Dynamic measurement and evaluation on foreign exchange risks of international construction projects

Due to the complex economic and political situation of the world, China´s international construction engineering enterprises are faced with great risks and challenges in the overseas markets, among which the foreign exchange risks have become increasingly prominent. The payments and costs of international construction projects are generally denominated in different currencies and thus the exchange rate fluctuations during the whole contract period can cause severe losses for the projects. This paper identifies foreign exchange risks of international construction projects, develops a dynamic measurement and evaluation methodology on foreign exchange risks based on the net present value at risk method in order to facilitate the international construction contractors to measure and evaluate foreign exchange risks and take effective measures in time. Finally, a case analysis is advanced and the feasibility and effectiveness of the methodology are validated.