Identification of Factors Affecting Project Financing Risk

Document Type : Research Paper

Authors

1 PhD Candidate, Department of Industrial Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.

2 Assistant Prof., Department of Industrial Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.

10.22059/frj.2023.352427.1007423

Abstract

Objective
During project management, certain risks need to be effectively mitigated. While risks are an inevitable part of every project, their perception, analysis, and management help organizations achieve goals. Risk management is now an important part of project management and has a specific function for improving the efficiency of implementing the project, saving prices, and improving the profitability of projects. Theories have demonstrated risk management as an influential and scientific management instrument to decrease risk levels. Accordingly, investigating the new methods of eliminating financial risk and financial risk management of projects is necessary to develop and improve risk management.
 
Methods
In this study, the related models and variables were introduced to identify the factors influencing project financing risk. Subsequently, general criteria were derived from the examined models and their associated variables. The study samples were drawn from experts and professionals within Iranian mining companies who had direct involvement in the subject matter. Variables were identified using the content analysis method, which involved utilizing MAXQDA software for theoretical and qualitative data analysis.
 
Results
Financing methods, social risk, contractor risk, construction risk, political risk, design risk, legal risk, financial risk, management risk, customer risk, and sub-contracts are the categories governing the current research. Each item is composed of one or several concepts that represent “features,” “conditions,” and the current or desirable “situation” of the item in the country. Another important point is the synchronicity of “description” and “prescription” in secondary or pivotal items of the research. It means that the constituted items not only represent the descriptive meaning that reflects the description of the current or the desirable situation but also represent the prescriptive meaning. The highest-ranking item is "financing methods," with 99 allocated codes. Following that is "financial risk" in the second rank, with 86 codes, and "management risk" secures the third rank with 26 codes. Ultimately, the categorized items can be approached through a model. Therefore, one of the most important results of the country's economic enterprise challenges is the lack of proper modeling for the financing method. A specific model should be created for financing, based on the risk and return of financing. In addition, it should be noted that the structure used to finance the project in one country may not be effective due to the differences in its laws and conditions, while it is used effectively in another country. according to the conditions of each project and the host country of the project.
 
Conclusion
In this study, the influential items or factors affecting project financing risk are investigated. The results of the study showed that financing methods, social risks, contractor risks, construction risks, political risks, designing risks, legal risks, financial risks, management risks, customer risks, and secondary contracts have influential impacts on project financing risk. After project formation and establishment, project financing emerges as a key determinant. Effectively managing a project to successfully achieve its goals within defined time, cost, and quality parameters demands a holistic understanding of the project's stakeholders and its environmental context. Contract frameworks dictate how foreign companies can leverage their financial capabilities to execute operations within different countries.

Keywords

Main Subjects

References

 
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Financial Research Journal
Volume 25, Issue 3
2023
Pages 485-507

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