Risk analysis of schedule delays in international highway projects in Vietnam using a structural equation model

Purpose

As in other developing countries, increased highway development in Vietnam provides enormous opportunities for international construction companies (ICCs). However, a prolonged schedule delay (SD) can have an extremely detrimental impact on a project’s efficiency, cost and investment reputation. The purpose of this paper is to identify potential SD risk factors in international highway projects (IHPs) in Vietnam, and to explore the effects of and influences on such factors. A specific risk management framework is proposed as a useful tool for ICCs.

Design/methodology/approach

A system of SD risk indicators is presented for IHPs in Vietnam through a questionnaire survey. The system comprises 50 indicators that are grouped into 12 main factors. A structural equation model (SEM) is then used to assess the influences and mechanisms of these factors. Based on the obtained results, corresponding suggestions for preventing SD risks are presented and discussed.

Findings

First, among the 12 aforementioned major factors, the authors identify eight facors that have significant effects on IHP SDs. Second, the SEM analysis reveals that policy flaws and the fiscal ability of the owner play the most important roles, on account of their direct and indirect influences on SDs.

Originality/value

Considering stakeholders and external environmental effects, a system of indicators is introduced to explore SD risks to IHPs. In particular, an SEM is used to assess the effects of potential SD factors and characterize their interacting influences. This study could help ICCs to avoid or mitigate project delays and cost overruns in Vietnam, and also provide valuable lessons for other developing countries.