When paradigms shift

Friday, 19 March 2010 08:32

What is different about project management in emerging countries?

Projects not only occur in a social and economic vacuum, but their success is often a function of how well they are embedded in the local institutional framework. The institutional framework reflects the laws, rules and regulations that govern an economy. The institutional environment influences the type of players in a market and the manner in which these players interact with each other. Therefore, unlike a football game that is played along well-established international rules, the rules that dictate projects and an economy vary considerably from one country to the next.

The successful project manager needs to be aware that the project management techniques that work in one country may not be appropriate in other countries.

For the project manager, the challenge also lies in understanding the many market uncertainties that exist in emerging countries and the influence that they may have on the outcome of a project.

Understanding and reducing such uncertainties is critical in determining the successful delivery of a project.

An appreciation of project management in emerging countries starts with an understanding of how projects are delivered in the local environment.

Often, the ‘rules of the game’ that characterise emerging markets have developed over time to mitigate local social, technical and economic risks. It also means that ‘locally grown’ project management techniques have adapted to social, cultural and economic realities.

While these locally developed techniques may be used effectively by local players, they may be unfamiliar to the project manager entering an emerging country.

Therefore, while locally derived project management techniques – which at first sight may seem inefficient – may actually be highly effective in addressing local issues and should, when appropriate, be incorporated in project projects.

Analysing the characteristics of real estate markets in emerging countries

Although project management has not directly developed a body of knowledge that focuses on the integration of project management techniques with social and economic institutions in emerging countries, the problem has received significant attention in the existing economic literature.

Economic theory and New Institutional Economics (NIE), in particular, have played a role in fostering an understanding of economic activity beyond seeing land, labour and capital merely as factors of production which need to be combined efficiently in a company structure.

NIE is centred around the proposition that the structure and outcome of economies reflects the rules that drive them. It also emphasises that these rules are developed by human social interaction.

Therefore, society is in a position to change market characteristics when existing arrangements are no longer efficient or fail to serve the interests of a particular political or business group.

For the foreign investor or project manager, the challenge lies in not only understanding the national rules and regulations that define markets at different levels, but it also means understanding the formal and informal arrangements that define markets.

Keogh & D’Arcy (1999) underline the rules and regulations that define markets and can be explained in terms of three spheres of institutional hierarchy.

The first sphere incorporates the formal arrangements that are of a political, social and economic nature. These include the legislative environment that characterises a market.

At the next level, the property market itself is considered as an institution, with certain characteristics that are of a formal and informal nature.

The third sphere incorporates the way in which organisations (employees, the banking sector, land owners and other stakeholders) interact formally and informally with each other.

For the project manager, the arrangements at the legislative and constitutional level are often easy to understand and tend to be relatively stable. However, the situation becomes more complicated once the investor moves to the spheres characterised by formal as well as informal arrangements.

More often than not, an understanding of informal market arrangements requires the inclusion of local partners in a project.

Emerging countries are different

The unique paradigm in which project management occurs in emerging countries can be illustrated by looking at the way property development occurs in emerging countries.

While the steps of the property development process in industrialised countries flows from town planning, service delivery, construction and ultimately to occupation, in emerging countries the sequence is often reversed; thus, it starts with occupation and ends with town planning.

This suggests that property development in emerging countries needs to be looked at with a very different paradigm. Using the wrong paradigm could have severe delivery implications.

South Africa provides an interesting case study of the forces that mould markets and projects in emerging countries.

For instance, the need to transform South African society has resulted in an institutional environment that promotes broad-based black economic empowerment (BBBEE).

This invariably means that projects in South Africa take cognisance of transformational requirements that influence the type of projects which are undertaken, how they are undertaken, and for whom they are undertaken.

It often means finding project management techniques that are able to meet specific social objectives.

For the project manager, the decision to operate in foreign markets , and emerging countries in particular, is associated often with high levels of uncertainties.

Yet, if the cost of reducing such uncertainties are too high, and cannot be mitigated through appropriate project management, a project may not meet its objectives.

Although projects increasingly are being managed across national boundaries, the need to adapt project management techniques to local conditions remains critical.

Professor Francois Viruly

Head: School of Construction Economics and Management

University of the Witwatersrand

He is also the director of Viruly Consulting Property Economists and Advisors

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Figure 1: The direction of property development in industrialised and emerging countries

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