Financial Control Of Risks On Overseas Engineering Contracting Projects

As a top national strategy advocated by China in recent years,The Belt and Road Initiative makes full use of existing bilateral and multilateral mechanisms,actively develops economic partnership between China and many countries.Overseas engineering contracting industry is facing a lot of opportunities,as well as many challenges.At present,China's overseas contracting engineering business has spread over nearly two hundred countries and regions around the world.In some traditional Asian and African market,China still maintains a firm dominant position.Besides,its overseas contracting engineering business is also showing a trend of rapid growth in Latin America,Europe and North America.The market is more diversified and its structure has been further optimized.In 2017,China's foreign contracted project business completed 1 trillion 138 billion and 290 million yuan(equivalent to 168 billion 590 million US dollars,up 5.8%over the same period last year),and the new contract amount was 1 trillion and 791 billion 120 million yuan(equivalent to 265 billion 280 million US dollars,up 8.7%over the same period last year).In 2017,the export contract project led to export volume of $14 billion.The overseas engineering contracting projects are influenced by the international political and economic environment.The project cycle is very long,the environment is perplexing,and the contract subject is multinational.Besides,it also needs to adapt to international accounting standards and tax law.Under the terms of the FIDIC,it is facing the problems such as projects finance,exchange rate fluctuations,rising costs caused by inflation,financial risk of sub-contractors,capital management,tax planning,and profit remittance,etc.Those problems are important issues that have to be researched and solved by financial staffs of Chinese enterprises.China national aero-technology international engineering corporation is a representative international engineering company based on international project contracting,its business developed very good in Sri Lanka in recent years.This paper studies on case of Runaway Overlay and Associated Words at Bandaranaike International Airport Project whose contractor is China national aero-technology international engineering corporation,focusing on financial support and risk prevention.It discuss the whole process of a project,such as project financing scheme design of EFC+F in the bidding stage,contract negotiation,tax planning,foreign exchange control and exchange rate risk prevention in the pre-construction stage,the opening of the guarantee,management of transnational funds and resources,financial management of sub-contractors in the construction stage,and final accounts for the completed project and financial analysis of the projects in the end of the project.From this case,we get inspiration on financial operation and risk prevention of overseas engineering contracting projects,sort out main points of financial operation in different stages,and propose solutions accordingly,so as to prevent financial risks.