AN ANALYSIS OF RISKS FACED BY FOREIGN CONSTRUCTION FIRMS IN INDIA AND THEIR
EFFECT ON PROJECT PERFORMANCE
ROUZBEH MADDAH
DEPARTMENT OF CIVIL ENGINEERING INDIAN INSTITUTE OF TECHNOLOGY DELHI
SEPTEMBER 2019
AN ANALYSIS OF RISKS FACED BY FOREIGN CONSTRUCTION FIRMS IN INDIA AND THEIR
EFFECT ON PROJECT PERFORMANCE
by
ROUZBEH MADDAH Department of Civil Engineering
Submitted
In fulfillment of the requirements of the degree of Doctor of Philosophy
to the
INDIAN INSTITUTE OF TECHNOLOGY DELHI
SEPTEMBER 2019
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1.CERTIFICATE
This is to certify that the thesis entitled “An Analysis of Risks Faced by Foreign Construction Firms in India and Their Effect on Project Performance”, being submitted by Rouzbeh Maddah to the Indian Institute of Technology Delhi for the award of the degree of Doctor of Philosophy is a bonafide record of the research work carried out by him under our supervision and guidance. The thesis work, in our opinion, has reached the requisite standard, fulfilling the requirements for the degree of Doctor of Philosophy.
The contents of this thesis, in full or in parts, have not been submitted to any other University or Institute for the award of any degree or diploma.
Prof. A.K.JAIN (Professor)
Department of Civil Engineering Indian Institute of Technology Delhi Hauz Khas, New Delhi 110016 (India)
Prof. K.N.JHA (Professor)
Department of Civil Engineering Indian Institute of Technology Delhi Hauz Khas, New Delhi 110016 (India)
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2.ACKNOWLEDGEMENTS
First and foremost, all praise, honor, and glory be to Almighty God for providing me this opportunity and granting me the capability to proceed successfully.
I express my deepest sense of gratitude towards my supervisor Prof. A.K.Jain, and my co-supervisor Prof. K.N. Jha, for the motivation, inspiration, critical comments, encouragement and advice they have provided throughout my time as their student.
This thesis would not have been possible without their help, support and patience. I have been extremely lucky to have them. I am extremely indebted to them for accepting me as a student of Ph.D. under their guidance.
I also would like to express my sincere gratitude to Dr. S.Z.S. Tabish, for his warm encouragement, thoughtful guidance, critical comments, which were determinant for the accomplishment of the work presented in this thesis. Besides my supervisors, I would like to thank members of student research committee, Prof. K.S.Rao, Dr. S.P.
Singh, and Dr. J. U. Maheswari for their advice and guidance during the course of my Ph.D.
I am very thankful to Registrar of Corporates (ROC) Delhi & Haryana, Foreign Investment Promotion Board of India (FIPB), Ministry of corporate affairs – Government of India, and all the companies which participated in this study. The data collection required for this study would not be possible without their kind cooperation.
I am also thankful to my friends Dr. Satish Kumar, Dr. Dilip A. Patel, and Dr. Ratnesh Kumar, for their kind assistance.
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I would like to acknowledge the Indian Institute of Technology Delhi for offering me the admission to enable me to undertake the present research. I am especially thankful to all staff of Civil Engineering Department for their kind support, help, and guidance whenever I needed.
I am very much thankful to my dearest Dad Mohammad Maddah, My mother Azam Gharavi, and my Wife Hengameh Hobbian for their constant support which raised me to this level.
Rouzbeh Maddah
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3.ABSTRACT
The internationalization of the business environment and the development of communication between nations has provided a significant opportunity for construction companies to spread their scope of work beyond their home country borders. However, prior to stepping into the global construction market, a construction firm should identify the risks, and analyze their influence on the project goals. Moreover, a construction firm should be equipped with proper mitigation measures to cope with those risks.
These mitigation measures should be relevant to the characteristics of the host country.
Countries have different characteristics in terms of socio-cultural environments, geopolitical status, financial situations, economic conditions, and their governing rules and regulations. The risk prevalence and its level of influence on the project goals are specific to the host country characteristics. Therefore, in order to be more precise in analyzing the influence of the risks on the project goals, such analysis should be carried out in view of the characteristics of a particular host country.
This study has considered India as the host country, in order to investigate the international construction firms’ risk in the Indian construction market. This investigation is based on the perception of the foreign construction firms operating in India and covers risk identification, risk evaluation, and risk mitigation (response). The ultimate criteria of this study for which the effect of risks have been analyzed are cost, time, and overall performance of the international construction projects carried out in India. Although the project performance in Indian construction market is not at a satisfactory level, the Indian construction market has proven to be an attractive market for foreign construction firms.
The Indian construction market is a lucrative market for international construction firms due to its huge population, and economic growth (Ling and Hoi 2006). The ever- growing population of India promises the growing demand for infrastructure and housing projects. Meanwhile, the Indian government welcomes foreign direct investment in the fields of township development, housing, commercial premises, hotels, resorts, and infrastructure facilities. The majority of the demand for construction facilities in India are given a response by the domestic construction firms, however, there is a need for the technical, and managerial know-how of the foreign construction firms as well.
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Although India can offer an attractive construction market to the international construction firms, there are a variety of risks that foreign construction firms face in India. The risks which are incorporated in this study can be broadly classified as:
project-related risks, host country related risks, and risks associated with shortcomings of the Indian project stakeholders (i.e. Indian supplier, Indian partner, Indian labor, Indian subcontractor, and the Indian client). These risks are subject to various analysis in order to measure their prevalence (as perceived by foreign construction firms), and also their influence on the project goals. In order to fulfill the objectives of the study, the following steps have been taken.
At the initial stage, a total of 98 completed projects carried out by foreign construction companies in India were identified. A list of major risk attributes was identified through the literature and expert’s opinion. The project-wise questionnaire survey was conducted in order to measure the prevalence of the identified risks, and also to evaluate the cost and time performance of the international sample projects. Based on the collected responses, the factor analysis revealed the latent properties of the risk attributes. Therefore, a total of nine risk factors emerged namely: (1) poor inter-partner relationship, (2) adverse host country condition, (3) partner incompetency, (4) client incompetency, (5) unavailability of resources, (6) adverse project condition, (7) labor underperformance, (8) subcontractor incompetency, and (9) poor relationship with client. Subsequent to identification of the risk factors, the multiple regression analysis was applied in order to measure the direct influence of the risk factors on the cost and time performance based on their regression coefficient and their prediction capacity.
Findings revealed the critical risk factors with respect to cost and time performances.
The risk factors namely: adverse project condition, subcontractor incompetency, adverse host country condition, client incompetency, and partner incompetency are relatively and respectively have the highest influence on cost performance while, the risk factors such as: unavailability of material and resources, adverse project condition, poor inter-partner relationship, client incompetency, adverse host country condition, subcontractor incompetency, labor underperformance, and partner incompetency showed a considerable influence on the time performance.
This study further identified the causal interrelationship among the risks, and also identified the vulnerabilities and their indirect influence on the project goals (cost, time, and overall performance). For this purpose, the risk path models affecting the project
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goals were hypothesized. Further, the structural equation modeling was used to validate the interrelationships between the risks and to measure the path coefficients. The structural equation modeling could confirm the existence of six vulnerabilities affecting the project goals. These vulnerabilities are: (1) adverse host country condition, (2) project complexity, (3) subcontractor incompetency, (4) client incompetency, (5) unclarity of agreement between partners, and (6) partner incompetency. The vulnerabilities were ranked based on their effect on the project goals. The findings revealed that vulnerabilities such as: adverse host country condition, project complexity, and subcontractor incompetency are having the highest effect on the international projects’ goals in India.
In the last stage, this study proposed a total of 91 risk mitigation measures for the identified risk factors. Further, the effectiveness of these mitigation measures in the Indian context was evaluated by means of a questionnaire survey and application of the Delphi method.
The results are expected to help foreign construction firms to focus on fewer and more critical risks, which may affect their project goals; and to adopt apt measures in order to mitigate those risks. Findings of this study are drawn based on the perception of foreign construction firms operating in India. This study has contributed to the body of the knowledge by identifying risk paths toward foreign construction firms in India and also evaluating the extensive risk mitigation measures with respect to their applicability in the Indian context.
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4. सार
व्यापारिक वाताविण के अंतिााष्ट्रीयकिण औि िाष्ट्रों के बीच संचाि के ववकास ने वनर्ााण कंपवनयों को अपने देश की सीर्ाओं से पिे
अपने कार् के दायिे को फैलाने का एक र्हत्वपूणा अवसि प्रदान वकया है। हालांवक, वैविक वनर्ााण बाजाि र्ें कदर् िखने से पहले, एक वनर्ााण फर्ा को चावहए जोवखर्ों की पहचान किें, औि परियोजना के लक्ष्यों पि उनके प्रभाव का ववश्लेषण किें। इसके अलावा, एक वनर्ााण फर्ा को उन जोवखर्ों से वनपटने के वलए उवचत शर्न उपायों से लैस होना चावहए। ये शर्न उपाय र्ेजबान देश की ववशेषताओं के वलए प्रासंविक होनेचावहए।
सार्ावजक-सांस्कृवतक वाताविण, भू-िाजनीवतकवस्िवत, ववत्तीयवस्िवतयों, आविाक वस्िवतयोंऔि उनकेशासीवनयर्ों औिवववनयर्ों
के संदभा र्ें देशों की अलि-अलि ववशेषताएं हैं। परियोजना के लक्ष्यों पि जोवखर् की व्यापकता औि इसका प्रभाव र्ेजबान देश की
ववशेषताओं के वलए वववशष्ट है। इसवलए, परियोजना के लक्ष्यों पि जोवखर्ों के प्रभाव का ववश्लेषण किने र्ें अविक सटीक होने के वलए, एकववशेषर्ेजबानदेशकी ववशेषताओंकोदेखते हुए इसतिहकेववश्लेषणवकएजानेचावहए।
इस अध्ययन र्ें भाितीय वनर्ााण बाजाि र्ें अंतिााष्ट्रीय वनर्ााण फर्ों के जोवखर् की जांच किने के वलए भाित को र्ेजबान देश र्ाना है।
यह जांच भाित र्ें कायाित ववदेशी वनर्ााण फर्ों की िािणा पि आिारित है औि इसर्ें जोवखर् की पहचान, जोवखर् र्ूलयांकन औि
जोवखर् न्यूनीकिण (प्रवतविया) शावर्ल है। भाित र्ें वकए िए अंतिााष्ट्रीय वनर्ााण परियोजनाओं की लाित, सर्य औि सर्ग्र प्रदशान इस अध्ययनके अंवतर् र्ानदंड है वजनकेवलएजोवखर्ोंकेप्रभावकाववश्लेषणवकयाियाहैं। हालांवक भाितीयवनर्ााणबाजािर्ेंपरियोजना
काप्रदशान संतोषजनक स्तिपिनहींहै, लेवकनभाितीयवनर्ााणबाजािववदेशीवनर्ााणफर्ोंकेवलएएकआकषाकबाजािसावबत हुआ है।
भाितीय वनर्ााण बाजाि अपनी ववशाल आबादी औि आविाक ववकास के कािण अंतिााष्ट्रीय वनर्ााण फर्ों के वलए एक आकषाक बाजाि
है (वलंि औि होई 2006)। भाित की बढ़ती आबादी, बुवनयादी ढांचे औि आवास परियोजनाओं की बढ़ती र्ांि का वादा किती है। इस बीच, भाित सिकाि टाउनवशप ववकास, आवास, वावणवययक परिसि, होटल, रिसॉटा, औि बुवनयादी सुवविाओं के क्षेत्र र्ें प्रत्यक्ष ववदेशी
वनवेश का स्वाित किती है। भाित र्ें वनर्ााण सुवविाओं की र्ांि के बहुर्त को घिेलू वनर्ााण फर्ों द्वािा प्रवतविया दी जाती है, हालांवक, ववदेशी वनर्ााण कंपवनयों के तकनीकी, औि प्रबंिकीय ज्ञान की भी आवश्यकता है।
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यद्यवप भाित अंतिााष्ट्रीय वनर्ााण फर्ों के वलए एक आकषाक वनर्ााण बाजाि की पेशकश कि सकता है, लेवकन भाित र्ें ववदेशी वनर्ााण फर्ों के सार्ने कई तिह के जोवखर् हैं। इस अध्ययन र्ें शावर्ल वकए जाने वाले जोवखर्ों को र्ोटे तौि पि विीकृत वकया जा सकता है:
परियोजना से संबंवित जोवखर्, र्ेजबान देश से संबंवित जोवखर्, औि भाितीय परियोजना वहतिािकों (यानी भाितीय आपूवताकताा, भाितीयसाझेदाि, भाितीयश्रर्, भाितीय उपर्हाद्वीप, औि) कीकवर्यों से जुडे जोवखर्; भाितीय ग्राहक)। इनजोवखर्ोंकोवववभन्न ववश्लेषणों के अिीन वकया जाता है तावक उनकी व्यापकता (जैसा वक ववदेशी वनर्ााण फर्ों द्वािा र्ाना जाता है) को र्ापें, औि परियोजना
के लक्ष्यों पि उनका प्रभाव भी। अध्ययन के उद्देश्यों को पूिा किने के वलए, वनम्नवलवखत कदर् उठाए िए हैं।
प्रािंवभक चिण र्ें, भाित र्ें ववदेशी वनर्ााण कंपवनयों द्वािा वकए िए कुल 98 पूणा परियोजनाओं की पहचान की िई। सावहत्य औि ववशेषज्ञ की िाय के र्ाध्यर् से प्रर्ुख जोवखर् ववशेषताओं की एक सूची की पहचान की िई िी। परियोजना-वाि प्रश्नावली सवेक्षण का आयोजन पहचान वकए िए जोवखर्ों की व्यापकता को र्ापने के वलए वकया िया िा, औि अंतिााष्ट्रीय नर्ूना परियोजनाओं की लाित औि सर्य के प्रदशान का र्ूलयांकन किने के वलए भी वकया िया िा। एकवत्रत प्रवतवियाओं के आिाि पि, कािक ववश्लेषण र्ें जोवखर् ववशेषताओं
के अव्यक्त िुणों का पता चला। इसवलए, कुल नौ जोवखर् कािक सार्ने आए: (1) खिाब अंति-साझेदाि संबंि, (2) प्रवतकूल र्ेजबान देश की वस्िवत, (3) साझेदाि अक्षर्ता, (4) ग्राहक अक्षर्ता, (5) संसािनों की अनुपलब्िता, (6) प्रवतकूल परियोजना की वस्िवत, (7) लेबि
अंडिपिफॉर्ेंस, (8) सब-कॉन्रैक्टि अक्षर्ता, औि (9) क्लाइंट के साि खिाब संबंि। जोवखर् कािकों की पहचान के बाद, उनके प्रवतिर्न
िुणांक औिउनकी भववष्ट्यवाणीक्षर्ताकेआिािपिलाितऔिसर्यकेप्रदशानपिजोवखर् कािकोंकेप्रत्यक्षप्रभाव कोर्ापनेके
वलए कई प्रवतिर्न ववश्लेषण लािू वकया िया िा। वनष्ट्कषों ने लाित औि सर्य के प्रदशान के संबंि र्ें र्हत्वपूणा जोवखर् कािकों का
पता लिाया। जोवखर् कािक अिाात्: प्रवतकूल परियोजना की वस्िवत, उपर्हाद्वीप की अक्षर्ता, प्रवतकूल र्ेजबान देश की वस्िवत, ग्राहक की अक्षर्ता, औि साझेदाि अक्षर्ता अपेक्षाकृत अपेक्षाकृत कर् होती है औि िर्शः लाित प्रदशान पि सबसे अविक प्रभाव पडता है, जबवक जोवखर् कािक जैसे: सार्ग्री औि संसािनों की अनुपलब्िता, प्रवतकूल परियोजना हालत, खिाब अंति-साझेदाि संबंि, ग्राहक अक्षर्ता, प्रवतकूल र्ेजबान देश की वस्िवत, उपर्हाद्वीप अक्षर्ता, श्रर् अवििचना औि सािी अक्षर्ता ने सर्य प्रदशान पि काफी प्रभाव वदखाया।
इस अध्ययन ने आिे जोवखर् के बीच कािण अंतिसंबंि की पहचान की, औि परियोजना लक्ष्यों (लाित, सर्य औि सर्ग्र प्रदशान) पि
कर्जोरियों औि उनके अप्रत्यक्ष प्रभाव की भी पहचान की। इस उद्देश्य के वलए, परियोजना के लक्ष्यों को प्रभाववत किने वाले जोवखर्
पि र्ॉडल परिकवलपत िे। इसके अलावा, संिचनात्र्क सर्ीकिण र्ॉडवलंि का उपयोि जोवखर्ों के बीच अंतसंबंिों को र्ान्य किने औि
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पि िुणांकों को र्ापने के वलए वकया िया िा। संिचनात्र्क सर्ीकिण र्ॉडवलंि परियोजना लक्ष्यों को प्रभाववत किने वाली छह कर्जोरियों
के अवस्तत्व की पुवष्ट कि सकता है। ये भेद्यताएँ हैं: (1) प्रवतकूल र्ेजबान देश की वस्िवत, (2) परियोजना की जवटलता, (3) उपर्हाद्वीप अक्षर्ता, (4) ग्राहक अक्षर्ता, (5) भािीदािों के बीच सर्झौते की अस्पष्टता, औि (6) साझेदाि अक्षर्ता। परियोजना लक्ष्यों पि उनके प्रभाव के आिाि पि कर्जोरियों को िैंक वकया िया िा। वनष्ट्कषों से पता चला है वक कर्जोरियां जैसे: प्रवतकूल र्ेजबानदेशकीवस्िवत, परियोजना
की जवटलता औि उपर्हाद्वीप की अक्षर्ता भाित र्ें अंतिााष्ट्रीय परियोजनाओं के लक्ष्यों पि सबसे अविक प्रभाव डालती हैं।
अंवतर् चिण र्ें, इस अध्ययन ने पहचान वकए िए जोवखर् कािकों के वलए कुल 91 जोवखर् शर्न उपायों का प्रस्ताव वकया। इसके
अलावा, भाितीय संदभा र्ें इन शर्न उपायों की प्रभावशीलता का र्ूलयांकन एक प्रश्नावली सवेक्षण औि डेलफी पद्धवत के अनुप्रयोि के
र्ाध्यर् से वकया िया िा।
परिणार्ों से उम्र्ीद है वक ववदेशी वनर्ााण कंपवनयों को कर् औि अविक र्हत्वपूणा जोवखर्ों पि ध्यान केंवित किने र्ें र्दद वर्लेिी, जो
उनके परियोजना लक्ष्यों को प्रभाववत कि सकते हैं; औि उन जोवखर्ों को कर् किने के वलए उवचत उपायों को अपनाने के वलए उ र्दद वर्लेिी। भाितर्ेंकायाितववदेशीवनर्ााणफर्ोंकीिािणाकेआिािपिइसअध्ययनकेवनष्ट्कषावनकालेिएहैं।इसअध्ययननेभाितर्ें
ववदेशी वनर्ााण फर्ों की ओि जोवखर् के िास्तों की पहचान किके योिदान वदया है औि भाितीय संदभा र्ें उनकी प्रयोययता के संबंि र्ें
व्यापकजोवखर्शर्नउपायोंका र्ूलयांकन भीवकयाहै।
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5.TABLE OF CONTENTS
CERTIFICATE ... i
ACKNOWLEDGEMENTS ... ii
ABSTRACT ... iv
सार ... vii
TABLE OF CONTENTS ... x
LIST OF FIGURES ... xviii
LIST OF TABLES ... xix
CHAPTER 1 - INTRODUCTION ... 1
GENERAL ... 1
INDIAN CONSTRUCTION MARKET... 2
1.2.1. INDIAN CONSTRUCTION MARKET AGAINST FOREIGN COMPANIES ... 3
1.2.2. EASE OF DOING BUSINESS ... 4
ADVANTAGES OF FOREIGN CONSTRUCTION MARKET ... 4
1.3.1. BENEFITS TO THE INTERNATIONAL CONSTRUCTION FIRMS ... 4
1.3.2. BENEFITS TO THE HOST COUNTRY ... 5 MODES OF ENTRY IN INTERNATIONAL CONSTRUCTION MARKETS 6
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ENTRY DURATION IN FOREIGN CONSTRUCTION MARKET ... 7
MOTIVATION FOR THE STUDY ... 7
RESEARCH OBJECTIVES ... 9
ORGANIZATION OF THE THESIS ... 9
SUMMARY AND CONCLUDING REMARKS ... 11
CHAPTER 2 – LITERATURE REVIEW ... 12
INTRODUCTION ... 12
RISK MANAGEMENT MODELS ... 14
RISK ANALYSIS TOOLS ... 16
THE GENERAL STATE OF THE ART ... 17
2.4.1. GENERIC STUDIES ... 17
2.4.2. POLITICAL RISK ... 20
2.4.3. ECONOMIC/FINANCIAL RISK ... 24
2.4.4. CULTURAL RISK ... 28
2.4.5. EMPLOYEE’S RISK... 30
2.4.6. MARKET ENTRY DECISION SUPPORT MODELS ... 31
2.4.7. SCOPE OF THE STUDIES BASED ON INCORPORATED RISKS ... 32
RISK-BASED PREDICTION MODELS ... 33
2.5.1. COST PERFORMANCE PREDICTION STUDIES ... 34
2.5.2. PROFIT PREDICTION STUDIES... 35
2.5.3. OVERALL PERFORMANCE PREDICTION STUDIES ... 35
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RISK MITIGATION ... 37
RESEARCH/KNOWLEDGE GAP ... 38
SUMMARY AND CONCLUSION ... 39
CHAPTER 3 - RESEARCH METHODS ... 40
INTRODUCTION ... 40
RESEARCH METHOD STEPS AND FLOW CHART ... 40
NEED FOR A QUESTIONNAIRE SURVEY ... 41
DEVELOPMENT OF QUESTIONNAIRE FOR PART ONE ... 41
3.4.1. QUESTIONNAIRE PART 1 (RESPONDENT’S PERSONAL DETAILS AND PROFESSIONAL EXPERIENCE) ... 44
3.4.2. QUESTIONNAIRE PART 2 (INDEPENDENT VARIABLES) ... 44
3.4.3. QUESTIONNAIRE PART 3 (DEPENDENT VARIABLES) ... 45
3.4.4. QUESTIONNAIRE PART 4 (CAUSAL RELATIONSHIPS)... 45
3.4.5. PILOT SURVEY ... 45
3.4.6. RESPONSES RECEIVED ... 46
FACTOR ANALYSIS ... 47
3.5.1. APPLICATION OF FACTOR ANALYSIS IN RISK-BASED STUDIES IN INTERNATIONAL CONSTRUCTION PROJECTS ... 47
3.5.2. APPLICATION OF FACTOR ANALYSIS IN THE CURRENT STUDY ... 48
MULTIPLE REGRESSION ANALYSIS ... 51
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3.6.1. APPLICATION OF REGRESSION ANALYSIS IN RISK-BASED
STUDIES IN INTERNATIONAL CONSTRUCTION PROJECTS ... 52
STRUCTURAL EQUATION MODELLING (SEM) ... 52
3.7.1. APPLICATION OF SEM IN RISK-BASED STUDIES IN INTERNATIONAL CONSTRUCTION PROJECTS ... 53
3.7.2. APPLICATION OF SEM IN CURRENT STUDY ... 54
DELPHI METHOD, QUESTIONNAIRE PART 2 ... 56
3.8.1. DELPHI METHOD ... 56
RESEARCH METHODOLOGY SUMMARY ... 57
CHAPTER 4 - IDENTIFICATION OF RISK FACTORS ... 58
INTRODUCTION ... 58
IDENTIFIED RISK ATTRIBUTES ... 58
PREVAILING RISKS ... 64
DATA RELIABILITY (SKEWNESS & KURTOSIS) ... 64
SAMPLING ADEQUACY ... 67
FACTOR EXTRACTION ... 67
RELIABILITY OF MEASUREMENT MODEL ... 75
4.7.1. CONTENT VALIDITY ... 75
4.7.2. SUBSTANTIVE VALIDITY ... 75
4.7.3. UNIDIMENTIONALITY ... 76
4.7.4. CONVERGENT VALIDITY ... 76
4.7.5. DISCRIMINANT VALIDITY ... 78
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4.7.6. INTERNAL CONSISTENCY OF CONSTRUCT (CRONBACH’S
ALPHA) ... 79
SUMMARY AND CONCLUSION ... 79
CHAPTER 5 – CRITICAL RISK FACTORS ... 80
INTRODUCTION ... 80
CRITICAL FACTORS FOR COST PERFORMANCE ... 81
5.2.1. EFFECT OF ADVERSE PROJECT CONDITION ON COST PERFORMANCE ... 82
5.2.2. EFFECT OF SUBCONTRACTOR INCOMPETENCY ON COST PERFORMANCE ... 83
5.2.3. EFFECT OF ADVERSE HOST COUNTRY CONDITION ON COST PERFORMANCE ... 84
5.2.4. EFFECT OF CLIENT INCOMPETENCY ON COST OVERRUN ... 85
5.2.5. EFFECT OF PARTNER INCOMPETENCY ON COST PERFORMANCE ... 86
CRITICAL FACTORS FOR TIME PERFORMANCE ... 86
5.3.1. EFFECT OF UNAVAILABILITY OF MATERIAL AND RESOURCES ON TIME PERFORMANCE ... 88
5.3.2. EFFECT OF ADVERSE PROJECT CONDITION ON TIME PERFORMANCE ... 89
5.3.3. EFFECT OF POOR INTER-PARTNER RELATIONSHIP ON TIME PERFORMANCE ... 89
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5.3.4. EFFECT OF CLIENT INCOMPETENCY ON TIME PERFORMANCE 90 5.3.5. EFFECT OF ADVERSE HOST COUNTRY CONDITION ON TIME
PERFORMANCE ... 91
5.3.6. EFFECT OF SUBCONTRACTOR INCOMPETENCY ON TIME PERFORMANCE ... 92
5.3.7. EFFECT OF LABOR UNDERPERFORMANCE ON TIME PERFORMANCE ... 92
5.3.8. EFFECT OF PARTNER INCOMPETENCY ON TIME PERFORMANCE ... 93
VALIDATION OF FINDINGS ... 94
SUMMARY AND CONCLUSION ... 96
CHAPTER 6 – IDENTIFICATION OF RISK PATHS AND VULNERABILITIES AFFECTING THE TIME AND COST PERFORMANCE ... 99
INTRODUCTION ... 99
PATH MODEL ... 100
6.2.1. MEASUREMENT MODEL ... 100
6.2.2. STRUCTURAL MODEL (HYPOTHESIS) ... 101
STRUCTURAL MODEL VALIDATION ... 105
VULNERABILITY ASSESSMENT ... 109
SUMMARY AND CONCLUSION ... 116
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CHAPTER 7 – IDENTIFICATION OF RISK PATHS AND
VULNERABILITIES AFFECTING OVERALL PERFORMANCE ... 118
INTRODUCTION ... 118
PROJECT PERFORMANCE IN INTERNATIONAL CONSTRUCTION PROJECTS ... 118
HYPOTHESIZED PATH MODEL ... 120
MODEL VALIDATION ... 123
VULNERABILITY ASSESSMENT AGAINST OVERALL PERFORMANCE ... 126
7.5.1. ADVERSE HOST COUNTRY CONDITION ... 126
7.5.2. PROJECT COMPLEXITY ... 129
7.5.3. SUBCONTRACTOR INCOMPETENCY ... 130
SUMMARY AND CONCLUSION ... 131
CHAPTER 8 – RISK MITIGATION ... 132
INTRODUCTION ... 132
IDENTIFICATION OF RISK MITIGATION MEASURES ... 132
EFFECTIVENESS OF MITIGATION MEASURES ... 142
CONCLUSION ... 155
CHAPTER 9 - CONCLUSION... 157
SUMMARY ... 157
PREVALENT RISK ATTRIBUTES ... 159
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CRITICAL RISK FACTORS ... 160
INFLUENCE OF THE VULNERABILITIES ... 162
RISK MITIGATION ... 163
RESEARCH CONTRIBUTION TO KNOWLEDGE AND PRACTICE ... 165
LIMITATIONS ... 165
SUGGESTION FOR FUTURE STUDY ... 167
REFERENCES ... 168
APPENDIX A – QUESTIONNAIRE PART 1 ... 183
APPENDIX B – QUESTIONNAIRE PART 2 ... 187
APPENDIX C - FOREIGN CONSTRUCTION FIRMS INCORPORATED IN THE STUDY... 194
APPENDIX D - BIO-DATA AND LIST OF PUBLICATIONS BASED ON THE THESIS ... 199
xviii
6.LIST OF FIGURES
Figure 3-1 Research methodology flowchart ... 43
Figure 5-1 Significant factors affecting cost performance ... 97
Figure 5-2 Significant factors affecting time performance ... 98
Figure 6-1 Hypothesized cost overrun path model ... 103
Figure 6-2 Hypothesized time overrun path model ... 104
Figure 6-3 Cost overrun structural model ... 107
Figure 6-4 Time overrun structural model ... 108
Figure 6-5 Effect of vulnerabilities on cost performance ... 111
Figure 6-6 Effect of vulnerabilities on the time performance... 112
Figure 7-1 Hypothetical path model for overall performance ... 122
Figure 7-2 Validation of the hypothesized path model for overall performance ... 125
Figure 7-3 Effect of vulnerabilities on overall performance ... 127
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7.LIST OF TABLES
Table 2-1 Application of most popular risk analysis tools in the literature ... 16
Table 2-2 Risks incorporated in the literature ... 32
Table 3-1 Experience of the respondents ... 44
Table 3-2 Sector-wise distribution of projects ... 50
Table 3-3 Ranking system for mitigation measure effectiveness ... 56
Table 4-1 List of incorporated risk attributes ... 60
Table 4-2 Ranking of risk attributes based on their prevalence ... 65
Table 4-3 KMO and Bartlett's Test ... 67
Table 4-4 Identified components ... 68
Table 4-5 Results of factor analysis ... 73
Table 4-6 Poor inter-partner relationship ... 76
Table 4-7 Adverse host country condition ... 76
Table 4-8 Partner incompetency ... 77
Table 4-9 Client’s incompetency ... 77
Table 4-10 Unavailability of resources ... 77
Table 4-11 Adverse project condition ... 78
Table 4-12 Labor underperformance ... 78
Table 4-13 Sub-contractor’s incompetency ... 78
Table 4-14 Poor relationship with client ... 78
Table 5-1Stepwise multiple regression results for cost performance ... 81
Table 5-2 Stepwise multiple regression results for time performance ... 87
Table 5-3 Spearman correlation for project cost performance ... 95
Table 5-4 Spearman correlation for project time performance ... 96
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Table 6-1 Theoretical identified paths ... 102
Table 6-2 Structural model fit indices ... 106
Table 6-3 Ranking of the vulnerabilities against cost overrun and time overrun ... 117
Table 7-1 Fit indices for overall performance model ... 124
Table 7-2 Ranking of the vulnerabilities based on their effect on overall performance ... 131
Table 8-1 Effectiveness of the risk mitigation measures (application of Delphi method) ... 145
Table 9-1 Critical risk factors ... 161
Table 9-2 Ranking of vulnerabilities with respect to their effect on project goals .... 162
