INTERNATIONAL CONSTRUCTION

ICC8X00

TENDAI DIZA (tendaidizah@gmail.com)

 International Construction Defined

International construction projects are those in which :

the contractor
the lead consultant
or the employer
is not of the same domicile, and at least one of them is working outside
his or her country of origin.
The lowering of international barriers allows construction companies to
conduct business in developed countries
Developing countries need new infrastructure and buildings and
welcome specialized contractors from industrialized countries.
International, MNC and Global compared
• While many construction firms can be described as
international in scope few would be typified as being
’global’ or even multinational.
• The international firm has a large domestic market
and dependent satellites in several countries.
• The global firm has a home base, but brands
independent companies around the world, e.g. Sony
(UK).
Reasons for International Contracting- Historical

International contracting is not a new phenomenon.

• Origins with the expansion of empires, e.g. the Romans constructing
infrastructure in the Northern Europe, the French constructing the Suez
Canal and the Germans constructing the Ankara-Baghdad railway,
• Aid programmes in Third World countries, funded by the World Bank, the
African Development Bank and the Asian Development Bank.
• Oil exploration in the Middle East, South America, Africa and Russia
continued to feed the global demand for international construction.
• Continued Growth and Development of Third World Countries and
Emerging nations.
• A firm deciding to internationalise may have their basis in the outcomes of
a portfolio analysis.
Characteristics of International Construction
Environment
Why Construction Firms Expand into International
Markets?
There exist several reasons for construction firms to expand
their business into international markets. These reasons include:
• Stagnant domestic markets
• Spreading risk through diversification into new markets
• Competitive use of resources
• Taking advantage of the opportunities offered by the global economy
• Technological advances
• Political reform
• Worldwide trends toward privatization
• An increasing recognition of economic interdependence,
• The globalization of construction markets now allows local construction
companies to compete internationally
Opportunities Associated with International
Construction
• Maximising the company’s share value and stock market rating
• Maximising profits /to increase long-term profitability
• Maximising dividends
• Securing the viability of the company
• Providing continuity of employment
• Career development and job satisfaction
• Building and maintaining the company’s standing
• A desire to maintain shareholders” return
Obstacles/Difficulties in International
Construction
• Changes in the law
• Political, economic, legal risk
• Expropriation
• Culture, language, value systems and business ideologies differs
• Exchange rate and convertibility
• Delay in approvals
• Reliability and Credit worthiness of client
• Shareholder resistance
• Force majeur
• Corruption
 The Construction Stakeholders

• The Client who invest in the project and who has the right to expect to receive
good service and value for money
• Design consultancies normally rely on reputation and the provision of
specialist expertise to attract the interest of global clients and clients from other
countries.
• Constructors: property development, design, construction and facility
management.
• Construction product manufacturers and material supply companies
• Subcontractors- specialist work
 Foreign Market Selection

• Need and Potential

• Financial and Economic considerations
• Political and Legal factors
• Socio-Cultural forces
• Degree of competition
• Freedom to trade
• Building Codes and Practices
• Business cycles