Political Risk Management in International Construction: Evidence from Pakistan

Safi Ullah (), Deng Xiaopeng (), Diana R. Anbar (), Chiemela Victor Amaechi () and Muhammad Waqas Ashraf ()
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Safi Ullah: Southeast University
Deng Xiaopeng: Southeast University
Diana R. Anbar: Southeast University
Chiemela Victor Amaechi: Global Banking School (Bath Spa University)
Muhammad Waqas Ashraf: Southeast University

Global Journal of Flexible Systems Management, 2025, vol. 26, issue 4, No 6, 839-864

Abstract: Abstract This research investigates the multifaceted nature of political risk management (PRM) within the context of country-specific international contractual agreements. It focuses on the pivotal domain of political risk management confronting foreign contractors engaged in cross-border business activities. The principal objective is to systematically identify, evaluate, and propose robust risk mitigation strategies aimed at effectively managing political uncertainties. The study adopts a rigorous qualitative research methodology, utilizing empirical data collection through surveys, structured interviews, and detailed case analyses of foreign contracting entities operating within selected organizations in Pakistan. Findings reveal a spectrum of political risks encountered by foreign contractors, including legislative amendments, regulatory impediments, political instability, corruption, and geopolitical tensions. Given the nation’s volatile political landscape and the attendant risk of operational disruptions, an effective PRM is critical for the successful delivery of international contracts. Drawing on comprehensive data analysis, this research constructs an integrative framework tailored for political risk management in environments characteristic of developing economies. Additionally, the study elucidates the intricate interplay between identified risks and their consequential impacts on project cost overruns, timeline deviations, stakeholder engagement, and overall organizational reputation.

Keywords: Construction industry; Contractual flexibility; International construction projects; Political risk; Project risk management; Risk assessment (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40171-025-00463-x

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