Risk paths in international construction projects: Case study from Chinese contractors

Contracting in overseas construction markets involves not only the typical risks at home, but also the complex and diverse risks peculiar to international transactions. In addition, international construction project risks are highly interdependent. The objectives of this study are to (1) explore the risk paths in the international construction projects performed by Chinese contractors, and (2) examine the risk effects on the objectives of these projects. To achieve the research objectives, a total of 60 risks were identified from literature review and a questionnaire survey was conducted with 104 professionals from Chinese international contractors. Adopting the structural equation modeling technique, this study proposed a networking of 20 significant risk paths. Specifically, host government–related risk, contractor’s lack of experience, and contractors’ lack of managerial skills had significant effect on project cost, quality, and schedule objectives, respectively. Moreover, host government–related risk affected project cost performance indirectly through resource price fluctuation, and contractors’ lack of managerial skills affects project schedule objective indirectly through decrease in productivity. This study contributes to the literature because it is different from most of the previous studies, which depended on separate risk categories and generic checklists but failed to explore the potential interrelationships among risks in international construction projects. Additionally, the identification of risk path scenarios enables practitioners to gain a better understanding of the sources and impact areas of risks, and to better deal with the risks, thereby contributing to the practice.