Introduction
The other major challenges that were noted are related to the economic disruptions because of the business cycles that are exaggerated. If these economic fluctuations are accompanied by exchange rate fluctuations, this could have an effect on the cash flow for the contractors, especially if their payments are denominated in the local currency. In addition, there is a greater likelihood that the economic fluctuations might be accompanied by high inflation rates. This could end up increasing the cost of materials used in the construction process1.
Additionally, there are terrorism threats given that there is a lot of organized crime in the region. Terrorism threats could affect the ability of the contractor to finish up the work on time as his operations could be disrupted because the workers may not be willing to work in situations where their security is threatened. Furthermore, this could result in a situation where the workers demand a higher pay to compensate them for working in an insecure environment. This could drive up the cost of operations with the net result being a reduction in the profitability of the venture.
Moreover, there could be a challenge regarding the policies on foreign employees in the region. This is especially acute in those countries where the law demands that a certain percentage of the workforce must be citizens of those respective countries. This would be critical especially in situations where there is a need to have a large workforce of skilled employees, and they cannot be sourced in the country where the contract is being undertaken. Consequently, there might be a lot of paperwork required for foreigners wishing to work in those countries.
Regional insecurity can also negatively impact the economy and bring about economic instability. This could, in turn, affect the ability of the contractor to deliver on time due to cash constraints given that the profit margins in this industry are thin and any disruption in the cash flow, no matter how small, could have a big impact on his ability to deliver satisfactorily2.
It must also be noted that the global economic crisis in 2008 influenced the countries in that region mostly. Consequently, a lot of customers defaulted on their payments, and the development companies that were funding those contracts were unable to continue. Subsequently, this resulted to a lot of contracts being cancelled. This had an effect of eroding any profits that the contractors may have anticipated at the completion of those projects.
This worldwide economic downturn had an effect of increasing competition among the contractors as they now had to contend with diminished opportunities. This impacted negatively their profit margins which were drastically reduced. This led to a situation where a lot of contractors were forced to leave as it was no longer viable to continue operating in that country. As a result, the remaining contractors had to contend with an even bigger challenge of raising finances to sustain their operations in the country. This indicates that only those contractors who are financially strong will be able to survive in that environment.
Another adverse effect of the economic meltdown was that prior to it, the customers had been paying their bills on time. However, the global economic crisis affected their ability to pay on time. This had a severe effect on the cash flow for the contractors, which hampered their ability to purchase the materials required for the construction3.
Additionally, it must be noted that the Australian contractors find the operating environment in the Emirates very challenging. There is sometimes an erroneous perception that the operating environment is somewhat similar to the one found in Australia. However, it must be appreciated that different countries have different operating environments. Therefore, there is a need to have patience in order to acclimatize to the business environment in that country. The contractors also require a lot of support from the local government to adapt although this support is sometimes not extended to them.
The other challenge that the contractors face pertains to the issue of recruitment. This implies that it is very difficult to identify, recruit, and retain people to work in the emirates because Australia has a very strong economy with very good prospects for employment. At the same time, the standards of living in Australia are superior to those in the Middle East. For this reason, a lot of people are not interested in working in that region. This puts a considerable strain on the contractors as they have to look for skilled professionals from Australia that have to be lured with attractive perks.
There has also been political upheavals and unrest, which have taken place in the Middle East as well as in North Africa. This has impacted the political stability of the countries in that region. Nonetheless, it must be appreciated that the upheavals are likely to have positive impact on the construction prospects in the region due to the reconstruction process.
The Australian contractors in the Emirates have also to contend with the issue of cultural differences4. It has been said that the Emirates is the only place where the contrast between the cultures in the west and east is more pronounced. During the early stages of the growth of the economy, the country required a lot of skilled workers from the west. For this reason, the authorities turned a blind eye to what can be considered the western culture, which to some extent is repugnant to the Emiratis.
However, it must be appreciated that at that time there were some very sharp differences in culture especially on issues pertaining to the treatment of the females. This had the effect of discouraging the foreign contractors who might not be comfortable with that aspect of the Emiratis’ culture. Another challenge that the Australian contractors are likely to face is loneliness. Loneliness is engendered by the cultural differences, finances, the treatment of women, and the prolonged business cycles in the economy. More critically, loneliness will be as a result of the differences in culture that is sometimes unbearable to those who are not accustomed to it.
The Australian contractors also have to grapple with the high cost of living that is prevalent in the Emirates because the cost of living in the Emirates is comparatively higher than in most counties in the west. This can be attributed to the fact most products and services in that country are relatively expensive, and the employment opportunities, once secured, attract high income especially for those highly skilled employees.
The other issue that is likely impact on the Australian contractors is the relationship issue. This issue is likely to impact on those contactors who move into the country with their families, since the culture in the emirates is quite different from that in the west, especially on the way in which the women are treated. While this may not impact on the operations of the project directly, it is likely to affect the performance of the contractors indirectly. This can be illustrated in that, if they are not settled in their minds due to relational issues, they are less likely to concentrate fully on their projects.
Another issue that needs to be considered is the health care for the contractors working in the emirates5. It must be noted that the emirates has a superior health care system, which is comparable to the one found in the western countries. However, it is also very costly and it would be prudent for the contractor to ensure that his workers have an adequate health care insurance cover. This would be very beneficial in situations in which an employee has been involved in an accident, and may require hospitalization.
It has also been adduced that the authorities in the emirates tend to take instant decision which sometimes cannot be appealed against. This is in sharp contrast to the western countries where they are accustomed to decisions being arrived at by the authority using a pre-determined process. In addition, if any party feels that the decision taken against them is unfair, they can always appeal against it. The other issue that the contractors have to contend with is the red tape. The authorities in the emirates are known for their bureaucratic tendencies. This has an adverse effect on the operation of the contractors especially in situations where there is some approval that has to be sought concerning the project. While it is understandable that the red tape is meant to ensure that there is as little favoritism as practicably possible, it is also evident that it does lead to some bottle-necks as far as the operation of the contractors is concerned.
How to respond to the challenges
Regarding the exchange rate fluctuations that are as a result of economic disruptions, the contractors could ask for their payments to be made in their home currencies. This would shield them from losses that could emanate from the fluctuations in the foreign exchange rates. Similarly, the contractors could put in place measures that can help in shielding them against the effects of inflation. This could even entail buying the required materials in advance because inflation could have the effect of increasing the cost of the entire project with a subsequent decline in profits6.
In areas where there is a possibility of terrorism threats, the contractors could liaise with the relevant authority so that they can be accorded the necessary security. This would have the effect of deterring the criminal groups from posing a danger to the contractors as they go on with their operations. In the worst case scenario, the contractor should consider declining to take up the contract especially in situations in which the local government is not willing to provide the necessary security. Given that the employees may be operating in high risk area, the company should also consider giving them ample security as they carry out their duties as well as well as offer them good remuneration. This would help the contactors to attract the skilled personnel that may be required for the successful operation and completion of the contract.
To deal with the issues of the policy on foreign workers, the contractors should always ensure that they adhere to the regulations. This would ensure that they are not in conflict with the authorities in those countries. In this regard, they should have all the necessary papers for all their employers. Additionally, they should have the requisite number of local people employed in their ventures. This would help the contractor to avoid the hefty fees that come with the legal fees that would ensue, in case a legal suit is brought against them.
In order to effectively deal with the competition, there is need for the contractors to deliver high quality products. This would give them a competitive edge against the other contractors. Additionally, every contractor should strive to cultivate a positive image, which can go a long way in endearing him to the clients. To maintain this image, the contractor should ensure that neither he nor his employees are allowed to behave in a manner, which contravenes either the legal statute or the moral values of that country.
Additionally, it must be appreciated that there could be challenges in terms of finances for the contractors operating in a foreign country. For this reason, the contractor should contemplate seeking for finance from their home countries, or even ensure that they have a sufficient capital base to enable them to effectively complete the projects that may have been entrusted to them. Before embarking on any contact in a foreign country, the contractor should make a point of scanning the operating environment. This would enable them to note any potential threats that may hinder their work. In this way, they are going to be in a better position to put in place the necessary measures needed to address those challenges. This would prevent them from having the perception that the operating environment is similar to the one found in Australia. As earlier mentioned the contractors should seek to have good working relationship with the relevant authorities since they can be instrumental in helping the contractor to adapt to the new operating environment.
To address the issue of recruitment, the contractors should have a recruitment policy that can be relied upon to attract new employees7. This recruitment policy should spell out the monetary benefits that the employees are likely to get by working for the contractor. Additionally, the recruitment policy should also be clear on the other benefits that the employees are likely to get as well as indicate the possible growth and development opportunities that are provided by the company to its employees. This would help the company to have the necessary skilled employees who are going to help the contractor to carry out their operations efficiently.
The political upheavals that have taken place in the Arab countries do not necessarily have to be disadvantageous to the contractors. With the coming of the new regimes, there is likely to be a desire by those in power to revamp or even build new infrastructure in a bid to shore up their popularity. Consequently, there is a high probability that there will be a lot of opportunities for the contractors who are based in those counties. On the issue of differences in cultures, the foreign contractors must realize that they must look for ways of conforming to the culture of the place in which they are working, because failure to do this will have the effect of escalating the conflict between the emirates and the foreign nationals. Subsequently, and this could negatively affect the operations of the contractors.
One of the ways in which loneliness can be dealt with is by finding fellow contractors from the some nationality, who can be very instrumental in helping them to settle down. In addition, the contractors should also ensure that they deal with the issue about finances to ensure that they are not stranded and lonely in the emirates. Moreover, the Australian contractors can deal with the issue of loneliness by ensuring that they have someone to whom they can vent their feelings. This is very important as it facilitates the release of powerful emotions, which can become destructive if not ventilated.
To overcome the challenge of the high cost of living, the contractors should do financial planning prior to undertaking the projects in the emirates8. Despite the fact that the country has the best facilities and the standard of living is quite high, the cost of living is equally high. For this reason, good financial planning should be preceded by a thorough comparison of the cost of living in the emirates with those of the other countries in the west. This will ensure that the Australian contractors are not caught off-guard upon getting to the emirates because of the high cost of living.
It has been said that relational issues can only be solved by addressing them in the right way. However, it must be clear to the contractors that they cannot win the battle against the deeply entrenched Arab culture in the emirates. For this reason, for instance, the women should be aware of the expectations that the Arab culture has about them. This would go a long way in stemming the possibility of these cultural conflicts to escalate into relational issues.
To avoid a situation in which the authorities have to make unpleasant decisions against the contractors, it is prudent for the contractors to always ensure that they abide with the legal provisions in the emirates. This would ensure that they do not have to be on the receiving end of such kind of decisions, which could have an impact on their operations, and on their ability to deliver the projects on time.
While there is very little that the contractors can do regarding government’s red tape, they can greatly benefit from having adequate information concerning the procedures required by the relevant authorities. In this way, at least they can cut back on the time that would be spent in trying to get government’s approval on some projects.
Performance indicators to measure cultural preparedness for major challenges
One of the performance indicators that show the cultural preparedness of the Australian contractors is the cultural awareness9, which entails carrying out a background check of the culture of the Emiratis before commencing with the project. This is useful since the contractors are not caught by surprise when they come to the country. This helps in avoiding some of the problems that could arise such as relational problems as well as cultural shocks. For this reason, the contactors will be able to proceed with their projects with very few interruptions.
The other performance indicator that can reflect the level of cultural preparedness is adaptability and flexibility10. Since the culture in the emirates is quite different from the one found in the west, it is important for the contractors to be flexible enough to deal with anything that is different from what they are accustomed to.
Additionally, the other indicator that can indicate preparedness, on the part of the contractors, is developing and building relationships. This can prove to be critical in helping the contactors to deal with the cultural changes that they are likely to face. For instance, the contractors can cultivate good relationship with the authorities, who can be very instrumental in helping them to adapt to their new cultural challenges in a foreign country.
The contractors also benefit greatly by having a neutral party who can arbitrate when there are disputes. The neutral party selected must have the respect and support of all the parties concerned. By having a neutral party, all the conflicts that are likely to arise as a result of cultural differences can be resolved speedily and amicably.
The other performance indicator is cultural matching. This is whereby the contractors ensure that they take advantage of the cultural diversity of their workforce. For this reason, they can assign responsibilities to workers who are somewhat similar in their cultures in order to avoid a possible cultural clash. In this way, they can enhance the performance of their team, and avoid a possible cultural clash.
The impact of culture on the performance of the contract
The impact of the culture on the performance influences problem solving techniques because different cultures advocate for a particular way of approaching issues. For this reason, there is a need to appreciate the different perspectives in order to reduce the probability that a conflict might arise during the process of problem solving.
The other impact that culture is likely to have on the performance of the team is the decision making skills since some members of the team might prefer decision making that is preceded by consulting all the relevant stakeholders. On the other hand, other members of the team might prefer to make independent decisions without having to consult all the other members of the team. Therefore, culture could have the effect of speeding up the process of decision making or even slowing down the process. The other effect on the decisions making process relates to the responses made in the process of decisions making. For this reason, the contractor will need to consider the various approaches to decision making with a view to capitalizing on them.
The other aspect that the contractor will need to look into is the communication methods. Communication to a very great extent is influenced by the language used. The language in use in the Emirates is quite different from the one used in Australia. As such the contractor might encounter language barriers especially when dealing with the local workers. This would call for the use of interpreters to ease the communication between the contractors and the workers. Other issues that could arise touch upon differences in the use of words, which might be perceived to be rude when used in some contexts.
Another issue that could be affected by the diverse cultural background is the level of trusting each other. It has been postulated that trust is one of the key ingredients that can enhance the operations of the contractor. As such, the contactor faces the challenge of creating a harmonious relationship that can be instrumental in forging that trust because it is highly unlikely that people from diverse background can trust each other unless effort is taken to cultivate it.
The key culture elements that may influence the performance
Some of the key cultural elements that are likely to impact the performance of the project include religion because religion is a very influential factor when it comes to thinking, living and the manner of doing things. Religion also helps in the identification of the most important goals in life, and it also determines the work ethics. The major religions in the world emphasize on the value of hard work. However, there could be disruption in the operations especially when it comes to the day of worship as well as major religious festivities11.
The other key cultural factor is education, which can be defined as the process through which the society transmits the necessary information. Due to the cultural differences the means of transmission of the information can be vastly different. This can even impact on the way the workers at the construction sites follow the instructions given. Due to the differences in the education process, the workers may respond differently when the instructions are given. Additionally, the level of education of the workers is a very great determinant of the level of skills and expertise.
Another key issue that affects the operation of the contract pertains to economics. This determines the manner in which the resources are distributed in the society. The government in the emirates seems to favor a mixture of free-market and government-controlled economy, though to a varying degree. This is quite different from the practice in the west where the governments prefer a liberalized economy.
Another aspect of culture that can have an effect on the performance of the contract is the politics. Politics relates to the manner in which a country is governed. It also entails the structures that have been put in place in order to help in governing the country. For instance, the emirate has a monarchical system which is dictatorial, whereas in Australia it is a mixture of monarchical and democratic set up. This affects the business environment and, inevitably, the operating environment. Operating environment affects the effective performance and the completion of the project.
Data analysis
The data to be used in this research has been derived from the qualitative techniques. Therefore, from the information given, it is clear that there are some factors which impacts heavily on the ability of the contractor to perform the project satisfactorily. The following table will be used to illustrate the key indicators that are likely to affect the performance of the contractor.
In the emirates the indicator that is likely to have a bigger influence on the ability of the contractor to perform well on his contact is religion. This is because religion in the emirates is predominantly Islam as opposed to the western countries whose major religion is Christianity. The next indicator that is likely to have an influence on the performance of foreign contractors is politics. Politics is likely to have an influence on the system of governance, business environment and the operating environment. The other indicators are likely to have a moderate effect on the performance of the contractor. These indicators are education and economics.
Conclusion
It is apparent that there are so many challenges that the Australian contractors have to face when they undertake their projects in the emirates. Most of the challenges emanate from the fact that there are differences in culture. This is because culture has a very big influence in society. It determines their work ethics, language and a host of other factors. Therefore, any contractor wishing to work in the emirates must ensure that he is well informed on the culture that he is likely to encounter in the emirates.
In spite of the fact that culture might not impact on the performance of the project directly, it nonetheless can bring about other issues that can have the effect of derailing or even stalling the project. Another key issue that the contractors need to face concerns the high level of government control in the business environment. It extends even to such issues as employment. In addition, the leadership structure is strictly top-down and the citizens are not supposed to express their differing opinions in front of their leaders. This is in sharp contrast to the western countries, where anyone can express their view freely. This is particularly problematic especially where the workers are supposed to give feedback on the progress of their respective duties. The contractors may realize that a lot of information is not disclosed to them since people from that region are known to hold back their opinions, especially when confronted by their leaders.
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Footnotes
- S Kubba, Green Construction Project Management and Cost Oversight, Taylor & Francis, Burlington, 2010, p.18.
- F Moghaddam, The New Global Insecurity: How Terrorism, Environmental Collapse, Economic inequalities and resources shortages are changing our world, ABC-CLIO, Santa Barbara, 2010, p. 77.
- V Gorgenländer, A Strategic Analysis of the Construction Industry in the United Arab Emirates, Diplomica Verlag, Hamburg, 2011, p.24.
- S Hurreiz, Folklore and Folklife in the United Arab Emirates, Routledge, New York, 2002, p.146.
- E Berkowitz, Essentials of Health Care Marketing, Jones and Bartlett Learning, London, 2010, p.20.
- B Fryer, M Fryer, and C Egbu , The Practice of Construction Management: People and Business Performance, John Wiley & Sons, Hoboken, 2004, p.24.
- P Budhwar and K Mell, Managing Human Resources in the Middle East, Routledge, New York, 2006, p.70.
- J Walker and S Butler, Oman, UAE & Arabian Peninsula, John Wiley and sons, Hoboken, 2010, p.251.
- D Brady, Essentials of International Marketing, M.E. Sharpe, New York, 2010, p.392.
- J Deal, Developing Cultural Adaptability: How to Work Across Differences, John Wiley and Sons, Hoboken, 2011, p.8.
- B Hopkins, Cultural Differences and Improving Performance: How Values and Beliefs can influence organizational performance, Gower Publishing, Ltd., Burlington, 2009, p.140.