Protection against risks of international engineering contracting
International engineering is a risk-ridden industry, which can be described as “a trap everywhere, sometimes in crisis”. Among the risks often encountered in international contracting are political risks, technological risks, operational risks and exchange rate risks。
Political risks
With regard to political risks, we have adopted strategies in practice:
The first is “fast and slow”. In the early stages of political unrest or war, china should rapidly and decisively withdraw from the country or region in which it is located, ensuring the safety and security of its staff and striving to minimize the loss of property. It is not appropriate to invest more in countries or regions where political instability is volatile. The second is “the timing of the review, subject to availability”. Countries and regions where political stability has become more stable should choose the best opportunity to enter the market and, once this is done, make great strides in gaining access to work on better terms。
Technical risks
The technical risks were mainly due to underestimation of the engineering technology at the time of the tender or overestimation of the level of technology in the unit, which resulted in the project being implemented without breakthrough due to the difficulty of engineering technology, affecting the construction schedule and the cost of the work. In this regard, projects should be selected in an effort to prevent them。
• select as much as possible the project of its strength. Be familiar with the technical characteristics of engineering and be well prepared before bidding。
— best possible mix of professional construction teams. Professional construction teams are skilled and do well, effectively reducing the cost of work. Full use should be made of the technical capacity of specialized companies when contracting for complex large- and medium-sized engineering projects。
• make the best use of local professional companies. In recent years, with the rise in the level of salaries of domestic workers, some competitiveness has been lost in international contracting. Many developing countries, particularly in south-east asia, have experienced significant improvements in the quality of their construction capacity, which in some respects has been close to or even greater than the domestic construction capacity, but which has lower labour costs than those of domestic labour. The full utilization of the local construction capacity is therefore an effective way to pre-empt specialized works and mitigate technological risks。
Business risk
In project operations, different coping strategies should be adopted for the risks arising from different causes。
- operating risk due to unforeseen factors. Such risks are often sudden and unexpected, and therefore react quickly, randomly and appropriately. In 1995, the bank of bahrain in the united kingdom closed down its singapore branch futures business because of its large losses. When china water and power had learned, china had decisively transferred all of its deposits before the bank was declared bankrupt, avoiding losses in this unpredictable event。
- business risk due to design deficiencies. Such risks are closely related to ownership and advisory responsibilities and are difficult to address. Therefore, companies need to build up and collect technical information in order to prove responsibility on a solid basis and, if necessary, to call upon eminent experts and authorities
