Research On Financing Risk Management Of International Engineering Project

Since the execution of “Belt and Road” initiative,China’s international engineering project contractors have made great progress.With the background of global political and economic environment becoming worse,the contractors engaged in international engineering project is facing complex business environment.Project financing is one of the major problems and the risk of project financing perplexes the contractors a lot.Now the cash-settlement projects become less and less,and the financing and its risk become the bottleneck of overseas business,restraining the contractors developing in a sound way.Now these contractors engaged in internationalengineeringproject are facing the big challenge on how to manage the financing risk.First,this paper explains the basic theory of financing risk,discussing the financing risks,including political risk,legal risk,economic risk,market risk,performance risk,project construction risk and operation risk.Second,according to the main financing risks,the paper gives the related risk control measures and management suggestions.Third,use the method of AHP(Analytic hierarchy process)to make weight evaluation on the financing risks,The biggest weight goes to economic risk,the second biggest weight is political risk,the third biggest is market risk,then from the fourth to the last is performance risk,legal risk,operation risk and project construction risk.Through the two typical cases,namely Sabah 11-Floor Apartment Project in Malaysia and Phuket Marriott Resort Hotel in Thailand,to introduce the roles played by the international contractors,including construction party,financing party and even investment party and expatiate upon the risk factors encountered in different stages during financing work and the according risk handling measures.The research result of Sabah 11-Floor Apartment Project in Malaysia shows as the following: the exchange rate risk has extremely important impact on the financing,the law change risk,the market need risk and the owner’s credit standing risk have very important impact on the financing,and the interest rate risk,the pricing risk and the business environment risk have important impact on the financing.As to the research result of Phuket Marriott Resort Hotel in Thailand,it shows as the following: the exchange rate risk,the interest rate risk,the project completion risk,the cost control risk and the owner’s credit standing risk have extremely important impact on the financing,the inflation risk and the market need risk have very important impact on the financing,and the pricing risk has important impact on the financing.This paper makes the weight evaluation on the main financing risk of international engineering projects and gets the importance order from each financing risk factor.And based on the role played by the contractors and the individual features of each project,the according handling measures are given so as to effectively manage the financing risks.The research of this paper is helpful to the contractors engage in international engineering project to enhance their ability to handle and manage the financing risks and improve their competitiveness and profitability,having big guiding significance.