A new framework for ranking Critical Success Factors for International Construction Projects

Since the concept of CSFs has been researched, the results of most studies have shown that the greatest use of this concept is in the field of project management (Belassi and Tukel 1996; Cooke-Davies 2002; Saqib et al. 2008; Ika et al. 2012; Pandremmenou et al. 2013; Yalegama et al. 2016; Das and Ngacho 2017; Luckmann and Feldmann 2017; Mavi and Standing 2018). According to Kannan (2018), the concept of CSFs provides a smarter way to identify certain factors that must or must not be present in or excluded from the project, to make a successful project. Among the first studies of CSFs in the project management literature was that of Belassi and Tukel (1996). They focused on the CSFs that influence project success or failure and proposed a new framework for determining CSFs in projects consisting of four groups: factors related to the project, factors related to the project manager and team members, factors related to the organization, and factors related to the external environment. Their research was conducted in six industries and the results showed that top management support is one of the most CSFs. Among the factors related to the project manager, coordination and competence were found to be critical, and among the factors related to the project team members, technical background and commitment were the most critical. Environmental factors such as technology, economy, and the client were also found to be critical and have a statistically significant relationship with construction projects.

From then, many authors have explored the critical factors that lead to project success in general, so a large number of studies can also be found in the field of CPM (Chan et al. 2004; Arain and Asif 2010; Gudienė et al. 2013; Wondimu et al. 2016; Mavi and Standing 2018; Banihashemi et al. 2017; Zou et al. 2014; Pal et al. 2017; Liu et al. 2016; Yu et al. 2018). Considering that construction is a project-oriented activity and the business of the construction company can be viewed across projects, it is justified to use the concept of CSFs in the management of construction projects. The results of previous research have shown that there are several factors that can influence project success. This is particularly pronounced in construction projects due to their specificity and complexity. Many researchers have classified the success factors into specific groups according to selected criteria.

Chan et al. (2004) developed a conceptual framework on CSFs of construction projects based on the literature review of seven major journals in the construction field. Five groups of CSFs, namely project-related factors, project procedures, project management actions, human-related factors, and external environment were identified as critical to project success. Nguyen et al. (2004) analyzed 109 large construction projects in Vietnam and the results revealed that the success factors for large construction projects can be grouped into four categories, here referred to as the four COMs: Comfort, Competence, Commitment, and Communication. Of the 20 success factors included in this research, 5 were identified as critical: competent project manager, adequate funding to project completion, multidisciplinary/competent project team, commitment to the project, and availability of resources.

In the study by Saqib et al. (2008), 77 factors that could be critical to the success of construction projects were selected and categorized into seven groups. The results of the study showed that the most important CSFs, in descending order of importance, are: decision-making effectiveness, project manager's experience, contractor's cash flow, contractor experience, the timely decision by owner/owner's representative, site management, supervision, planning effort, prior project management experience and client's ability to make a decision. Another conceptual model that contains grouped CSFs that influence project success was developed by Gudienė et al. (2014). They described seven main groups of factors namely external factors, institutional factors, project-related factors, project management/team-related factors, project manager-related factors, client-related factors, and contractor-related factors that influence project success. The most important CSFs for construction project success based on the three main criteria (time, cost, and quality) were identified in the research by Arain and Asif (2010). The top five CSFs for overall project success included clearly defined project mission, objective and scope, adequate planning and control techniques, owner satisfaction with the developed project, adequacy of plans and specifications, and lack of legal encumbrances.

The concept of CSF also found its place in special research areas among CPM. In the context of innovation in construction projects, Liu et al.'s (2016) study identified 20 CSFs – owner involvement and leadership, top management commitment, and strategic importance of the innovation project. In the work of Mavi and Standing (2018), five groups of CSFs were identified concerning sustainable project management. For material procurement to improve waste minimization in construction projects, the procurement process is characterized by four features: supplier commitment to low-waste measures, low-waste purchasing management, effective material supply management, and waste-efficient bill of quantities (Ajayi and Oyedele 2018). From the review of previous studies, it is evident that the majority of the existing research on CSFs has focused on construction projects in general, but few studies have identified CSFs for ICPs.

Previous studies dealing with the CSFs of international business, particularly ICPs, have not been nearly as comprehensive as those on the factors that influence overall project success. In the past, there have been few studies on this topic. Among the first studies of international construction was that of Mawhinney (2001). In his book, he identified some CSFs for ICPs, such as partners, safety and security measures, social and cultural issues, and estimating costs. Han et al. (2007) analyzed the causes of poor profits in overseas construction projects. Zhao et al. (2009) defined some important factors that influence the internationalization of Chinese construction projects. Their study showed that the Chinese government plays an important role in the internationalization of construction companies’ business, as it strongly supports and helps to promote companies abroad. Another study, that by Chen and Orr (2009), showed that the most important factors for the success of business abroad are good infrastructure, the ability to finance the project, and the availability of natural resources in the target market. Han et al (2010) pointed out that uncertain and aggressive changes in the global construction sector pose a serious threat to all participants in ICP.

But in the last decade, an interest in the field of ICPs has been increased. CSFs, which impact international engineering, procurement, and construction (IEPC) project success to the greatest extent, are service provided by suppliers and/or subcontractors, continuous improvement, supplier and/or subcontractor delivery reliability, and effective problem solving (Pal et al. 2017). In the work of Alashwal et al. (2017) among Malaysian contractors, factors such as team power and skills, resource availability, external environment, organization capability, project support, and project organization were found to be most significant for ICPs. One of the most important factors affecting the success of ICPs can certainly be singled out as being related to cultural differences between countries. For example, Chan and Tse (2003) analyzed the international activities of construction companies in a cultural context and showed that cultural differences are the most critical factor in conducting international activities. The importance of understanding cultural differences and taking appropriate actions to achieve project delivery of international projects was also studied by Pheng and Leong (2000). They used construction projects in China to show how cross-cultural management can affect the outcome of projects. There is limited but growing research examining critical risk factors that influence the success of ICPs (e.g. Razzaq et al. 2018; Viswanathan and Jha 2020).

As some research has shown (eg. Mohamed 2003; Kwok et al. 2000; Khamaksorn et al. 2020), for construction companies operating internationally, the most popular strategy and the one that contributes most to risk reduction is the international joint venture (IJV), especially with a local partner. Bing and Tiong (1999) categorized the key success factors for an international construction joint venture (ICJV) into seven groups: partner selection, contracting, recruitment, control, subcontracting, good connections, and negotiation. Mohamed (2003) investigated several IJV projects between the UK and Australian construction companies. His research aimed to investigate the links between risk, key success factors, and execution. The results showed that selecting a local partner and adopting a proactive risk management strategy are keys to successful IJV. A study by Razzaq et al (2018) identified the 16 critical external risks in IJVs. They were classified into five groups: political, economic, legal, social, and environmental risks.

The most common CSFs that influence the implementation and success of ICPs were identified through a detailed literature search that included articles from various databases such as Science Direct, Scopus, Google Scholar, etc. There were four common categories/groups of CSFs highlighted in the literature with a total of 56 CSF indicators. These identified CSFs with references are presented in Table 1.

In Phase 2, semi-structured interviews were conducted with experts to adapt the preliminary list of CSFs from Phase 1 in the context of ICPs. The target respondents for the interviews were construction management professionals with relevant experience in international business. 10 experts were invited to participate in this phase of the research, as shown in Table 2. In the first part of the interview, the interviewees were asked for general information about their company and their previous international experience. The interviewees in this phase had an average international experience of 18 years and all of them were involved in the decision-making process about internationalization of their company.

In the second part of this pre-pilot survey, questions focused on a specific international project in which the respondent was personally involved and the factors that were critical to that project. Respondents ranked the critical factors previously identified in the literature in order of importance concerning a particular international project using the card sorting method (Appendix 1). Respondents also suggested some additional factors that were critical from their experience and that had not been identified in the literature reviewed. In the end, a list of 37 CSFs emerged that were found to be crucial in the implementation of international projects.

Table 3 shows the list of CSFs for which the level of agreement that they were critical or potentially critical was >50%. Other factors where the percentage of agreement was <50%, are such as uniqueness of project activities, language barriers, completion of the project on time, quality of work, technical solutions, and some others were excluded from further analysis. Based on the interviews, in the next phase of primary research, some external or organizational factors were included, which were suggested by the respondents themselves, such as the presence of a foreign partner, local companies/subcontractors, the investor, legislation in the country of implementation, and company references. Based on these results of the pre-pilot study, a final list of CSFs was formed, consisting of 37 factors. The CSFs were grouped into four groups, namely project-related factors, human factors, organizational factors, and external factors, and this grouping was adjusted according to previous research on determining the factors that influence project success.

Before the final design of the questionnaire, a pilot study was conducted on the list of CSFs for ICPs. The purpose of this pilot study was to ensure the validity and reliability of the designed questions and measurement scales. A questionnaire was designed with 37 CSFs identified from the extensive literature review and the results of the pre-pilot study. The reliability of the measurement scales was analyzed by the coefficient Cronbach's alpha and Corrected-Item Total Correlation (CITC) indicator (Churchill 1979). The collected data were imported into SPSS Statistics 22 and all values of Cronbach's alpha for the CSF items are >0.9 and none of the items had a negative CITC indicator, indicating a relatively high level of internal reliability (Hair et al. 2009).

In addition, the study tested for normality and atypical variables (outliers). According to Hair et al. (2009), an objective test for testing normality is the calculation of the skewness index and the kurtosis index. In this study, normality was first assessed by the Shapiro-Wilk test, as it was assumed to be appropriate for n<50 samples and additionally by skewness and kurtosis indices with subjective histogram assessment. The results also showed that none of the tested variables deviated from normal or permissible values. Accordingly, all CSF items were included in the final questionnaire (Appendix 2).

The primary research was conducted through in-depth interviews with 35 leading experts who were involved in decisions to internationalize their companies or as project managers of international projects from December 2019 to February 2020. The interviews used questions in the form of a semi-structured questionnaire and were conducted using the Computer Assitant Personal Interview (CAPI) method, which allowed respondents to answer questions with computer assistance. The interview was divided into two sections; the first section asked for the interviewees’ background data and the second section included the CSFs (defined in earlier stages of the present research) concerning an ICP, expressed on a 5-point Likert scale from 1 (not critical at all) to 5 (very critical). In this second part of the interview, respondents were asked to rate CSFs offered concerning a specific international project in which they had personally participated.

The demographic information of the respondents is presented in Table 4. It shows that the majority of the respondents work in a company that acts as a contractor in foreign markets (74.3%) and another 25.7% were consultants. Regarding the distribution of company years of international work experience, 14.3% had <5 years of experience, 20.0% had between 5 years and 10 years of experience, 28.6% had between 10 years and 20 years of experience, and 37.1% had >20 years of experience in international markets. In terms of the number of ICPs their company was involved in, 22.9% participated in <10 projects, 51.4% participated in between 10 and 20 projects, and 25.7% participated in >20 international projects.

Other demographic questions asked were about specific ICPs in which a respondent was involved. Most ICPs were public projects (65.7%), private projects accounted for 22.9%, followed by PPP projects (11.4%). Most of the analyzed ICPs were located in non-EU member countries (45.7%), including Serbia, Bosnia, and Herzegovina, Montenegro, and Kosovo. EU member countries accounted for 28.6% of the projects, followed by Africa (14.3%) and Asia (11.4%). Finally, it is interesting to note that 25 of the surveyed companies already had the experience of participating in projects in the country where the observed project was carried out, and also 29 companies subsequently concluded new projects and continued their business in that country.

An assessment of the significance of the CSFs concerning the ICPs was calculated using the s-factor. In this study, a 5-point Likert scale ranging from 1 (not at all critical) to 5 (very critical) was used to evaluate the CSFs. This methodology is adapted from the work of Edum-Fotwe and McCaffer (2000). A similar methodology for ranking CSFs for large building projects was also used by Mathar et al. (2020). The perceived level of critical rank for each factor was determined by applying Eq. (1). (1) s−factor=100*Σxifi/(xmax*Σfi) s - factor = 100*\Sigma {{\rm{x}}_{\rm{i}}}{{\rm{f}}_{\rm{i}}}/\left( {{x_{\max }}*\Sigma {{\rm{f}}_{\rm{i}}}} \right) where: i takes a value between 1 and 5 based on the adopted nominal scale; x_i represents discrete categories of scaled respondent attitudes; x_max the maximum value of x_i; f_i represents the frequency for each category of x_i; Σf_i represents the total sample size for each CSF. Values of the s-factor ranged from 100 to 0, with higher values indicating higher levels of criticality.

According to the participants’ assessment of CSFs, it can be seen that the most important is the group of external factors with an s-factor of >70, followed by organizational and project factors (Table 5). This study also elicited the relative importance for each capability and based on this, the final results were analyzed and discussed. Table 6. shows the resulting s-factors associated with each CSF. The results showed that none of the CSFs listed in the questionnaire received an s-factor of <50, so all 37 CSFs identified in this study could be important for the success of ICPs. A new framework of CSFs associated with ICP success is presented in Figure 1. The results show the important role of external factors in the success of construction projects, especially in the international market, as two factors from this group have an s-factor >80.0. These results are consistent with the findings from the work of Razzaq et al. (2018), which suggest that external risks are associated with the success of ICP. However, even though this research focused on ICPs, the most critical factor is the one related to the characteristics of the project itself, its constructability/complexity.

Fig. 1

The results of this study show that the most important group of CSFs are the external factors with the highest overall mean and s-factor value. This is in line with the findings of the work of Razzaq et al. (2018) who indicated that external risks are associated with the success of ICP. This study identified some very important external factors that could be critical to the success of ICPs. Within this group, there are two CSFs with an s-factor >80: Local contractor/subcontractor) (CSF-E-9) and Investor (CSF-E-9) Given the complexity of a construction project, subcontractors are often hired to complete a specific portion of the project. When managing an international project, contractors consider hiring local firms, which may impact the ultimate success of the project (especially if there is not enough qualified local labor or local firms do not meet the prime contractor/project manager criteria). These criteria were identified by the contractors in the first phase of the study as critical in overseas projects and were included in the final list of CSFs on their recommendation. For the same reason, the investor, if from the host country, emerged as the second most important CSF for ICPs among the external factors and third overall. The third most important external factor is the presence of a foreign partner (CSF-E-8), mainly because a local partner could facilitate the implementation of a project, followed by the regularity of the construction market (CSF-E-5) and legislation in the host country (CSF-E-3). The first three factors were unique findings of this study, while the other factors were consistent with previous studies.

Organizational factors were found to be the second most important group of CSFs for ICP success, mainly because of the support needed at each stage of international business. The most important CSF is effective organization and planning (CSF-O-8). If the company has not defined a strategy that includes targeting and diversifying into new international markets, as well as does not have the necessary resources, ICP success will fail to materialize. Top management support (CSF-O-1) was ranked as the second critical factor for ICP success. The results show that quality control (CSF-O-4) is the third most important CSF at the organizational level, followed by company's references (CSF-O-9) and the strong financing capacity of the firm (CSF-O-7). It is obvious that in international business, support from the whole company is much more necessary than in domestic projects.

As mentioned earlier, the construction sector is a project-oriented industry, so it is not surprising that project-related factors are also very important for the success of ICPs. The most important CSF in this group of factors is the constructability/complexity of the project (CSF-P-2) and also in the whole research. The second most important CSF concerning the project is site management (CSF-P-3). Since site organization is a critical factor for the project in general (Ghanbaripour et al. 2020; Mathar et al. 2020), the findings of this research suggest that it could also be critical for ICPs. Since the construction products are static, remain at the place of manufacture, and many parties are involved in the construction, the site organization must be consistent with defined schedules, costs, and quality. In addition, accurate initial cost estimating (CSF-P-4), as one of the three major criteria for project success, was found to be the third most important factor among project-related factors for ICP success. Other factors such as appropriate project identification (CSF-P-9) and effective project management (CSF-P-10) were also found to be significant in the context of international projects.

In this group of factors that could be critical to the success of ICPs, the factors that were assessed were those related to the project manager and the project team (human-related factors). Human-related factors were found to be the least important in this research, but when considering project management in general, and therefore ICPs, there is no question about the importance of the factors identified in this group. If project stakeholders can better predict the likelihood of success, they can take steps to avoid unsuccessful projects, identify good projects worth pursuing, and identify problems on current projects and take corrective action (Saqib et al. 2008). The most significant CSF from this research is project manager competency (CSF-H-1), which is consistent with much previous research (e.g. Khan and Spang 2011; Alashwal et al. 2017; Mavi and Standing 2018). The second most important CSF is the project manager's experience (CSF-H-2), followed by the roject manager's leadership skills (CSF-H-4) and the project manager's decision-making ability (CSF-P-3).