Research On Mechanism,Assessment And Strategies Of Political Risk In International Construction Projects

Since entering the international construction market in 1978,after more than forty years of developing,Chinese contractors have made great achievements on oversea revenue.However,Chinese contractors are also plagued with political risks in the oversea market.With the proposition of the “One Belt and One Road” initiative and the “China construction 2035”strategy,China's oversea construction business are experiencing a new round of growth and development.How to implement effective political risk management has become the most important issue for Chinese contractors.The existing literature on political risk is generally concerned with examining political risks associated with Foreign Direct Investments(FDI),Multinational Enterprises(MNEs)and International Joint Ventures(IJVs)in international general business,but provided few insights into the management of political risks in international projects.Chinese contractors are lack of effective political risk assessment and management methods,with bad performance in political risk management practice.This study aims to identify the political risk events,actors and formation elements and explore the mechanism of political risk in international construction projects by using Social Network Analysis(SNA)and Interpretation Structure Modeling(ISM)methods;to establish a model for assessing political risk based on the vulnerability theory and the Cannikin Law,considering the characteristics of international construction projects,country-specific factors,practicality and objectivity of the model;to identify the political risk management strategies,and then develop the decision-making model and management information systems.The results showed that host governments and society occupy the core position in the risk social network,and the vulnerability factors(project and contractor related factors)play an important role in the political risk process;the Threat Level(TL),Vulnerability Level(VL),and Political Risk Level(PRL)can be assessed by using the available data from international research institutes and project systems;the use of the Cannikin Law,which emphasize the barrel effect of one system on risk cause,can facilitate in political risk warning and threats and weakness revealing.Based the quantitative results,the corresponding strategies can be implemented by the international cons tractors to address the political risk and reduce the PRL.This study incorporated the risk conduction theory,risk management knowledge,the vulnerability theory,and the Cannikin Law in political risk mechanism analysis and assessment,enriching the global body of knowledge of in international construction management and risk management.Moreover,the establishment of the management information systems can help international contractors to assess and manage political risk effectively,thereby contributing to the practice.