Going international

Dear David,
I read your article, “International strategies,” in the February 2009 issue of CE News, and found it very informative. Do you have any suggestions on how my firm should begin the process of going international?
J.B., Ill.

Dear J.B.,
As the article suggests, international work can be both frustrating and rewarding. Here are a few general guidelines for beginning the process of working internationally, assuming that you will be attempting to start up an international practice. These guidelines are based on my own experience as a small-business principal, trying to self-finance my foray into the international arena in the developing world. Larger, well-capitalized firms would obviously have a much different approach than what I am suggesting.

My first suggestion is to focus on a country that you know fairly well and where you have local contacts and potential partners whom you trust — I have found that local partners are a must. The partner should be trustworthy, but I still suggest using the old Ronald Reagan strategy, “trust but verify.” Being double-crossed by a supposedly trustworthy local partner is not a pleasant experience (trust me on this) and it can be costly. Assuming you find this partner, explain to them what you do and what you can bring to the table in the selected country, and solicit their involvement in finding projects and gaining access for you to the decision makers.

Starting out, it may make sense to work mainly on projects where your company is tied to the financing in some way. Usually this means you will be responsible for obtaining the financing. Using this approach, you will have a much better comfort level regarding payment since you will be in the financing loop. I suggest finding a need (which is usually the easy part), identifying a finance approach that will match up with the need, and selling the project to the client as a total package.

I have found that the financing is almost always the key for relatively small- to medium-sized projects. Most of the countries where I have worked have indigenous engineers who are quite capable of providing the engineering, construction management, and other technical services required by this project type, but may have no familiarity with international project financing and the related paperwork. For this reason, unless the project is financed locally, it remains a need that cannot be met. Cherry-pick among needs to find the one that best meets your expertise and resources.

The Export-Import Bank of the United States is a great resource for funding projects that have significant U.S. content. Check the bank’s Country Limitation Schedule (www.exim.gov) to determine availability in the specific country in which you are working. Working with multi-lateral banks — World Bank, Inter-American Development Bank, African Development Bank, etc. — is another approach, but it will take a longer time to develop because they usually have a long procedural pipeline for projects. These organizations also have very specific open-competition procurement requirements that may minimize or eliminate the possibility of sole-sourcing.

International competition
Dear David,
In your opinion, how competitive are U.S.-based engineering firms in the international market?
S.F., Tenn.

Dear S.F.,
Although U.S.-based engineering firms remain competitive internationally based on their expertise and level of service, they face serious challenges when competing for international projects. The reasons for these challenges include subsidies and political lobbying from a competitor company’s government, corruption, and an uneven regulatory playing field.

Government promotion of the private sector may include concessionary financing and political lobbying on behalf of a business. The Organization for Economic Cooperation and Development (OECD) was formed to regulate this type of activity, but its membership of 30 countries has some notable exceptions, such as China.

The Foreign Corrupt Practices Act places strict limitations on U.S. companies with regard to payments to foreign officials and other inducements to gain work.

David M. Roebuck, P.E., CCM, LEED AP, is an Athens, Ga.-based professional engineer with the firm of Armentrout Roebuck Matheny Consulting Group. He has worked internationally in Central Asia, Africa, South America, and the Caribbean. He can be contacted at droebuck@armentrout-roebuck.com. Get answers to your questions about design firm and project management, finances, marketing, international engineering, and related topics by sending them to Q&A c/o: CE News, 330 N. Wabash, Suite 2525, Chicago, IL 60611, or bdrake@stagnitomedia.com. Include your name and telephone number in all correspondence. Your name will not be used in connection with published questions.

Posted in Uncategorized | January 29th, 2014 by

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