Risk mitigation modelling of international construction projects executed by Indian firms: a structural equation modelling approach

Purpose

A number of previous studies have investigated international construction project risks and have proposed risk mitigation measures without examining their interdependence. The purpose of the current study is to identify the influence of various risk mitigation measures on macro-level risk factors in the international marketplace.

Design/methodology/approach

The authors initially identified 26 risk variables and nine risk mitigation measures through a literature review, which were then verified for their pertinence to international projects by three experts. Subsequently, 105 questionnaire survey responses were collected and analysed using factor analysis and structural equation modelling to test the interrelations between the risk variables and mitigation measures.

Findings

The findings suggest that joint ventures with local partners is emerged as the most critical risk mitigation measure that influences the international projects, which are exposed to political, project and firm-specific risk factors. Further, it is worth noting that among the recognised risk mitigation measures in international projects, offering more local employment is the least critical mitigation measure in the international projects.

Research limitations/implications

The findings of this study are based on the macro-risk factors encountered by Indian construction firms in international projects, mostly from specific Asian and African regions. Thus, the opinions of construction firms from the developed countries might be different.

Originality/value

The main contribution of this study to existing knowledge is empirical evidence of the interrelationships between risk mitigation measures and risk factors that are portrayed as latent variables of different manifest risk variables. The generated model can assist construction firms in emphasising several risk mitigation methods, in order to reduce risk and enhance performance in international construction projects.