The international contractor's decision to invest : a strategic risk management decision model for public private partnership projects in Saudi Arabia
Alotaibi, Saud Saad
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One of the main sources of risks that influence potential project success is the project selection decision, especially for international contractor organisations looking for an opportunity to invest in public private partnership projects in foreign countries. Project selection decision, which involves the bid/no bid decision, is a critical investment decision needs to be made based on concrete project evaluation and risks identifications; where negative-risk is in place if there is an absence of a rational basis at the time of making such a decision. Thus, negative consequences of such a decision might occur. The bid/no bid decision necessitates an effective project evaluation and risk identification from various aspects with consideration of several internal and external factors in order to achieve project success. Bidding for PPP projects overseas without efficiently applying risk management tools and techniques to evaluate both the project and the organisation’s current situation and capability might result either in large losses or consumption of time and resources that could have been avoided. The prime aim of this research is to develop a strategic investment decision model from the perspective of risk management, in order to facilitate the decisions of international contractors who intend to invest in public private partnership projects in the Saudi Arabian construction industry. This aim requires establishing a link between the risk management process and the organisation's strategy and its current situation, and identifying risks involved in the bid/no bid decision, PPP projects, and international investment in order to provide an effective computer-based model that is capable of organising the bid/no bid decision in a rational, logical, flexible, and user-friendly manner. The pragmatic triangulation philosophy approach is adopted as the best research methodology that allows two types of research strategy to be combined in order to accomplish the research aim and objectives. Thus, the methods used are qualitative interviews and a quantitative questionnaire-based survey. The findings of this research identified critical success factors of international contractors’ bidding decisions for PPP projects in the Saudi Arabian construction industry. In particular, seventy-seven factors affecting the bid/no bid decision were used as a foundation for development of a Strategic Risk Management Decision Model (SRMDM), available at www.srmdm.com.