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There Is A Lack Of Control Since The Project Is A Joint Venture
Oct 03,2007 00:00
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admin
There Is A Lack Of Control Since The Project Is A Joint Venture
There are many instances where the operations in specific
locations are jointly owned and controlled by several firms. These firms
typically have very different cultures and methods of management. Managing a
joint venture project is very challenging for these reasons. Since the project
is being carried out by equal partners, it is very difficult to establish
control. Instead, firms typically create coordination. Unfortunately, this is
not the same as control. When actions are required, it may take too long to get
decisions since each party must understand the situation and agree on what is to
be done—a very tall order.
Impact
The joint venture sounded like a good idea. The problem was
that little thought was given to how things other than daily work would be done.
When confronted by a project, just getting the project started is a major
challenge. In one such firm, it took 3 months to get any substantial project
approved. Managers in the field quickly learned that they had to work informally
and not call the work a project— to avoid the bureaucracy. The impact is that
the work is driven underground.
Prevention
At the time a joint venture is established, the ground rules
for projects as well as the daily management of work need to be established. It
is recommended that several sample projects be dry run so that guidelines for
projects can be set up. In one joint venture each partner firm supplied managers
in alternate years. This sounded like a good idea in theory since it established
formal authority. However, many problems arose. The cultures of the two firms
were almost diametrically opposite. In one there was a formal structure; in the
other managers were encouraged to be entrepreneurial. This led to differences in
project reporting, control, and direction. If a project spanned the period of
the end of the year, there were likely to be many changes to the active projects
due to this major cultural difference.
Action
It is better to surface
a number of smaller issues to the management of both firms than to wait until a
major crisis arises. This will pave the way for better ways of addressing
problems later. An active project can be used as an example and standardized
reporting and review methods established.
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