On Managing Cultural Conflicts In International Project Contracting

The twenty-first century is being shaped by global political, social, and economic events. With the development of globalization, international project contracting has become one of the most important modes of international cooperation. There is a broad international market for industrial lines such as electricity industry, telecom industry and construction industry. The risks are at least as great as those encountered in domestic operations. Moreover, new cultures and environments will challenge patience, understanding, and ingenuity, since the environment of host country is so much different from home country. Thus the study on project risk management has drawn scholars' attention. Most of scholars focus on technical risks in international project contracting, while other non-technical risks are seldom touched. Actually, international project contractor generally takes more time, costs more money, and involves more steps than gets work done in home country. There are more subtle differences in culture, management styles, negotiation techniques, labor relations, and so on. Those "understoods" that are not understood anymore spring up from the most unsuspecting sources and cause the most unexpected conflicts. Consequently, to manage cultural conflict in the international project is a must.Based on literature review on cultural issues, conflict management in business, and risk management in international project contracting, this dissertation analyzes cultural conflicts in the processes of international project contracting, including bidding, negotiating, designing, contract management, and construction. Culture, however, is subject to change, and international project is non-permanent, so the cultural conflict can be managed. Strategies for managing cultural conflict have been concluded, which can be a guideline for international project contracting management.Case study method is applied to support the points and argument. A senior project manager from Continental-GeoPetro Co., Ltd., who is in charge of Bengara-II Block Project in Indonesia, was interviewed. The case study is based on the interview.