Financial Risk Management On Cultural Differences Of International Engineering Projects

In recent years, a growing number of construction contracting business are using the"going out " strategy, and have made some achievements, with the deepening of reform andopening and conduct of international friendship and cooperation, more and more domesticenterprises start building large-scale projects undertaken in the international engineeringcontracting market. Therefore, in order to reduce the domestic construction businessmanagers of financial risks caused by cultural differences in the contracting internationalengineering projects, the paper uses the losses of China Railway Construction in Mecca LightRail Project as a case, and mainly use the theoretical analysis and An Empirical Analysis ofcombining research methods, selecting a single case and using descriptive case to study thecultural differences of all aspects of international projects.Firstly the article describes the account of the background and significance of the article,then summarizes the analysis of domestic and foreign scholars on how to classify culturaldifferences, and describes the way cultural differences affected the project finance and theresponse methods. Secondly, the risk of cross-cultural theory in a chapter analyzes themeaning and cultural characteristics, as well as cultural differences, cultural conflict and therelationship among them, and the cultural differences may cause the project financial risksinto international engineering contracting projects four categories: the surface culturaldifferences, the institutional and cultural differences, the value of cultural differences andother cultural differences.After the theoretical analysis, there is a comparative analysis of the cultural differencesbetween China and Saudi Arabia Mecca, according to the analysis of the project managementphase and the impact of these differences on the financial risk that the analysis of thedecision-making stage. The impact of cultural differences is comprehensive, will be fullyaffect the project managers, decides the managers can influence the budgetary control withinan acceptable range; in the bidding stage, cultural differences, especially institutionalcultural differences affect the estimated contract offer is reasonable; during the design andprocurement stage impact of cultural differences and value system of the larger cultural differences, project manager if not in accordance with local economic systems and behaviorto select the appropriate subcontractors and buyers will lead to financial risks; the risks aremost likely to occur in the last stage, mainly in the surface of the cultural differences andlanguage barriers and obstacles of different religious beliefs and values, such as culturaldifferences in the way of living and working areas.Finally, suggestions of contracting international engineering projects at domesticconstruction contracting business are suggested that in the face of cultural differences andcultural differences we should firstly face squarely its existence and analyze the benefits anddisadvantages. For analysis of the decision-making stage, the proposed integrated,comprehensive grasp of the cultural differences must also pay close attention to financial riskfactors that affect the larger cultural differences; contract price adjustment method using thebidding stage, in response to price changes and the human cost of the project site fluctuationswhile using currency as a stable currency denominated currency exchange risk in response;during the design and procurement stage to combine the principle of diversity of localeconomic development policies and "cost optimal" reasonable choice of local sub-contractorsand buyers; During the construction phase will have to establish a risk warning mechanism, adynamic process, running constantly sum up experience and lessons learned, and even adjustto establish a flexible mechanism to deal with cultural differences.