and penalties are assessed. Syed Fahad Khalid, a Jakarta, Indonesia-based senior solution architect at
Ericsson, a PMI Global Executive Council member, says telecommunications companies often take a
“carrot and stick” approach with vendors to keep projects on time and within budget.
For example, vendors working on a broadband project might be paid generously for on-time work.
But if vendors don’t complete tasks by the deadline, they might have to ;nish the work at their own
expense, says Mr. Fahad.
By building incentives like these into project contracts, organizations can decrease downtime and
keep their clients plugged in. “If the customer doesn’t notice the changeover, that’s a good result,”
Mr. Fahad says. —Carol Wolf
Without a Net
Brazil’s economy has hit another rough patch—but this time, the country’s national government isn’t
backing major projects to stimulate Latin America’s largest economy. To the contrary: It’s enacting
austerity measures and reeling from a corruption scandal involving one of the country’s marquee
projects. Embroiled in bribery allegations, Petrobras’ Abreu e Lima oil re;nery in Ipojuca, Brazil
opened in December three years late and more than US$15 billion over budget.
;e scandal prompted the semi-public multinational energy company to announce it will review
all of its projects. Two oil re;neries under construction will be delayed so contracts can be renegotiated with companies that have faced accusations of overcharging for work. A global drop in oil prices
has prompted Petrobras to cancel two other re;nery projects
in Brazil’s northeast.
“;ere’s a high degree of
uncertainty resulting from the
corruption investigations at
Petrobras, and that is certainly
a;ecting the construction
industry as well,” says Sara
Johnson, senior research direc-
tor for global economics, IHS
Global Insight, Lexington, Mas-
sachusetts, USA. “Brazil is in
From oil re;neries and
highways to shipyards and
hydroelectric plants, grand
infrastructure projects have
long buoyed Brazil’s economy.
When the country hit an eco-
nomic slowdown in 2011, the
government stepped in with
stimulus packages to keep
projects on track. But with the
Little more than a decade ago, the BRIC nations—shorthand for the developing economies of
Brazil, Russia, India and China—were seen as the future of the global economy. Today, two of these
once-vaunted countries are in recessions, and only one is growing robustly.
It’s not only Brazil. Russia’s real GDP will likely contract 5 percent in 2015, says Sara Johnson,
senior research director for global economics, IHS Global Insight, Lexington, Massachusetts, USA.
She projects a 1. 1 percent real GDP decline for the year in Brazil—“not as difficult as Russia, but far
worse than India and China.”
The country’s rapidly cooling realestate market has slowed construction project activity, and as of April
that had rippled out to slow down
employment and new business
growth to their lowest points in at
least eight months. But the factory
sector is showing signs of a rebound,
and the government has acted to
make home buying easier in an attempt to jump-start the market.
“We’re projecting 6. 5 percent
real GDP growth compared to 7. 4
last year,” Ms. Johnson says. “The
environment is not as vibrant, but at
least there is some growth.”
The global drop in oil
prices, coupled with
from Western countries, has triggered big
cuts and a major recession. That had pushed
down project activity in
defense and healthcare.
Soaring inflation has
also hurt the private
sector, including retailers and wholesalers.
2015 may be India’s breakout year.
With a new government spurring
market optimism with promises
to enact business-friendly tax,
labor and foreign investment laws,
IHS Global Insight projects a 7. 8
percent growth rate in the current
fiscal year—higher than China’s for
the first time this century. Project
activity is particularly hot in
defense, energy and manufacturing
sectors. Still, lackluster electricity
and transportation infrastructure
continues to hold back broader
project activity, Ms. Johnson says.