Evaluating impacts of financial risks on schedule delays of international highway projects in Vietnam using structural equation model

Schedule delay (SD) in International Highway Projects (IHPs) has a higher risk than traditional projects and causes a significant detrimental impact on efficiency, cost, and reputation of project investment. As one of the main reasons causing SD, the financial problem was discussed in the literature but was either usually listed very generally or its impacts on project performance were insufficiently described. This study focuses on the financial-related factors affecting SD in IHPs, and employs a factor analysis technique to identify and categorize them using the 207 questionnaire data from the IHPs in Vietnam. Then, the study applies the Structural Equation Model (SEM) to assess the influences of identified factors on SD as well as interactions among them. The empirical results reveal that the financial-related risk elements of SD could be grouped into five major factors in IHPs. In accordance with the effects on SD, the five factors from highest to lowest respectively are changing economic environment(CEE), policy changes (PC), lack of financial capital (LFC), delayed payment (DP), and poor financial management (PFM). The study also discusses the implications of empirical results to effectively avoid, reduce, or even eliminate the impacts of financial-related risks on SD, and provides a set of countermeasures to help the local government and international contractors to mitigate the SD of IHPs in Vietnam, as well as in developing countries that possess similar conditions to those in Vietnam. © 2018 Totem Publisher, Inc. All rights reserved.