RISK FACTORS INFLUENCING INTERNATIONAL CONSTRUCTION PROJECTS IN PAKISTAN

Construction is the second largest sector in Pakistan’s economy after agriculture. Roughly 30-35% of employment is directly or indirectly attached with the construction industry. In contrast to the prospective share of Pakistani construction in the local and global economic market, the development of the sector has not been at par with the market demands. Pakistan’s construction industry is still characterized as pressured and adversarial. Further, construction projects in Pakistan generally run over time and over budget; do not necessarily meet user expectations; and often require remedial works due to construction defects, with many conflicting issues, leading to project disputes and litigation.

Mr. Ahsem Maqsoom (M. Eng’g in CEIM) made a research to (1) understand the basic concepts involved in international construction business and their limitations; (2) study the reasons and characteristics for internationalization of firm; (3) study the problems and risks associated with international construction projects; (4) study the entry modes and formulation of healthy strategies for international construction business; (5) identify the risk factors influencing international construction projects in Pakistan

He found out that new opportunities are constantly growing as a result of globalization in construction sector. Construction firms want to have projects at international level. In every construction project, risks are present. Risks in international construction projects are more critical as compared to domestic projects especially when developing countries are involved. That’s why it is desirable for international construction firms who want to do construction projects in foreign country, to identify the risks as early as possible, so that suitable strategies can be made for the penetration in to the foreign construction market and to manage these risks before the actual execution of projects on international level.

Risk consequences in construction projects may reach an undesirable level because of inadequate resources and lack of advancements in technologies, therefore a thorough awareness and identification of risks is essential to prepare suitable strategies.

Mr. Maqsoom’s abstract is copied and posted.

Abstract

Globally construction companies are entering in an era of internationalization. This brings a need of developing and defining strategies to cope with the international demands of quality, risk and profit. Different models related to the international construction have been studied in context with the following issues.
• Globalization and construction industry development
• Characteristics of internationalization
• Risks or Obstacles associated with international Construction business
• Competitive advantage and strategies for international construction business

International construction projects have many risks involved due to the nature of their structure. There are more parties involved and more phases are present in international construction projects than a conventional construction project. Each party has its different objectives. This difference in the objectives of parties leads to conflict of interest which is a root cause of risks in international construction projects. An international construction adaption model has been developed in this research. This model had been applied on Pakistan construction industry to know the practical example of internationalization. The risks factors which influence the international construction business in Pakistan have been identified and then classified on country, construction industry and project bases. Some critical problems related to international construction projects have been indicated from these identified risks. Some recommendations have also been suggested to manage the critical risk for the success of international projects and development of international construction industry of Pakistan.