Factors Affecting International Contractors’ Performance in the 21st Century

Abstract

Applying advanced technologies and efficient project management techniques helped United States (US) contractors build a strong track record in international construction. Engineering News-Record (ENR) data from the early 1980s to 2008 show that US contractors led the international construction arena during that period. However, starting in 2009, Chinese construction firms took a lead in the international construction market, with increasing volume and revenue. In addition, companies from newly industrialized countries (NICs), mainly South Korea and Turkey, also increased their volumes and revenues. This study analyzes the changing trends in international construction from the beginning of the 21st century. The study also analyzes the factors that helped contractors from NICs to advance in international construction. Study findings indicate that having advanced technological capabilities and project management skills does not provide the same distinctive competitive advantage to US contractors in the 21st century’s international construction industry. US contractors need to form strategic alliances with other international companies that are successfully operating in the Middle East and Asia. Financial support from government can significantly improve US companies’ competitiveness. To improve the capabilities in delivering full-cycle services, US construction companies can acquire facilities management companies. In addition, use of emerging delivery methods and contract strategies, such as build-operate-transfer (BOT), design-build-finance-maintain-operate (DBFMO), and public–private partnerships (PPP), can improve the competitiveness of US contractors in international markets. Other strategies for US construction companies include seeking international mergers and acquisitions (M&As) to improve their performance.