Risk factors in oil and gas construction projects in developing countries: a case study

Abstract

PurposeThis study aims to investigate the risk factors in construction projects in oil and gas processing facilities in Yemen and serves as a case study for developing countries.Design/methodology/approachBy using a questionnaire, data were collected from 201 project managers and engineers employed in different sectors in the oil and gas industry in Yemen.FindingsThe survey analysis based on Kruskal–Wallis test method shows a high degree of agreement on the perceptions of risk factors depending on categories of companies. In other words, the tested risk factors exist in all sectors of oil companies in Yemen and are valid as a measure of risk factors in construction projects in oil and gas organizations in general. Although no evidence suggests that the risk factors differ significantly according to job title, the result of identifiable risk factors according to experience shows a statistically significant difference among participants in terms of their experience. The relative importance of the ranking of risk factors was obtained by the statistical analysis of responses on the impact and likelihood of occurrence of these risks. Findings show that internal risks are the greatest influential factors in construction projects in the oil and gas sector, followed by changes during construction project, government instability, incorrect project cost estimation, government delay in decision making, incorrect project schedule estimation, and political situation and war in the country.Originality/valueThese findings are valuable to organizations that are planning to conduct construction projects for oil and gas processing facilities in Yemen and other nations with similar environments, such as developing countries.