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International Contracting – What Contractors Need to Know

December 11, 2019

The opportunity to work overseas can be exciting, lucrative and, frankly, challenging. One key to success is to ask the right questions and know the requirements as you plan, staff, work, and, ultimately, complete your project outside of the United States.

You may already be aware of some of the challenges of doing business overseas. The following is a quick checklist of things to consider as part of your due diligence before accepting an international project. We will address each of the subjects in more detail below.

International Contracting Checklist

Read Your Contract
Official Travel Documents
Currency
Lodging
Transportation
Determine Work Standards
Labor Issues
Host Nation Laws
Language Matters
Military Considerations

What to Know Before You Travel Overseas

Read Your Contract

  • Read. Your. Contract.
  • Be particularly careful about the language used in any contract you enter into with entities outside of the United States. Do not assume anything will be the same as contracting in the United States.
  • Common contracting terms like “commissioning” or “training” can mean very different things in different countries.
  • Carefully check out contractual language regarding communications processes. You may be surprised to find that formal correspondence is required in a language other than English. Some contracts even require that formal correspondence be conducted via snail mail or fax.

Official Travel Documents

  • Be sure your passport is current. You may need to have a passport that is valid for six months after your departure date. The Schengen Area of Europe is particularly strict about this rule.
  • You will probably need to formally apply for a Visa. Make sure you apply long before you need it, as depending on the country in which you will be working, the process can take weeks or even months.
  • You will be required to show that the work you are performing cannot be done by a member of the workforce in the host nation.
  • Make sure your resume is completely up-to-date before submitting it to the Visa office.

Currency

  • Understand what currency the contract price is based upon.
  • Determine what currency you will use to pay employees.
  • Expect and be prepared for fluctuations in the exchange rate.
  • Consider picking one exchange rate for the duration of the project, within some bounded range for market consideration. The British Pound-Dollar fluctuations resulting from Brexit proceedings are a good example of why this step is necessary.

Lodging

  • Where will you and/or your employees stay? Depending on the country in which you are working, you may be living in unusually challenging conditions.
  • Carefully read housing contracts. Again, contracts operate very differently in different countries, and your rights are different in other countries.

Transportation

  • Everywhere you go, the rules of the road are different. A brief team training session about the traffic laws and driving customs in the host nation can go a long way to preventing traffic violations.
  • Depending on the nation in which you will be working, employees may have to acquire new drivers’ licenses, take drivers’ education courses, language courses, and even first- aid classes to operate common vehicles.
  • Encourage the use of available public transportation wherever possible.

Determine Work Standards

  • Determine which standards take precedence over your work. For example, there are substantial conflicts between fire safety standards in the United States and those in the European Union. If you don’t understand the local requirements, you may install things in accordance with U.S. standards, and then be required to re-do the work.

Labor Issues

  • Think carefully about hiring locally versus bringing your own labor force. Each has its benefits and challenges. For example, bringing workers from home can cause difficulties when people want to break up long periods away from home to visit family or for other reasons.
  • Be prepared for cultural differences between your expectations and those of your international employees.
  • Labor laws are different in every country. When trying to accelerate a project, you may find that the host nation’s laws discourage overtime or night work.
  • Be aware of how taxes are applied to your payroll. Some countries require the employer to pay taxes, rather than the employee.

Understand Host Nation Laws

  • You don’t want to invite any trouble, so it’s smart to be aware of the kinds of problems employees might find themselves facing. Consider, for example, that the Blood Alcohol Limit for driving is lower in Germany (a country famous for its beer) than it is in the United States.

Language Matters

  • Take some time to learn a little bit of the local language. The smallest effort goes a long way with the local contractors.
  • You will never regret having someone who is bilingual on your project to assist when confusion arises between your first language and someone else’s second language.

Military Considerations

  • Are you working on a military project? If so, prepare yourself and your team for additional security-related challenges.

I hope this blog helps you and your team know what to expect, so you will not be as surprised as I was on my first international project.

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