CASE STUDY ON RISK MANAGEMENT IN THE CHINESE CONSTRUCTION INDUSTRY

Abstract

China has seen a GDP increase of above 8% annually for the past 10 years. Rapid development of economy and open market policies are boosting the Chinese construction industry. However, the complicated market carries further risks to players. The type of risk is different to different ownership clients in projects. It is therefore important for industry participants to evaluate risks brought by different ownership of clients in China, some of whom are the foreign private client, Chinese government client and Chinese private client. The objectives of this study are to (1) investigate the types of risks encountered in construction projects belonging to different types of clients, (2) identify and recommend strategies to be adopted to manage these risks. Three case studies in China with different ownership clients were researched qualitatively. Data were collected from professionals of each project party in the project through indepth interviews. Findings show that there are different risks brought by different clients in terms of political, legal, financial, culture and human resource (HR). This is because of the different characteristics and work styles of clients. This study found that the foreign private clients are exposed to more risks from the culture aspect and the Chinese private clients face a higher possibility of having problems in political and financial aspects. The Chinese government clients sometimes delay making payments, leading to financial and legal problems for contractors. Some suggestions to clients and other project participants to manage risks found in this research were shared in the study. These suggestions were drawn and analyzed from feedback given by interviewees who were experienced in the Chinese construction industry.