Excerpt
Table of Content
Executive Summary
List of Abbreviations
List of Figures
1 Introduction
2 Problem Definition
3 Objectives
4 Methodology
5 Accounting and evaluation principles
5.1 Accounting principles
5.2 Accounting bans, rules and options
5.3. Evaluation principles
5.4 Valuation standards according to HGB
6 Evaluation and accounting according to German Commercial Code
6.1 Accounting of non-current assets (invested capital)
6.2 Accounting of current assets (working capital)
6.3 Accounting of liabilities (accounts payable)
6.4 Practical example: accouting at Daimler AG
7 Examples (JW)
8 Conclusion (JW)
9 ITM (CO + JW)
10 Bibliography
Executive Summary (JW)
In this assignment the authors will look into the subject of challenges and best practices in international projects. A single examination of all the various challenges in the world of global project management like multicultural communication, geographical distance or asynchronous interactions - resulting from multiple systems happening and taking place in more than one location and are requiring different technological knowledge for e.g. - is confronted to a broad presentation, examination and evaluation of best practices: namely concrete business orientated solutions like global teams, collaborative tools or global project organizations. The theoretical introductory part exposes lack of sensitivity to local cultures, the general issue of complexity which arises in lack of control, variety of regulations and rules, different time zones and also the “treatment of the international project as a standard project” as main challenges for and reasons for failure of many international projects. All these rather impeding and logically challenging findings are visibly summarized in the “Five Dimensions of IP” figure, concluding that there are five dimensions which will affect every project in a different manner and in different decrees of intensity. Next, there is the description and visualization of new, interesting international PM tools like the risk register, quality gates. Additionally the authors come up with general rules and advice as the agreement on binding communication rules, templates and one language for successfully working global project team. In the last part the uneven challenges and best practices couples are kind of “married” by presenting two successful international projects: The SWAP project from the leading central European energy supply company OMV, where the superior project manager Barbara Krappinger succeeded in overcoming many cultural and geographical challenges and a major event management project from the Siemens.
List of Abbreviations
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List of Figures
Figure 1 – Comparison standard project and international project
Figure 2 – Seven main challenges in IPs according to LIENTZ & REA (2003)
Figure 3 – Five dimensions in IPs according to BINDER et al (2010)
Figure 4 – Cultural dependable expectations towards the project manager
Figure 5 – Overview of “Best Practices” for international PM
Figure 6 – Hall and Hall´s Modell: High-Context vs. Low-Context Cultures
Figure 7 – Occurrence of the Success Factors in the Literature
Figure 8 – Evaluation of Best Practice Tools and Techniques for IPM
Figure 9 – Portfolio of selected global risk factors in international projects
Figure 10 – Major phases of a general risk management cycle
Figure 11 – Challenges & Best Practices for “SWAP” (OMV Group)
Figure 12 – Challenges & Best Practices for “EURO 2008” (Siemens AG)
1 Introduction
Although the business culture and especially international operating companies in Germany have undergone major changes and reorganizations due to the globalization and the digitalization of the world-wide business landscape there is a kind of stability and uniformity in the area of accounting provided with the HGB: The German “Handelsgesetzbuch” (HGB or “commercial code”) is legislative in origin[1] and has become effective in January 1st 1900 together with the BGB. Based on the so-called “subjective system”[2], “written in relatively abstractive terms”, comprising altogether 905 paragraphs split up in five ledgers in its current edition, the HGB is characterized as:
- “undoubtedly conservative accounting system[3] (2010)
- “ample opportunity for German managers to bend financial reporting (…) to meet corporate an personal objectives”[4] (2009)
- “allow firms to accrue future expenses”
For all the above mentioned characteristics or assumptions the following chapters will describe, analyze and try to explain whether there are certain accounting and reporting principles in the HGB which allow German companies to manipulate “the books” or build up hidden reserves. This assignment seeks to answer these speculations in scientific literature.
2 Problem Definition
In contrast to Anglo-Saxon driven accounting standards and principles as the U.S. GAAP which are based on a true and fair perspective, the HGB is very prudent, conservative and its five ledgers with many articles provide greater or even far to much flexibility. The challenge of this assignment is to cover up and explain where in particular the principles of recognition and valuation do permit or even encourage the allowance of hidden provisions and reserves.
3 Objectives
In case of accounting, taxation or investment related topics for essays and papers the major aim is most often to present numbers, formulas, scenarios and calculations which prove the performance, efficiency or benefits of new principles and proceedings. However for this assignment the first objective is to provide an overview of the core aspects of accounting and valuation principles of the German HGB and the second objective lies in presenting an “example of use” to inherit and better visualize the theoretical facts. The focus of the examination is directed towards “international” and “global” issues.
4 Methodology
To provide an overview of the topic the author screened several expert literature on GAAP and used the HGB in its current edition for valid and current legal information. In addition, the authors interviewed Barbara Krappinger, the Austrian PM of the year 2009, for insights on a concrete example. Own experience and group discussions complete the sources.
5. Main part
5.1 Definition of international projects
The PMBOK® Guide 2008 defines the project as a "a temporary endeavor undertaken to create a unique product, service, or result." Important is its limited character in labor, schedule and budget. Whereas a standard project in general takes place within a single organization and a single country, an international project involves people from various countries, can be conducted in different countries, locations, and involves different entities, business units and cultures.[5] For a more detailed description of main differences please compare figure 1 below.
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Figure 1 – Comparison standard project and international project
As can be seen above from figure 1, international projects are defined through plural nouns and adjectives such as multiple, varied, variations or more complex. Whereas standard projects can be seen within one single company, with one single company culture, and regulations and self-interest are more easily understood. Projects that are conducted internationally are way more complex and culturally diversified. Of course, the whole issue of complexity and also cultures applies too for national big projects. On the one hand, huge national projects also can involve different company cultures and are therefore also very multifaceted, too. On the other hand, huge national projects are seldom “national” any longer. Big companies operate across borders, employ people from different nationalities or involve foreign experts. A clear distinction would rather be very artificial. Anyhow, the paper likes to stress challenges and later on best practices that differ from other projects by highlighting issues that derive from the fact that international projects - in contrast to standard projects - involve people from different cultural backgrounds and cultures.
5.2 Challenges in international projects
In addition to the challenges of standard projects, IPs impose – due to the different countries and cultures involved - additional challenges to PMs. For the presentation the authors relied on the findings of Lientz & Rea (2003). Which will be shown in 5.2.1. Within the scope of class feedback and later on group discussion the authors looked for a more sound model to describe the differences and will therefore be presenting the 5 dimensions of Jean Binder, a PM with many years of IPM experience.
5.2.1 Seven main issues in IPs according to LIENTZ & REA (2003)
Lientz & Rea (2003) stress out seven main issues why international projects fail. The findings of can be seen in figure 2.
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Figure 2 – Seven main challenges in IPs according to LIENTZ & REA (2003)
Source: Compare Lientz, B & Rea, K. (2003), p.13
Reviewing the list, it can be stated that at least five of the seven listed factors are applicable as well for bigger projects. Even for smaller projects some points are applicable, e.g. lack of measurement or micromanagement can pose a problem to every projects.
Only two factors are valid to differ in international projects: “Lack of sensitivity to the local culture” and “the treatment of the IP as a standard project”. The findings of Lientz & Rea (2003) seem to be incomplete and not stressing on real differences, the authors therefore would like to present different findings in the next chapter and go into a bit more detail.
5.2.2 The five Dimensions of IPs according to BINDER et al (2010)
According to Jean Binder (2010), a very experienced expert in IPM that publishes articles as well for the IMPA, there are mainly five dimensions [6] that cause major problems in managing international projects.[7] Please compare figure 3 on the following page.
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Figure 3 - Five dimensions in IPs according to BINDER et al (2010)
Source: Own graph. Five dimensions derived from Binder et al (2010), p.4-7
This model is not yet published and was first presented by Binder, J., Gardiner, P.D., and Ritchie, J.M. in 2009 at the PMI Global Congress 2009 EMEA – Conference in Amsterdam. The model in mentioned in an article of the annual publication of the IMPA.[8] A model of success factors for Global Project Management. These five dimensions will affect every project in a different manner and in different decrees of intensity, but it is certain that they will affect every IP in the one way or another. In the following the five dimensions are explained in a more detail.
[...]
[1] Ball (2003), p.120
[2] Compare: Fleischer (2010), p. IX
[3] Adamek and Kaserer (2006), p.8
[4] http://www.tonybates.ca/2009/09/03/why-the-university-of-illinois-global-campus-project-failed/ [accessed April 2010]
[5] Compare Lientz, B. & Rea, K. (2003), p.11
[6] Binder et al (2010) “A model of success factors for Global Project Management”, in IPMA – Project Perspectives 2010, 4-9, accessed: http://www.ipma.com [April 7th, 2009]
[7] Binder makes a distinction between international and global projects. The authors find the differentiation rather artificial when talking about challenges and best practices and therefore will neglect the fact. For further reading compare Binder (2007), p.18
[8] Binder et al (2010) “A model of success factors for Global Project Management”, in IPMA – Project Perspectives 2010, 4-9, accessed: http://www.ipma.com [April 7th, 2010]