Planning an International Practice
0By Bradford Perkins, FAIA MRAIC AICP
0Many firms – ours included – stumble into their first international project. It is not uncommon to react like a dog that chases a bus and, to its surprise, catches it. Then what?
0Most experienced firms agree that any international practice should be governed by a plan – even if it is developed after securing the first one or two projects. The costs and risks of international practice are too great to just play it by ear.
0There is no standard format for a plan but there are at least six basic issues that should be addressed. These six include the following:
0The first questions should be:
0• What makes working in this country of interest?
0• Is there a need for our services? And for how long?
0• Are good design and quality building valued?
0• Who else is there?
0• What does it take to be competitive?
0• Are the prevailing fee levels adequate?
0• Can the fees be paid in American dollars and are there tax issues?
0• What special skills, resources, and advisors are needed?
0• What have the major risks and rewards been for the firms already working in the country?
0• Are there local resources that can help us get and do the work efficiently?
0Often the best sources for answers to these questions are other firms with experience in the country. Some of this is shared in conferences, some comes from friends in other firms, and some advice comes from other firms in related disciplines – engineers, builders and consultants. Useful information can also be obtained from the commercial section of the country’s U.S. Embassy; a variety of book, magazine and online sources; and the first-hand impressions gained in an exploratory trip.
0The AIA Handbook chapter on “Practicing in a Global Market” also recommends: “You can learn a lot about the history of a nation and the values of its people from literature, guidebooks, travelogues, and by attending seminars, all before you go abroad.” Some combination of these sources is usually enough to develop preliminary answers to the questions listed above. Only first-hand experience and a constant effort to learn about working in a country will result in the answers needed to be really successful.
0Setting realistic goals is an important part of any plan.
0• What country or countries will be the primary focus?
0• What projects or project types will be targeted?
0• How much time and expense will be budgeted?
0• What results (new projects, types of projects, sales revenues, profits, etc.) make the effort worthwhile?
0• What results will trigger abandonment of the effort?
0• Does the long-term strategy involve a commitment to a permanent presence in the country? Will it be a marketing or representative office, a local technical liaison and support office, or an office able to offer services on its own?
An Evaluation of Strengths and Weaknesses
0The first step toward achieving the goals is often a realistic evaluation of the firm’s strengths and weaknesses. A recognized specialty, size, strong contacts overseas, an able local partner, management depth, and spare financial resources are all important strengths. Even with some or all of these, a firm must ask itself:
0• Are my services needed in the target country?
0• Are we competitive with the firms – international and local – that we will be competing with?
0• Do we have the contacts, knowledge and local relationships to operate effectively in the country?
0• Can we communicate effectively?
0• Can we spare the senior management time required?
0• Do we have the financial resources to ante-up for the initial effort?
0If the answer to any of these questions is no or maybe, the plan should include proactive measures to compensate for the perceived weakness(es). The right local adviser, a specialty consultant, and/or a joint venture partner or team with complementary skills and resources are just some of the ways to deal with a gap in the firm’s capabilities.
A Marketing Plan
0This part of the plan should cover all of the major issues in any marketing plan:
01. How do we generate leads?
02. How do we qualify leads and determine whether they are worth pursuing?
03. Who is going to follow up and how?
04. What is the normal process? Is it qualifications based, is it fee based, is it a design competition or is it some other process unique to the country? While U.S. and Canadian clients tend to follow North American practices for their projects overseas, most foreign clients do not. Many foreign clients like to see some work up front before selecting an architect. In some cases this is in the form of legitimate competitions and and in many cases it is just clients looking for free work to help them make a choice. Therefore, it is essential to research how the process works in each country of interest and to determine whether the selection process is acceptable.
05. What are the prevailing fee levels and how are contracts structured to keep them adequate?
06. Who is going to make the sales presentations and what are the important issues? Many firms work hard to establish a local network of advisors, associate firms and friends if they intend to make a major commitment to a particular country. Other firms focus on U.S. clients and the Federal Government, which actually provide the majority of international billings at many firms.
07. Are there government resources that can help us with introductions and marketing assistance?
08. What special skills are required to be successful? The marketing skills a firm has acquired in North America are usually relevant to international work, but there are new skills required in almost every foreign country.
Management and Operations
0This part of the plan is even more important than is the case of plans for a domestic practice initiative. Working internationally presents new and more complex challenges. Among the most common issues to be addressed are the following:
0• Who is going to manage the marketing effort and who is going to follow through if projects are obtained?
0• What will be done in the home office and what will be done in the country?
0• How will projects be done so that travel and other direct costs are minimized?
0• What local resources are available to facilitate projects?
0• What technology is necessary to facilitate the work?
0• What steps (registration, etc.) do we have to take to operate legally with minimum tax exposure?
0It is important to remember that international work requires the commitment of senior people. What is more, when they are 6 – 12 time zones away, they must be able to operate very independently. Appropriate and skilled local support as well as a reliable technology umbilical cord to the main office are very important.
0Many international projects cannot afford large teams traveling to the site. What is more, few firms can afford to have large numbers of senior people away from the office at the same time. Both of these facts make it important for firms managing the people who do go overseas to have the right people working within a well thought-out operations plan.
0The final part of a basic plan is a financial structure and budget. This includes answers to such basic questions as:
0• What should the budget be for exploratory trips, marketing, and (if part of the process) competitions?
0• How much is the maximum that can be invested before project income starts coming in?
0• What is the projected cash flow for the first 12 – 24 months of operations?
0• What are the accrual-basis projections for revenues and expenses for the first 12 – 24 months? While accurate projections are always difficult to calculate, the effort will clearly bring out serious issues. Most experienced firms will reflect that their initial forays into international practice cost far more than they had expected. Moreover, if they had been working within a carefully constructed budget, they might not have invested so much.
0Together, these six basic parts of a plan can set an initial framework for either a first international effort or for the first steps in a new country.
About the Author: Bradford Perkins, FAIA MRAIC AICP is the Founder and Chairman of Perkins Eastman Architects, a 600 person firm based in New York with seven other US offices and five international offices. He is the author of International Practice for Architects published by John Wiley & Sons. He has worked in more than 30 countries around the world over the last 40 years.