How to Deal with the Complication of Cost Control for Multi-Entity, Multi-Currency International Projects

Most Large, Complex Projects are executed nowadays in an international environment. Sometimes the contract given to a Contractor is split into several contracts for several entities often located in different countries. At the same time, multiple currencies are often used both for revenue and expenditure. Being able to manage effectively this additional complexity and take advantage of it is a substantial competitive edge for international contractors, where maturity of processes and systems is essential for success. Our new White Paper 2014-12 on Multi-Currency, Multi-Entity Cost Control explains the basics that need to be followed.

Currency riskThe White Paper tackles in particular the following key issues:

  • How overall Percentage of Completion accounting needs to be implemented, and not a Percentage of Completion accounting separate per entity; and how to deal with the accruals that result,
  • How multi-currency issues have to be managed, and what are the different ways to protect oneself against currency fluctuations – natural hedging and contractual hedging, and what are the advantages and drawbacks of each method.

Mature international contractors distinguish themselves by being able to manage the complication of multicontract, multi-currency situations through adequate systems and processes.

Multiple contracting entities and multiple currencies are additional challenges that are often unavoidable in the performance of international contracts, in particular in certain countries. Specific control and accounting approaches must be used. If they are not implemented, profit might be recognized imprudently too early and significant impacts can happen from changes in currency exchange rates. This has led many upcoming project-driven organizations in difficult situations with respect to their investors or clients. Surprises created because of these issues denote poor control of project operations. Learn how to overcome these issues in our new White Paper 2014-12 on Multi-Currency, Multi-Entity Cost Control !

Find all these principles of Project Cost Control exposed in a comprehensive manner in our new Handbook, Practical Cost Control Handbook for Project Managers: coverPractical Project Cost Control for Project Managers (now published – click on the link to see it on Amazon!)