Research On The Risk Management Of Overseas EPC Properties

With the gradual implementation of the CPC Central Committee on on the "going out"development strategy, domestic industrial restructuring and upgrading, a growing number oflarge Chinese construction companies, especially large state-owned enterprises began toparticipate in the international construction market competition on international projects. Forinternational contracting projects, EPC contracting model with its unique advantages tobecome one of the mainstream contracting model. Project management staff and experts andscholars around the world pay more and more attention to the study on the application of thismodel.As one of the major participants in the EPC general contracting mode projects, may gethuge profits while also facing unprecedented risks and challenges. When China’s constructionenterprises contracted overseas EPC projects, they face with many risks, such as political,economic, social and natural environment in the Project host country, the project is muchmore difficult than domestic projects. Through the analysis of the EPC contracting modelapplication status in our international engineering contractors found that there is a gap,compared with a world-class contractors, which mainly reflected in they are not familiar withengineering, procurement and construction (EPC)/Turnkey contract conditions, and often ina passive position in the management of foreign contracts; risks that may exist on the projectis not enough emphasis, neglect risk management; they are not familiar with internationalprocurement and labor hire habit, thus cause losses to the projects. So, if China’s internationalcontractors want a foothold in the fierce international contracting market, they need to docareful research on international practices, strengthen risk management.This article from the perspective of the EPC contractor,takes EPC Project risk as themain object of study, considering the domestic and international research in related fields,proceed from the EPC Mode and risks related concepts, and comprehensively analyses thewhole process of the EPC general contracting project risk management. This Paper analyzesemphatically the identification and response measure for typical risk factors facing by thegeneral contractor in EPC contracting overseas projects from project biding until the project iscompleted. From a qualitative point of view of the major risk factors for overseas EPC contractor faced all stages, the conclusion is that in the stage of bidding and negotiations isthe risk of rushed into the market, the risk of tender offer blindly; contract negotiation andcontract signing stage is terms of payment risk and economic risk posed; mainly in theimplementation phase of the project engineering geological data error risk, the risk of errorsof design parameters, material prices risk, supplier risk, foreign exchange risk, contractmanagement risk and the risk of sub-contractors. On the basis of a comprehensive comparisonof many actual cases, the choice is more representative of the Addis Ababa-Djibouti Railwayproject as a case study, starting from project risk identification, analysis hierarchy process toidentify project risks for risk assessment, to get the right value for each risk factorsorting.Finally, risk response measures against major risks are presented.Further explore the risk factors faced by the general contractor of total constructioncontracting business in the overseas market, to build the system overseas contracting projectrisk management system, have positive practical significance for our contractors to select theoverseas engineering and avoid project risk.