Critical evaluation of credit risk management within defects liability period of infrastructure projects in UAE banks
Creators: name: Ismail, Mohamed
Publisher: name: Anglia Ruskin Research Online (ARRO)
Year: 2025

description: The study critically evaluates credit risk management within the defects liability period (DLP) of infrastructure projects in the UAE banking industry. Earlier literature suggests that credit risk peaks at the inception of construction projects and diminishes as projects progress. Contrary experiential evidence indicates that significant defaults occur during the DLP, necessitating an enhanced focus on this period.This research aims to bridge the literature gap by introducing a modern conceptual framework that incorporates the insights of technical specialists into traditional credit risk management practices, with respect to managing credit risk during the DLP. The study also seeks to develop a project-failure predictive model combining financial and technical engineering aspects of risk management. Fulfilment of this aim is accomplished by answering 3 research questions: (1) What elements in the existing models contributed to infrastructure project failures within the DLP in the UAE? (2) To what extent can bank engineer’s assessment enhance the predictive capabilities of traditional financial scoring techniques? (3) How can the role of bank engineers be promoted to mitigate unforeseen risks in the absence of trade unions in the UAE?A mixed-methods research approach was employed, incorporating data from 133 completed questionnaires and 6 interviews with key credit risk management professionals across the UAE banking sector. This was supported by case studies and an analysis of credit policies and standard procedures. The collected data were analysed using non-parametric statistical tests for quantitative data, alongside thematic and content analysis for qualitative data.The study introduces a new predictive model for failure of infrastructure contracting companies, incorporating both financial and technical indicators, providing a comprehensive risk management tool. The findings highlight the importance of continuous risk monitoring during the DLP and propose practical measures for integrating engineering expertise into the traditional financial analysis framework of UAE banks. This integration is shown to enhance the predictive accuracy of failures and improve overall credit risk management.This research contributes to both academic knowledge and practical business practices by offering a robust framework for managing credit risk in infrastructure projects, emphasizing the critical role of the DLP. The proposed model and recommendations aim to mitigate risks and support banks in achieving more reliable and efficient project financing outcomes.The practical implications of this research are significant for both banking and infrastructure sectors. The study provides a framework for enhancing early detection of project failures, supporting banks in proactively managing credit risk during the DLP. It also offers a systematic approach for integrating engineering assessments into credit decision-making, which can improve risk prediction accuracy and reduce financial losses.