On a construction project abroad, risks are both more varied and noticed later than on a project at home. Below we summarise the most common risks and the measures that can be taken for each at the start of the work.
| Risk | Why it matters | Measure |
|---|---|---|
| Currency | If income and costs are in different currencies, the margin can disappear | State the contract currency and who carries the exchange-rate risk |
| Regulatory differences | The design may need to change to meet local standards | Review local codes at the design stage |
| Permit times | Building permits, work permits and import licences can delay work | Write permits into the programme with their durations |
| Supply | Materials may be unavailable locally or held at customs | Order long-lead and imported items early |
| Climate | Heat, rain or frost can stop some works | Build the programme around the climate calendar |
| Contract and law | Governing law and dispute resolution may be left unclear | Write the law, language and dispute route at the start |
| Communication | Distance between head office and site delays decisions | Regular, written, decision-oriented reporting |
1. Currency and payment risk
Where income is in one currency and costs in another, exchange-rate movements can wipe out the margin quickly. The contract currency, payment schedule and price adjustment clauses should be settled at the start.
2. Regulatory and standard differences
A material or detail accepted in one country may not meet another country’s codes. Reviewing building, fire, energy and seismic codes at the design stage prevents redesign during execution.
3. Permits and official processes
Building permits, work permits for foreign staff and import licences take very different times from country to country. If these are not written into the programme as separate items, the site stops while it waits for a permit.
4. Supply and logistics
Products that are not available locally must be imported; production, sea or road freight and customs can take weeks. These items should be identified early and their orders planned back from the programme. See construction procurement management for details.
5. Climate
Concreting in extreme heat, earthworks in the rainy season or facade work in freezing cold affect quality and time. The programme should take the country’s climate calendar into account.
6. Contract, law and partnership structure
The governing law, contract language and dispute resolution route should not be left open. In work entered as a partnership or consortium, each partner’s share of work, responsibility and risk should be clearly defined.
7. Communication and reporting
Distance means information arrives late. Regular written progress reports let head office and the investor see problems in time. We set out the sections of a good report in how to write a construction progress report.
Keep a risk register
Collecting all of these risks in a risk register, recording each risk’s likelihood, impact, owner and measure and updating the list regularly, is the simplest and most effective tool of risk management on international projects.
DEMAFT’s experience
DEMAFT has run projects in Türkiye, Kyrgyzstan, Algeria, Cameroon and the United States, in 5 countries on 4 continents, under different regulations, climates and supply conditions. We carry out our work in the US through our licensed affiliate CNK Contracting LLC in Maryland. We use this experience in our international construction projects service and, for pre-investment assessment, in our construction consultancy service.
