Research Of International Projects Risk Early Warning System For Chinese International Contractors

The market development conditions, industry features as well as the market competition of foreign projects contracting have been deeply restructured along with China’s “Going Global” strategy for state-owned enterprises. In addition to this, the acceleration of Chinese enterprises’ management and operation transformation make international engineering projects face more complex risks. The occurrence of mature termination of contracts and huge losses are living proof of this situation. Therefore it is in urgent need for international project contracting enterprises to establish comprehensive risk management system, to improve the ability and level of risk management so as to guarantee successful operation of the projects and sustainable development of the corporation.Survey within international project contracting enterprises and expert interviews were conducted to identify problems in the field of risk management. The research identified 3 problems: 1) lack of qualified staffs and technology of risk management, 2) ineffective transition of project risks, 3) lack of criterion evaluating risks in the corporation. Therefore risk monitoring during project implementation and effective transition of relevant information are effective methods to improve the risk management level of China’s international project contracting enterprises.Literature review and case study methods were carried out, identifying 65 risk factors during the whole project life cycle including 25 environmental risks, 7 project participants risks and 33 project management risks, and the 65 risk factors can be classified into 23 categories. Through further analysis of the forms, stages and results of the identified risks, this article examined the significance level of these risk factors in international engineering projects using survey method. The result shows that pre-bid decision and lack of independent control are high-incidence risks; factors that influence contractors’ pre-bid decision, negotiation and design are high risks; environmental risks are listed as ones that are least controllable under enterprise. Altogether 48 of the identified factors are labeled as “high” level risks.A regression model is proposed between China foreign project contract turnover and project environmental risks. The panel data is drawn from environmental risks-related evaluation or ratings from authorized international organization. Structural equation method is used to construct a new relationship model between the significance level of project risk factors, enterprise risk management ability and the actual performance of the projects. Through survey and expert interview, the results show that project management risk has the greatest influence on the direct effect on performance; environment risk has the greatest influence on the summation of direct and indirect effect on performance; service access has the greatest influence on performance. Based on the above models, the numeration of project environment risk alarming index, project participant risk and project management risk alarming index, and their classification method are suggested.In the end, a risk management work flow during the whole project life cycle is raised. The author also explored the position of risk alarming mechanism in international engineering projects management, suggested work modules and identified the work process for risk alarming incidents resulting from different kinds of risk factors.