Political Risks in International Construction
Publication: Journal of Construction Engineering and Management
Volume 113, Issue 3
Abstract
Political risk identification, measurement, and management are key to successful international construction contracting. Multinational contractors are particularly sensitive to quick, unexpected change in the political environment that affects principal cash‐flow elements of their projects. Traditional political risk analysis used by manufacturing or heavy industrial firms for capital investment decisions does not adequately address contracting risks. An alternate approach is presented to fill this important gap. Essential to this treatment is the identification of the primary political source risks and their impacts on project cash‐flow elements. Recognition and planning, rather than gambling, is emphasized as a contractor's best approach to successful international construction.
Get full access to this article
View all available purchase options and get full access to this article.
References
1.
Ashley, D., and Avots, I. (1984). “Influence diagramming for analysis of project risks,” Project Mgmt. J., XV(1), 56–62.
2.
Bonner, J. J. (1981). “Political risk analysis system for multinational contractors,” thesis presented to the Massachusetts Institute of Technology, at Cambridge, Mass., in partial fulfillment of the requirements for the degree of Master of Science.
3.
Burton, F. N., and Inoue, H. (1985). “Country risk evaluation methods: A survey of systems in use,” Banker, 133.
4.
Eiteman, D. K., and Stonehill, A. I. (1979). Multinational business finance, Addison‐Wesley Publishing Co., Inc., Reading, Mass.
5.
Farmer, R. N. (1979). “How to forecast a revolution,” Worldwide projects.
6.
“Fighting to stay ahead of inflation.” (1980). Engrg. News Record, Apr. 17.
7.
“Foreign awards zoom, top contractors take $75.6 billion.” (1975). Engrg. News Record, Apr. 10.
8.
“Foreign contracts account for one third of '75 volume.” (1976). Apr. 15.
9.
“Foreign work up 71% for top U.S. contractors.” (1974). Engrg. News Record, Apr. 11.
10.
Gabriel, P. P. (1972). “MNE's in the Third World: Is conflict unavoidable?” Harvard Business Review, 50(4).
11.
Gebelein, C. A., Pearson, C. E., and Silbergh, M. (1978). “Assessing political risk of oil investment ventures,” J. Petroleum Tech.
12.
Goodman, S. (1977). “How the big US banks really evaluate sovereign risks,” Euromoney.
13.
Goodman, S. H., Ed. (1978). Financing and risk in developing countries, Praeger Publishers, Inc., New York, N.Y.
14.
Green, R. T., and Korth, C. M. (1974). “Political instability and the foreign investor,” California Mgmt. Rev.
15.
Haendel, D. (1979). Foreign investments and the management of political risk, Westview Press, Boulder, Colo.
16.
Haendel, D., West, G. T., and Meadow, R. G. (1974). Overseas investment and political risk, Foreign Policy Research Institute, Lexington Books, Philadelphia, Pa.
17.
Hertz, D. B. (1964). “Risk analysis in capital investment,” Harvard Business Review.
18.
Higashi, T. (1980). “Risk‐based estimating system,” thesis presented to the Massachusetts Institute of Technology, at Cambridge, Mass., in partial fulfillment of the requirements for the degree of Master of Science.
19.
Howard, N. (1980). “Doing Business in Unstable Countries,” Dun's Review.
20.
International Engineering and Construction Industries Council, Proceedings of the second action conference—New concepts to encourage the export of engineering and construction. (1973). IECIC, Hershey, Pa.
21.
Johnston, F. M. (1984). “Political risk market expansion broadens OPIC's role,” Risk Management.
22.
Keselman, J. (1976). “Financing operations of American contractors in developing countries,” thesis presented to the Massachusetts Institute of Technology, at Cambridge, Mass., in partial fulfillment of the requirements for the degree of Master of Science.
23.
Kobrin, S. J. (1976). “The environmental determinants of foreign direct investment: An ex‐post empirical analysis,” J. Int. Studies.
24.
Kobrin, S. J. (1977). “The conditions under which political disruption results in increased political risk,” Sloan School of Management Working Paper, 900–1977, Massachusetts Institute of Technology, Cambridge, Mass.
25.
Kraar, L. (1980). “The multinationals get smarter about political risks,” Fortune.
26.
Kroncke, C. O. (1984). “Rating risk,” Management World.
27.
“Largest contractors set new volume record.” (1972). Engrg. News Record, Apr. 6.
28.
Levitt, R. E., Ashley, D. B., Logcher, R. D., and Dziekan, M. W. (1979). A quantitative method for analyzing the allocation of risks in transportation construction, Report No. DOT‐TSC‐UMTA‐79‐14, U.S. Department of Transportation, Washington, D.C.
29.
Maloney, W. F. (1984). “Supervisory problems in international construction,” J. Constr. Div., ASCE, 108(3), 406–418.
30.
“Many top contractors take a cut in volume, watch profits shrink.” (1971). Engrg. News Record, Apr. 8.
31.
Measurement of political and foreign investment strategy: A summary report. (1975). Foreign Policy Research Institute, Philadelphia, Pa.
32.
Moavenzadeh, F. (1974). “The role of the construction industry in the development process,” Public Policy, 22(2).
33.
Moavenzadeh, F., and Rossow, J. A. K. (1975). “The construction industry in developing countries,” Technology Adaptation Program, Massachusetts Institute of Technology, Cambridge, Mass.
34.
“Non‐U.S. firms grab big share of global market,” (1979). Engrg. News Record, Dec. 6.
35.
“Overseas rivals gain grounds and eye new markets.” (1980). Engrg. News Record, Jul. 17.
36.
Pouliquen, L. Y. (1970). “Risk analysis in project appraisal,” Occasional Paper No. 11, International Bank for Reconstruction and Development, World Bank Staff, John Hopkins Press, Baltimore, Md.
37.
Reutlinger, S. (1970). “Techniques for project appraisal under uncertainty,” Occasional Paper No. 10, International Bank for Reconstruction and Development, World Bank Staff, John Hopkins Press, Baltimore, Md.
38.
Robock, S. (1971). “Political risk: identification and assessment,” Columbia J. World Business.
39.
Root, F. R. (1968). “U.S. business abroad and the political risks,” MSU Business Topics.
40.
Root, F. R. (1972). “Analyzing political risks in international business,” Multinational enterprise in transition: selected reading and essays, A. Kapoor and P. Grub, Eds., Darwing Press, Detroit, Mich.
41.
Rummel, R. J., and Heenan, D. A. (1978). “How multinationals analyze political risk,” Harvard Business Review.
42.
Stael Von Holstein, C. S. (1973). “A tutorial in decision analysis,” Third research conference on subjective probability, utility and decision making, Stanford Research Institute, Menlo Park, Calif.
43.
Stobaugh, R. B., Jr. (1969). “How to analyze foreign investment climates,” Harvard Business Review.
44.
“Top contractors increase domestic work,” (1973). Engrg. News Record, Apr. 12.
45.
“Top 400 reports record contract volume in 1978.” (1979). Engrg. News Record, Apr. 12.
46.
“Top 400 reaps bonanza in 1977 U.S. contracts.” (1977). Engrg. News Record, Apr. 14.
47.
“U.S. ‘arrogance’ costs firms billions in lost jobs.” (1979). Engrg. News Record, Nov. 29.
48.
Van Agtmael, A. W. (1976). “How business has dealt with political risk,” Financial Executive.
49.
Vergara, A. J. (1977). “Probabilistic estimating and applications of portfolio theory in construction,” thesis presented to the University of Illinois, at Urbana, Ill. in partial fulfillment of the requirements for the degree of Doctor of Philosophy.
50.
Zink, D. W. (1973). The political risks for multinational enterprise in developing country, with a case study of Peru, Praeger Publishers, Inc., New York, N.Y.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 113 • Issue 3 • September 1987
Pages: 447 - 467
Copyright
Copyright © 1987 ASCE.
History
Published online: Sep 1, 1987
Published in print: Sep 1987
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.