Assessment And Countermeasure Of The Political Risk Of International Construction Projects

It has been almost forty years since Chinese contractors entered the international engineering market in 1978.The Chinese oversea contacting business has made spectacular achievements.In accordance with the 2016 statistics of “Engineering News-Record”,250 world's largest international engineering contractors accomplished turnover was $500.01 billion in the overseas market,among which 65 Chinese mainland contractors contributed $94.62 billion,taking 19.3% of the totol overseas turnover.Howerver,the political risks in the international contracting market have also brought huge losses to Chinese contractors.But the research on the political risks of international projects is rare,if any,they are mostly focused on the national level.From the microcosmic level,the self-characteristics of contractors and projects and the host country's political risk events jointly affect the project's political risk.This article will study the political risks of international projects from both the internal vulnerability of the project system and the external political risk events.Then the article will put forward strategies to reduce the internal vulnerability of the project system and deal with political risks in three stages,namely earnly-warning,in-process control and post-processing so to reduce and compensate for the loss of political risks to the projects and the contractors.Fist of all,22 vulnerability factors were identified through the literature review.And they were divided into 6 major categories based on capacity dimension and exposure dimension.Based on this,a “C+E evaluation index system” for measuring the project system vulnerability was constructed.Then through the literature review and case studies,the political risk events were classified as 18 kinds according to the source and divided into 7 categories according to the characteristics between them.Secondly,according to the vulnerability factors and the political risk event classification,Questionnaires were designed and conducted.After recycling of the questionnaires from CJI in seven countries of Sub-Saharan Africa(Ethiopia,Sudan,Zambia,Zimbabwe,Mozambique,Botswana,Namibia),the relevant assignment methods were used to assign the factors in the questionnaires.By analyzing the vulnerability of the project system in the region,the vulnerability impact index,the political risk event and the political risk situation,it could be concluded that CJI is less vulnerable in the project system in the region.And also the size of the project,the duration of the project,the location advantage of the project,the size of the enterprise(subsidiary),favorable contractual conditions,the complexity of project technology and management are the main factors affecting system vulnerability.Furthermore,the high-risk political risk events in the region were the risk of currency exchange and the risk of changes in laws and regulations.Corruption was also a common problem,particularly in Mozambique.In the case of low vulnerability to the project system,the order of political risk of these seven countries listed from high to low was Botswana,Sudan,Mozambique,Zimbabwe,Ethiopia,Namibia and Zambia.Last but not least,the article raised some strategies to deal with political risks from three stages earnly-warning,in-process control and post-processing.In this paper,the research evaluated the political risk of sub-Saharan Africa's international project,identified the influencing factors of the political risk of the project in the region,and put forward a coping strategy to deal with political risks.It provides reference for pre-decision and political risk management of Chinese contractors engaged in international engineering in the region.