Improving Risk Decisions for Internationally Contracting Projects Based on Behavioral Decision Theory

Abstract

Project risks have been proposed to be divided into four categories, namely, strategic risks, financial risks, operational risks and hazard risks for projects under the international competitive environment. Through systematical studies on internationally contracting project risk decisions based on Behavioral Decision Theory (BDT), key factors related to the behavior preferences of decision makers have been induced to expand and improve existing risk decision models, improving the efficiency and effectiveness of risk decision-making. Such systematical studies have resulted in some interesting findings which may be helpful for guiding the project management in strategic and operational planning. The first finding shows that, a reasonable guide has helped owners determine the appropriate contracting project management mode based on the specific context and requirements of the project in order to better improve the decision-making efficiency and effectiveness, and effectively control project risks by properly staffing the organizational behaviors. The second finding shows that, the risk quantification and proper financing decision making basis has been proposed on internationally contracting project costs estimate to meet the financing requirements of international banks, so as to help the contractor assist the owners for financing. The third finding shows that, the clearly defined methods for calculating the expected returns and risks on the risk decision on contracting project in properly packaging planning and procurement strategies have been systematically studied, so as to effectively instruct the contractors for the project subcontracting and its packaging planning and risk controlling.