The lure of international construction ... but you better do your homework before heading overseas

One thing I’m sure of is that the world needs our construction industry. I have spent a significant portion of my career working overseas and have seen the lucrative enticement of working on foreign projects as well as the challenges involved with them.

One of my more extreme experiences began in the early 2000s, when Russia, the United States and several other international parties formed a partnership to build a chemical weapons disposal facility in Siberia near the town of Shchuch’ye. The project was deemed critical due to tens of thousands of chemical weapons that had been stored (and later abandoned) in a field near the village of Panovoye. The site held approximately 1.9 million artillery shells and 600 warheads containing 5,460 metric tons of nerve agents, 13.6 percent of the total Russian chemical weapons stockpile. The weapons were protected only by shed-like structures made of wood and corrugated metal and surrounded by rusty fences and barbed wire. Security was nonexistent.

Until 1993, the residents of Panovoye had no idea that they lived next to one of the world’s largest chemical weapons depots. When they were discovered, Russian government officials tried to reassure the inhabitants and dismiss their safety concerns. However, it was undeniable that the nerve agent stocks were poorly protected against fire and natural disaster, among other things. As concern grew, precautions were taken, and gas masks were distributed to every household. Regardless, security and proliferation concerns persisted because the physical protection of the depot was limited, guards were poorly paid and many of the chemical weapons stored at the site were easily portable.

As was soon discovered, although the shells were stored without their burster charges, terrorists were planning to steal them and use other types of explosives to disperse the nerve agent on their desired targets. Additionally, just across the border in Kazakhstan, Al-Qaeda was also formulating plans to steal the weapons. As a result, then- President George Bush, along with other international donors, gave the Russian government $7 billion to begin immediately building a new chemical weapons disposal facility.

The project had two main components, which were building a man-camp to house the expatriates working on the project and the Schuch’ye Chemical Weapons Disposal Facility.  On a project of this magnitude, there are generally three major parties involved: the technical employer, the project engineer and the general contractor.

• The technical employer is the foreign entity with expertise in exercising construction supervision (completed works and quality) — in this case, a Russian company.

• The project designer is the company responsible for preparing the design drawings and documentation as well as providing expert assessment of design documentation — in this case, a company foreign to Russia.

• The general contractor is the company responsible for organizing and coordinating the construction process and safety requirements on-site — in this case, a company foreign to Russia. The general contractor generally performs the bulk of the work and employs subcontractors for specific work items.

Construction began in 2002 and was plagued from the get-go with major problems. First, many of the local sub-contractors demanded 95 percent of their payments up front and then declared bankruptcy upon receiving the funds. These subs walked away with millions of dollars designated for the project and often kept the money while their workers went unpaid.  Second, nearly every environmental and construction permit required “money under the table” to move it forward through the approval process. Third, there were no government regulations preventing this type of activity. We quickly learned many of the pitfalls of working within the confines of the Russian construction system.

Some generalities that can be learned from these experiences may help local construction companies considering international construction work. Some of them include, but are not limited to:

1. Understand the labor environment you are proposing to work in. What are their labor laws and industry standards?

2. Research the region for business practices. Are there underlying concerns with corruption in the region?

3. Learn about additional safety concerns with working in a foreign country. Are there additional concerns for employee safety outside of the typical construction concerns?

4. Understand industry standards of the region. Often industries in foreign countries place a much different importance on safety requirements, materials standards, construction standards and even codes of conduct.

5. Get familiar with project funding sources. Understand the requirements for working with the funding agency and how payments will be made.

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6. Review contract requirements. Will you be required to utilize a certain number of local subcontractors or will it be necessary because of the nature of the work? How much control will you have over the different facets of your labor force?

Before you jump into international projects, do your due diligence. Research the conditions in the host country, the specific area and particularly the project site. My international experiences have certainly been rewarding, but I have learned many lessons about the challenges of construction in a foreign environment.

Marc Wiggins is a senior project manager at Precision Systems Engineering in Salt Lake City. He has a B.S. degree in mechanical engineering and a B.S. degree in business management. He has worked around the world advising foreign military and in the oil industry.