A.

NEW ISSUES AND EMERGING RISKS IN INTERNATIONAL CONSTRUCTION IN

RELATION TO THE CURRENT STATE OF THE WORLD IN PARTICULAR
,ENVIRONMENTAL DEGRADATION, DECIPATING RESOURCES AND CLIMATE
CHANGE

1. Overview of issues, new issues emerging risks in international

construction and its relation to state of the world
Introduction
Issues is a regular scenario in particular organization. There are a number of
impacts/issues emanating from urbanization in both the developed and
developing world, particularly the sociological, economic, environmental, and
technical impacts of developed and developing countries.
In international construction industry, there were many issues mentioned
(State of the World ) relating demographics, economic condition and etc. those
various issues whether new or traditional it states a problem that can emerge
risk in particular construction process.

ISSUES AND NEW ISSUES EMERGING RISKS

CONSTRUCTION REGARDING TO FOLLOWING:

IN

INTERNATIONAL

RISK MANAGEMENT
DEMAND INCLUDING ECONOMIC SECTOR
URBANIZATION

Because of the complex nature of construction, the participants are widely

exposed to a high degree of risk (Hendrickson 2000). Typical risks include
socioeconomic factors (environmental protection, public safety, economic
stability), organization relationships (contractual relationships, attitudes of
participants, communication), and technological problems (design assumptions,
site conditions, construction procedures). However, risk management techniques
are not well developed in the construction industry, and almost all participants
approach risk management in terms of intuition, judgment, and experience
gained from previous contracts (Bing 1999). In this section, we present a brief
summary of relevant issues.
RISK MANAGEMENT
INCLUDING THE ECONOMIC SCTOR
1. Capital Budgeting
Capital budgeting quantifies the benefits, costs, and risks of an
investment. The firm must first estimate the cash flows associated with
the project over time and discount the cash flows to determine their net
present value using an appropriate discount rate.
2. GLOBAL RISK

global risks, are Large-scale events or circumstances that arise from global
trends; are beyond any particular partys capacity to control; and may
have impacts not only on the organisation but also on multiple parties
across geographic borders, industries, and/or sectors, in ways diffi cult to
imagine today.
3. HEALTH AND SAFETY
The provisions of safety measures to be considered in site or
international construction. Being knowledgeable in practice through
educating sometimes becomes a lack, in terms on access to preventive
measure trainings and other guide manuals.

URBANIZATION
A DATA FROM STATE OF THE WORLD

Gap between rich and poor

The gap between the rich and the poor is getting wider. This polarisation is
particularly evident, and more destructive, in the growing urban areas of
the world where food and water provision as well as water and sanitation
infrastructure, are not meeting demand.

Climate change and sustainability

Climate change is fundamentally affecting . The world has experienced an
increasing frequency of natural disasters driven by climate change, such
as tropical cyclones, flooding and landslides. The
Low Elevation Coastal Zone, the contiguous area along the coast that is
less than 10 metres above sea level, makes up 2% of the worlds land area
but contains 10% of the worlds population. In addition, many informal
settlements are located in other high-risk areas such as steep hill slopes,
deep gullies and flood-prone areas. Sustainability and its associated
environmental pressures is changing construction. There are push-pull
elements with legislation and taxation providing the push, with the pull
coming in the form of business motivation to achieve less waste and
greater energy efficiency, thus reducing costs.

Megacities
It is estimated that by 2015 there will be as many as 60 megacities (cities
with more than five million inhabitants), together housing more than 600
million people. Megacities require human and natural resources for
energy, industry, construction, infrastructure, and maintenance, and the
ecological footprint they create has a huge impact, both locally and
globally. The consequences of high population densities include pollution,
energy consumption and waste.

Ignoring any one of these will compromise a citys sustainability, but they
all require planning, finance and delivery. Public-private partnerships are
seen by many as the only way to achieve improvements in urban areas.

Lack of water and sanitation

More than 1.1 billion people lack access to safe water, and 2.6 billion lack
access to anything more than basic sanitation, putting peoples lives at
riskThe worlds water resources are under increasing pressure due to
intensive farming, increasing population, and political tensions. This
situation is exacerbated by climate change and environmental
degradation. Most of the water used is for agriculture; irrigation accounts
for nearly 70% of total global use. Growing food is water-intensive; every
kilogramme of potatoes we eat uses 1,000 litres, wheat 1,450 litres and
rice 3,450 litres. Industry uses 20%, and nearly every industrial process
needs some water; it takes 477,750 litres of water to make a single car for
instance. The remaining 10% is for everyday use for drinking, washing,
bathing, and cooking. Each person in the world should have a minimum of
2-3 litres of water to drink every day.

Poverty
About 25,000 people die every day of hunger or hunger-related causes
(Food and Agriculture Organization, 2008). Of the three billion that live in
cities, one billion are in slums and the majority of these slum dwellers live
on less than US$1 per day. Poverty in urban areas is different in character
from rural poverty. Towns and cities are part of the monetary economy and
people living there are completely dependent on a stable income base in
order to be able to pay for necessities such as food, shelter and fuel.

Congestion
Increasing congestion owing to increasing urbanisation and vehicle
ownership has an economic, social and environmental impact. In China,
national vehicle ownership is forecast to rise from 30 million to 140 million
by 2020. Tackling congestion is high on the agenda of many countries;
investment in transport infrastructure is crucial. Governments are faced
not only with the need for new facilities but also have to finance the
replacement, modernisation or refurbishment of existing ageing stock.
Many city governments are looking at building underground, to lessen the
environmental impact and also because of land availability issues.

Housing shortages

The emerging economies, notably the BRIC countries Brazil, Russia,

India, and China are undertaking market reforms that are prompting the
expansion of a middle class in need of housing. People with an annual
income of over US$3,000 (part of The World Banks definition of middle
class) in the BRICs has nearly doubled in the past three years. These
countries need 22 million housing units every year until 2030.
Demographics and ageing

The design of cities must take account of the changing age profile of the
inhabitants. This is of particular importance for healthcare, accessible
infrastructure and leisure facilities.
DEMAND FOR INFRASTRUCTURE
One of the basis of development and a competitive country is a good
infrastructure provision that relates transportation and communication,
educational and health facilities.
Fig. 6 shows the global infrastructure gap and the projected infrastructure
investment needs in various countries and regions. The crux of the
challenge of bridging the infrastructure gap is money. Whatever the
financing structure, the public sector is the final funder. New forms of
procurement, particularly publicprivate partnerships (PPP), Private Finance
Initiatives (PFI) and Build-Operate-Transfer (BOT), are involving the private
sector in the provision of public goods and are providing much needed
facilities, but the integration (and thus the sustainability) of transport
must remain a high priority, a challenge when different organisationsare
involved in each of the one-off projects.
EMERGING
RISKS
ALSO
INCLUDES

 Increasing natural resource

constraints
(e.g.,
loss
of
freshwater reserves, depletion
of
oil
reserves,
loss
of
biodiversity) that could raise
the cost of raw materials and
increase food prices, human
suffering, and the pressure to
identify
alternate
energy
sources.

Natural
or
man-made
disasters
(e.g.,
floods,
terrorism,
cyber-terrorism,
viruses, spyware) that could
cause business disruption and
human catastrophes.
Increased industrial pollution
and
rising
global
carbon
emissions leading to climate
change that could cause a
decrease in biodiversity, a shift
in locations of production and
consumption,
and
regional
resource shortages.
Rapidly shifting demographic
patterns
(e.g.,
ageing
population) that could cause
talent shortages in certain
labour
markets
or
within
certain capabilities, lack of adequate skills, or shifts in customer demands and/or
loyalties.
Rising labour costs driven, in part, by expanding benefits (pension, workers
compensation, and other non-salary expenses), which could result in lower
profitability and loss of competitive advantage.
Increased volatility in asset prices and commodity markets (e.g., oil price
shock, asset price collapse) that could cause fluctuations in cost structures that
cannot readily be passed on to the consumer or otherwise absorbed.
A global liquidity crunch (e.g., resulting from sub-prime mortgage lending
practices) that could raise the cost of capital for finuancing transactions.
Emergence of new technologies (e.g., nanotechnology) that could evolve in
unforeseen ways in an emerging market for example, leapfrogging existing
technologies as new applications arise.
Technology and communication disruptions (e.g., Internet blackout) or system
failures, which could lead to business disruptions and economic loss.
Changes in laws and regulations (e.g., spread of liability regimes impacting
foreign investment, or industry-specific laws such as prohibition impacting the
alcohol beverage industry) that could cause an overhaul in the manner by which
businesses are run, or affect the sources of their profits.
A realignment of power in the capital markets of a country (e.g., increased
governmental control of companies, foreign investment) that could lead to
classes of activist investors who could pressure for different industry approaches
to capital structure, profit allocation, or strategic goals.

 Decline in global economic growth (e.g., caused by slowed Chinese economic

growth, global recession, unsustainable deficit levels) that could negatively
impact demand and put downward pressure on prices.
Political crises (e.g., failed and failing states, war, Middle East instability, failure
of democratic institutions, regime change), which could result in nationalization
of assets, increased regulation, protectionist tendencies, or other loss of control.
Pandemics and other health crises (e.g., fast-traveling pathogens such as avian
flu, developing world disease such as HIV/AIDS, tuberculosis, malaria), which
could jeopardise supply chain, consumers, employees, and others.
Economic inequality which could exacerbate poverty and suffering and increase
pressure on business to engage in humanitarian efforts.
Rise in nuclear capabilities which could endanger global political stability and
physical security.
Terrorist threats which could reduce economic confidence or cause direct
economic losses as well as loss of life, property, and security.
Increased competition from emerging markets and/or within the home market
which could cause downward pressure on prices.
Rise in anti-globalization sentiment and protectionism (e.g., fiscal policies,
trade embargoes, heightened tariffs, or other anti-competitive practices), which
could cause retrenchment from global trade and investment.
Increase in corruption (e.g., bribery in procurement or sales), which could
create anti-competitive business practices and lead to regulatory fines and
sanctions and reputational damage for perpetrators.
Decline in recognition or enforcement of intellectual property rights (e.g.,
patents, licenses), which could cause unlicensed commercial activity or loss of
proprietary information.