Effect of Geopolitical Tensions on Construction Costs of Selected Government Building in Nairobi City County

Abstract

This study examined the effect of geopolitical tensions on construction costs of selected government building projects in Nairobi, Kenya. Increasing global political instability has disrupted supply chains, trade regulations, and currency stability, contributing to rising construction costs. However, despite growing evidence linking geopolitical risks to construction cost escalation globally, limited empirical studies have specifically examined how geopolitically driven security measures and market uncertainty affect construction costs of government building projects in Nairobi City County, Kenya. Anchored on Risk Management Theory and supported by Transaction Cost Economics, the study adopted a quantitative descriptive research design. The target population comprised architects, engineers, quantity surveyors, and project managers. Stratified sampling yielded 75 respondents. Data were collected using structured questionnaires administered physically and electronically, and analyzed using descriptive statistics and multiple regression in SPSS. Validity was ensured through expert review and pilot testing, while reliability was confirmed using Cronbach’s alpha. Ethical considerations included informed consent, confidentiality, and research authorization. The results revealed strong agreement among respondents that global trade disruptions contribute to increased construction costs. Multiple regression analysis further showed that COVID-19 pandemic effects, geopolitical tensions, and transport expenses jointly explained approximately 63.9% of the variation in construction costs (R² = 0.639), with the overall model being statistically significant, F (3, 52) = 30.62, p < .001. The study concludes that geopolitical risks are significant predictors of public construction cost escalation. It recommends integrating geopolitical risk assessment into budgeting frameworks, diversifying supply chains, adopting currency risk management strategies, and strengthening local material production to enhance cost stability.