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Home : International Project Management : Savings From A Project Are Not Attainable Because Of Local Laws
Savings From A Project Are Not Attainable Because Of Local LawsSavings From A Project Are Not Attainable Because Of Local LawsThere are many local regulations that inhibit the attainment of savings. One example is a restriction on currency conversion and transfer out of the country. The savings may have to remain in the country. A second case is where there are strong labor laws that protect jobs and make it difficult to downsize. That is why, for example, many European firms first downsize and obtain economies in other continents. Their labor laws are much less restrictive. While the short-term benefits are obvious to the job market, the long-term effect is to shift employment to countries where the labor laws are more flexible. ImpactIn many projects there is little thought given to how the benefits and savings will be realized. People assume that there will be the same benefits as at headquarters. They later find out to their dismay that there are no savings in some locations. Management may then try to force economies. Future projects are then discouraged. PreventionPrevention is really simpler than it first appears. The firm needs to be aware of the local laws and regulations. Then they can plan how to take advantage of the savings in other ways. For example, if there is a currency restriction, then other uses of the funds from the project results can be found in the country. Charitable projects might be undertaken. Parts of a plant can be expanded. In the case where people cannot be terminated, then the employees can be redirected into other work. In one southeast Asia country we organized such an effort. Both quality and overall productivity improved. ActionIf a project is started and the benefits are not thought through, then a possible action is to initiate another project to determine how the benefits can be used locally. 274
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