Practical know-how of the Global Project

Hitoshi Goto

Ukihiko Takagi

In Part 8, we discussed the difference in the warranty period, which should be noted in overseas projects. This time, we will look at the important things to keep in mind regarding local labor laws and contracts.

Multiple-person checking process is mandatory for contracts.

In part 8, we cited an example of the warranty period. In any case, it is a basic requirement of the global PMO to have a single knowledge of the civil code and labor law of the country or region where the PJ is on-going.

With that being said, it is essential to have a process in which contracts are checked by more than one person. In some domestic projects, there are some cases that checking contracts are left to sales or legal departments, but in global projects it is risky to do so.

Of course, it is required to go through legal department and attorneys who are expert in overseas business. This is because checking contract document itself is difficult at the PMO level due to the legal knowledge involved in each country and region. It's better to create a group checking system that includes legal experts.

In terms of intellectual property rights, "dispute location" is also important.

Some points related to labor laws and contracts are shown below.

It is important to make a contracts that take into account the wide variation of business practices in different countries and regions.

Warranty has been described in the prevous part. Another important issue in system development is the problem of intellectual property rights. In Japan, the owner of intellectual property rights is often specified in contracts, but it is even more important to specify them overseas.

The dispute location is also important for intellectual property rights. In the case of intellectual property rights trial court, it will take place in the court of dispute location stated in the contract. If the dispute location is overseas, we need to go on business trip etc for the law court and there is a risk that unexpected expenses occur. This is a burden that cannot be ignored in distant countries and regions such as the United States.

It is also required to clarify the application of labor laws in the countries and regions concerned. In particular, overtime is important. In Brazil and Indonesia, overtime hours of the month is strictly observed. On the other hand, in China it is relatively loose. In South Korea, as in Japan, there is a tendency to work hard even after overtime to protect delivery time. In particular, manager staffs are not very distress about overtime work.

Nevertheless, it is fundamental for global projects to schedule them without overtime (and with buffering during the period).

Two points related to T&M (Time & Material) contracts.

The T&M contract is a method to define only a unit price in advance for a person who wants to secure the resources at a work that is uncertain about scope, and to pay for the hour that they work. However, in China, there is no concept of T&M, and such method cannot be used.

It should also be noted that overseas T&M agreements are likely to lack deliverables. Rather, in the original meaning, it is strange that there are deliverables in a T&M contract. If the scope is clear, it should be fixed fee contract, and in overseas countries this practice is performed.

<<Read [Part 8]Read [Part 10]>>

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