Approaches for Making Risk-Based Go/No-Go Decision for International Projects

TLDR

Globalization of the economy and construction industry creates opportunities for contractors but also introduces additional uncertainties, and only about 19 % of the U.S. top 400 contractors pursue international projects. The paper reviews current entry‑decision approaches for international construction markets. It proposes a comprehensive, systematic go/no‑go decision framework and validates it through a pilot study.

Abstract

The world economy is becoming more global due to agreements such as the "Uruguay Round" in the General Agreement on Tariffs and Trade. The globalization of the construction industry provides tremendous opportunities for contractors to expand into new foreign markets. However, international construction involves all of the uncertainties common to domestic construction projects as well as risks specific to international transactions. Consequently, in opposition to the worldwide globalization trend, only 19% of the U.S. top 400 contractors actively seek international contracts. This paper discusses current approaches related to entry decisions into international construction markets. It then develops a comprehensive approach for making stable and systematic go/no-go decisions for international projects. Finally, a pilot study is used to demonstrate and validate the approach.