients and compete for future business. Access to such client insight would be
valuable in executing this research.
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XV. Appendix 1: Ethical Release for Survey
Introduction to Research
This survey is part of an MBA student’s dissertation in the UCT Graduate School ofBusiness. The research is exploratory in nature using both quantitative and qualitativemethodologies through survey. The purpose of the research is to understand the motivationand success factors in an Engineer Procure Construct company’s use of Global VirtualEngineering Teams to expand into new geographical markets.
The research has been approved by UCT’s Research Ethics Committee.
Participation
Participation is voluntary and you may withdraw at any time. The survey will includegeneral questions about the use of global virtual engineering teams and the motivations orsuccess factors associated with their use in strategic geographic expansion. The survey isexpected to take approximately 10-15 minutes.
There are no known risks or dangers to you associated with this study. Due to the nature ofthe survey, information gathered may be identifiable. The information will be used only forthis research, names of individuals, companies, or projects will not be used in the dissertationreport, and all records will be kept strictly confidential.
Contact
Should you have any questions regarding the research please feel free to contact theresearcher.
Scott AlexanderMBA 2016Graduate School of BusinessUniversity of Cape [email protected]
I acknowledge that I am participating in this study of my own free will. I understand that Imay refuse to participate or stop participating at any time without penalty. If I wish, I will begiven a copy of this consent form.
CLICK TO ACCEPT
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XVI. Appendix 2: Ethical Release for Interview
Introduction to Research
This survey is part of an MBA student’s dissertation in the UCT Graduate School ofBusiness. The research is exploratory in nature using both quantitative and qualitativemethodologies through survey or semi structured interview. The purpose of the research is tounderstand the motivation and success factors in an Engineer Procure Construct company’suse of Global Virtual Engineering Teams to expand into new geographical markets.
The research has been approved by UCT’s Research Ethics Committee.
Participation
Participation is voluntary and you may withdraw at any time. The semi structured interviewwill include general questions about the use of global virtual engineering teams and themotivations or success factors associated with their use in strategic geographic expansion.The semi structured interview may take 30-60 minutes.
There are no known risks or dangers to you associated with this study. Due to the nature ofthe semi structured interview, information gathered may be identifiable. The information willbe used only for this research, and names of individuals, companies, or projects will not beused in the dissertation report, and all records will be kept strictly confidential.
Contact
Should you have any questions regarding the research please feel free to contact theresearcher.
Scott AlexanderMBA 2016Graduate School of BusinessUniversity of Cape [email protected]
I acknowledge that I am participating in this study of my own free will. I understand that Imay refuse to participate or stop participating at any time without penalty. If I wish, I will begiven a copy of this consent form.
Name of Participant: ________________________________
Signature of Participant: ________________________________
Date: ________________________________
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XVII. Appendix 3: Survey Template
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XVIII. Appendix 4: Survey Results
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XIX. Appendix 5: Semi Structured Interview Analysis
IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RT2209
to enter new market "presence in africa and ability todeliver jobs in africa, not just in morocco buteverywhere in africa." across industries x
RT2209partner who needed capabilities in morocco pulled
through JV x
RT2209"there weren't resources to be had in the local offices""we can get the best people from around the world" x
RT2209cost saving, engineering, "best guys from around theworld" x
RT2209
engr cost dec, constr inc. "not how we sell it to clients,but that's what happens""GVET difficult to manage, difficult to get deliverablesjust right, the communication is the most improtantthing. Cultural boundaries.." which come in at theconstruction phase x x
RT2209
if virtual teams are managed correctly, if proj teamdoes a very good job of managing, there is a costsaving. But it is very difficult to get everyone on thesame page and keep everyone on the same page,including the client. EPCM is more difficult becausethe client doesnt' always know how GVET works, soyou often want the client less involved because we arethe ones who actually know how GVET works.not implementing correctly "cost us a lot of money. itcost our client a lot of money" x
RT2209
EPCM is more difficult because the client doesnt'always know how GVET works, so you often want theclient less involved because we are the ones whoactually know how GVET works.not implementing correctly "cost us a lot of money. itcost our client a lot of money" x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RT2209
day 1 GVET handled different:you've got to have a project team, the leadership andthe delivery office, needs to have senior folks withexperience in GVET and best practices.You've got to have guys that know the differencebetween best practice and doing what looks attractiveand shiny at the time.GVET when they're going well, they can go very well.once they get off track they can be very dangerousbecause it spins out of control x x
RT2209
mitigate-experience of the team beforehand, other opportunitiesfrom success and failed projectseasy to have rational ignorance. Advantage ofexperience/best practicesyou've got to spend more money when you're doingthings like this. You’ve' got to have guys from thedelivery office in the detailed design office, and viceversa, otherwise commnication is not easy.good understanding of cultral pieces in play. workingin places with large minorities, they might have culturalfeelings about what country that delivery office is inand that's absolutely been an issue. they may decidethey don't want to work with them. Preconceivednotions that are personal issues but they get draggedinto the office.you have to ahve people who are willing to go to thoseplaces and pull these pieces together. so you canestablish a good GVET, but you've got to spend moneyon establishing a personal relationship in the leadershipof those places. x x x x
RT2209
the way you structure the organizational structure onGVET is different than co-located. Adding levels ofbeauracracy with GVET because things have to roll up,but how can you have a PM who doesn't know the localresources assign employees to a team? conflicts ofinterest, or agency conflicts, must be managed by localoffice, but roll up to PM who pieces together.idea of 1 team does not really exist. PM joining manyteams from around the world x x
RT2209
all offices involved at bid stage and assigningresources. Leads identified, but project team is localoffice responsibility. x x x x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RT2209GVET doesn't make sense for smaller jobs, thresholdbefore it makes sense x x x
RT2209
task allocation at higher level based on areas ofexpertise for different offices, then office assigns actualresources x
RT2209try and avoid more than 4 offices, because it just getstoo complicated x x
RT2209
basic and conceptual engineering are done somewhereelse, then take into account cost/schedule savings fordetailed design is done through GVET x x
RT2209
specific roles by engineering centers who woulddetermine when to hire new employees. Deliveryoffice only hires for delivery team. x x
RT2209
proj team is based in delivery office. If they're hiring itis for proj coming from the local office or transferred injust for that project. x
RT2209
just so many people in organization, must trust localorg and ops managers to put the right person in theright job x
RT2209
use competitive advantage between offices todetermine WBS, then PM and proj team in deliveryoffice responsible for pulling together x x
RT2209
higher chance of success if there is some level ofpersonal connection"we have a PM in each location that's responsible for thebreakout deliverables". Viewed as own little projects,esp for controls, by GVET PM. x x
RT2209
home offices do as much as possible, they know wholocal teams are, so we try to find that local teams sticktogether, global teams do not necessarily.Global try to stick together, but idealistic. Focus onbillability means they have to move people aroundthrough teams x x x
RT2209
focus on personal relationships and getting peole intothe same room physically. Expensive technologieswith cameras and screens to make it feel like team is inthe same place.Having delegates from branch offices and pulling themin to the proj delivery office. regular meetingschedules to keep that relationship moving x x
RT2209teambuilding at early stage is more important and hasmore effect on life of project x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RT2209
Client relationship long termprojects on booksalways depends on financial success of immediateproject but also long term success of operation; do wehave more work coming in, are we able to provide andintegrate with virtual engineering teams, etc.if you've established a 10 yr relationshp and that ends,but you can sell work out of that office (internally),then that's attractive. x
RT2209
project teams will continue to be delivery office andsite based. As time goes on and it's a more commonexperience, will only become more common.Experience will let you understand the impact ofdecisions, and the client has to understand that as well.you can take advantage of GVET with successfulprojects, but when things get out of linet that's wherethe problems will arise because they are more difficultto correct with GVET. x
RT2209
global areas of specialization possible, rolled up by projdelivery teamsreality- clients impact- some clients who have gottenburned on that have said 'nope, never doin that again'.Also resource issue. People who aren't willing to traveldon't work well for GVET, specifically at a leadershiplevel.comes back to basic economics and economies ofscale/specialization x
RT2209
measure success with different strategies. Difficultbecause no 2 proj same, no 2 teams same.Tracking your hours, tracking your efficiencies.Essentially project controls. If you're not dataminingyour project controls across projects, you're missing outon a lot of opportunities. and guess what, a log ofcompanies aren't.you're missing out on a lot of opportunities to figureout what was and was not workingfinding what worked through a sensitivity analysis todetermine what the real variables were that impactedwhat you were seeing. that's very complicated whenyou're talking about billion dollar projects executedacross 4 continents. x x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RT2209
having international experience is the only way to getpeople capable of delivering projects, especially for theproject team, who are capable of delivering projectswith GVET. Being a great PM delivering jobs of 50m$ in PA is a very different thing than a 50m withproject team in India and a job site in Texas. not thesame thing, not the same issues.the more experience you have the more you becomeaware of potential points of complexity where youcould get sideways and you start to know what you canand can't do.i need to try and get connected to this person in acertain way. or sometimes when a person shakes theirhead in a certain way, it means i understand you not thati'm going to give you that. and you ahve to be aware ofthat.your reality isn't always the same thing in every place.and experience is the only way to become aware and ifyou're not aware then you're at risk of making mistakesbecause you didn't know. so the more you movearound, the better. x x
hard factors for motivation, soft keys to success x x x
RE2609
The driver is more towards making sure we canreplicate the same cultural attitude towards ourprojects, and trying to utilize that globally. It's more inline with using the same culture than cost.Obviously the global teams will be a mix of existingDRA people as well as some selected new recruits (onthe new geographical locations) x x x x
RE2609
smooth out local commodity cycles. Reduce your riskprofile by not only focusing on one country. But asyou know, it's no use going to an overseas office andputting up a brand and thinking everything is going towork by just hiring in new people. It's definitely arecipe for disaster. x x x
RE2609
you don't want to be in a hiring and firing mode all thetime. And putting processes and procedures in doesn'tmean you will replicate what we're currently doing. x x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RE2609
M&A in new locations possible without GVET?Expose all offices to skills of global entity.Buy entity with whole intention to use globally throughthe GVET x x
RE2609
Virtual team vs Local hire, cost/engr tradeoffsengr expertise justifies cost increases- exposes eachoffice to global track record. x x x
RE2609
client facing team separate from resources that gettransferred from one job to the next. Utilization doesincrease with efficiency, like production line x x x x
RE2609
knowledge that there is sucecssion to the current teamreduces agency conflict.Execution needs to be mix of local and GVET x x
RE2609GVET needs to be involved from feasibility to getbuyin and responsibility x x
RE2609
different for virtual teams? Teambuilding/trust?Trust immenates from the relationship betweenourselves and clients. Takes time. Repeat businesseverything goes smoother because trust has beenestablished.Client team also has quite a bit at stake as well x x x
RE2609
teambuilding- treatment mode rather than prevention.Underestimated importance of involving moreindividuals at different levels early on x x
RE2609
M&A and moved personnel into common locationfacilitated teambuilding and company cultureexpansion. Now able to integrate into GVET x
RE2609
WBS- appropriate resources for job.Depends on scale and commodity for selectingresources- match skillsets with specific job at hand x
RE2609
WBS scoperegulations, location specific experience for certainscopeless site specific based on skillset x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RE2609
Detailed design- discipline leads can be anywhereall in one central office- Jhbscope definition phase needs to be colocated, preferablywith client, or existing teamdiscipline specific separate from client facing team x x
RE2609GM projects allcoates based on availability for upfront, then discipline specific for detailed/execution x
RE2609
Traits for success - yes you can say someone moreculturally aware and experienced, but that doesn'tnecessarily mean it will be a success x
RE2609
formalized plan not the way to go. Case-by-case, notspecific to DRA's size, needs to remain case-by-case(though certain mount of formalization) regardlessbecause the projects are not all the same so theprocedure cannot be all the same.Project teams need freedom of decision making inorder to keep them accountable.it's not a production line, it's a project. everything isunique by definition. guidelines but not there toperscribe.guided by the way PM are requested to report, and thatin effect guides their way of managing their ownworks. If you ask him to report in a certain way thenhe's going to react in a certain way. he's going to getcontrols in place to create certain results. x x x
RE2609
team staying togetherfunction of availability of work. Definitely work betterwith existing team, but due to size of project team forstudies difficult to move entire teams together. Try tokeep core people together but dependent on teams x x x
RE2609
comparative advantage-technical engineering knowledge trying . pool ofknowledge as much as cost savingsclient facing/execution team- 2 yr medium termdurations to not able to apply comparative advantage tothese roles x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RE2609
duration on a project determines whether it can beGVET member or required to be in the client facingproject team subset of the GVETthe ability fo a resource to be a part of a virtual team isdependent on their duration of involvement (Scott saidsentence x
RE2609
contractors-involving earlier in the GVET, and rather than on acontractor level doing so on a partnership level as a JV.Especially if we don't have a history/trust with thosecontractors x x x
RE2609
bringing them in on the tools side to reducecommunication barrierBIM- building information modeling. Incorporate allstakeholders and information sharing. Start adddingadditional info into the model. Intelligent members,time. no longer bounded by software but byrelevance/desireBIM involves fab/const in earlier stages, expanding theGVET x x x x
RE2609
risk-combination or grouping of new/exisitng employees soyou have a better chance of people with DRA way ofdoing things, bringing in those individuals to guideteam, reduces risk profile of project x x
RR0610
Growing, lot of opportunity and need presence locallychasing work elsewhere, need to bring in pipelinesuccess measuredabove 85% billable to keep staff in officepeople do bits of work for all over to keep them busyand achieve this"they kind of end up doing work all over the place. tokeek them billing hours and not booking to overheads."Pipeline of projects in my region covers the turnovercosts x x
RR0610"Most of the people here are the cleverer ones, sothey're generally in demand globally" x x
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98
IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RR0610
resource forecasting for local. I need to make sure thatmy people here are allocated to projects that I bid on(to keep office busy)."bit of a juggling act" between proposals for localprojects vs billing out on GVET for other offices x x x
RR0610 "we just don't have the army to do what has to be done" x
RR0610 make the lower level roles virtual. x
RR0610
clients want to be in cape town, so we have clientoffices. The clients co-locate.They say ok let's have a meeting to talk aboutwhatever. They want to be able to go down the passageand grab a process engineer, grab a project engineer,whatever. So they want to be able to sit and talk aboutit. so those leads need to know what's going on, and bethe client facing engineer, but at the end of the day theclient doesn't really care who does the drawings x x x x
RR0610
when to hire"that'll be when there's not spare capacity in joburg foroverflow work""allistair's (GM) got the total DRA manplan, so heknow's. So he'll try and steal one of my guys and I'llsay no I've got something lined up for him, and then hewill recruit." x x
RR0610
"we've got issues with australia because the rates aremuch more. Aus can happily outsource to us becauseoru rates are much cheaper, but we can't just push it theother way"one directional GVET due to currency/rates, but thenthings change x x x x
RR0610
we've got the best diamond experience in this office.There was a time when we were trying to do a diamondcenter of excellence so all diamond work would comethrough here. So as soon as there's any diamondrecovery work, they'll send it to us so that Gavin can doit. x x x x
RR0610Gavin went to Stronaway fro commissiong and actuallynow is doing the front end stuff globally as well x x
RR0610employee desire to relocate geographically, DRAwanted to retain the talent x x
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99
IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RR0610when the client heard that we were running it out of theCT office he was quite happy to relocate x x
RR0610
without GVET, could not have taken on these projects.New liberty was 130mUSD, 175,000 man hours and atotal of 330 people booking time with only 25 out ofCT. The 25 out of cape town, they were the leadpeople. In terms of hours booked to the project, those25 were core functions and book the majority of thehours. x x
RR0610
GVET model established once makes the next fall intoplace.There are a few things needed to make the whole thingmore efficient. It's fine if you take a package and sendit out and they send it back, the team checks it andissues it. But if it's somethign that needs moreintegration and checking as you go, then we have moreto work on. x x
RR0610
different from day 1.cross discipline 3D virtual reviews for anythignrequiring lots of interactionwhere it became inefficient, is that there was noengineering input in the drafting center.If you say go draw for a week and then I'll have a lookat you, then they waste a week on the wrong thing,whereas if you're in teh same office as the guy you cansee it and fix it straight away. x x x
RR0610
the 3 marine guys, we have to leverage globallybecause there isn't enough work in Cape Town, orSouth Africa, to do that. x x x
RR0610
training to get invovled in global workforce?Technically once we get work, we can make it happen,but we need to make everyone aware globally of theircapability. x x x
RR0610
always nice to keep a project team together, becausethey know how to work with eachother, but the realityis they need something to do.So if you're lucky, you can keep them together but howto do that across a global environment is tricky. x x x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
RR0610
huge amount of merit to sitting face to face. You caneventually build up these relationships, but at one pointin time you ened to get the whole team togeher for aproject kickoff rather than doing a skype call orsomething. "engineers are still.. strangely enoughhuman" x x
RR0610
if it goes off, some of them to a different time zone,you don't see it until the next day. So you've spent 24hours and 8 hours worth of work, which you are at riskof it being wrong.You can't take your traditional project organogram andsay we're going to farm it out. x
RR0610
if you're outsourcing to a lower cost center, you canprobably cover it. But you can't just say these guys inCT, these in Jhb, this in Perth, etc because every timeyou split it out like that, particularly with the bulkresources, you add in another management orcoordinating level. whether it's a replica of a position,even part time. you're increasing the risk oncomplexity/time spent and unless you can offset that oncost/time with resources it doesn't work.And the higher your burn rate, the higher your risk onoverexpendatures x x x x x
RR0610
early stages, more senior people, and theycommunicate better, smaller focused team, so yea atthat level and the company perspective it lowers risk x x x
RR0610
the tricky part is to know who are the specialistsglobally. We have the best in the world for marinehere, but does anybody in pittsburgh know that?Having that knowledge of where your smarts areglobally needs to be managed and driven, otherwiseyou are going to miss those opportunities. x x
RR0610
IT infrastructure not up to it yet. Try doing a 3D modelreview in CT or to china and you wait 5 minutes for aview to load.There is that kind of internet speed out there, but it'snot in Africa. x x
RR0610
in a company that's been around for 32 years, nobodyhas said "we are going to go into a global virtualenvironment, and what do we need to do that?"because it didn't exist.If we're going to do it, there needs to be a conscious x x x x
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IdentificationCode Idea
General
GeographicExpansion
GVETMotivation
ClientPerspective
SuccessFactor
WBS
Agency/Portfolioconflict
Teambuilding
Measurement
risk
ComparativeAdvantage
Future
Tools
decision and a plan. so infrastructure is going to be oneof the things to impact it's effectiveness.
RP1810
Access to new markets to feed the workflow funnel-1:10 prospective opportunities turn in to a RFQ, 1:10 ofthese turns into a job, so must chase 100 opportunitiesto succeed with 1. when your home market dries up,you need something to fill 100 potentials. so look atnew geographic markets.Make diagram with funnel x
RN0111
"virtual teaming between offices is actually the way ofthe future, if we don't embrace it and actually get verygood at it, our competitors will have a major edge overus." x
RN0111"Just means we have to travel less, so we have moretime to do more work" xCopyright UCT