Financial risk management in the construction projects

Abstract

Construction risk can be described as the possibility of an incident that will harm the project’s feasibility. Different threats that impact businesses may be found in the construction industry as elsewhere. Moreover, construction projects face significant risks that put building projects at the risk of cost, over time, and poor standard of execution. In the last two years, Lebanon has been suffering from a severe economic crisis, which has affected a large number of businesses and industries, specifically the construction industry. Therefore, this article aims to identify, classify and analyse the most significant risks inherent in the Lebanese construction industry with special emphasis on the financial and economic risk category and eventually establish a conclusion in this regard. To achieve the aims of this research, the data were collected by conducting a questionnaire survey among experts in the Lebanese construction industry. The results showed that the construction industry in Lebanon is exposed to many risk sources, internal and external, and the most important ones are financial risks such as fluctuation of the currency, inflation, and lack of solvency. Finally, the importance and benefits of implementing risk management are discussed in this research as well as the barriers to its effective implementation.