Financial risk cascades represent a critical yet understudied phenomenon in mega-project management, wherein primary financial disruptions (payment delays, cost mismanagement) trigger secondary cascades (subcontractor defaults, resource constraints), ultimately culminating in project failure. This study employs Structural Equation Modeling (SEM) to investigate the financial risk cascade mechanism in Saudi hotel construction mega-projects, specifically examining the mediation pathways through which inadequate cost management and payment delays precipitate project failure. Data from 60 construction professionals (M age = 48.2 years, M experience = 18.7 years) working on Al-Madinah Central Area hotel construction projects were analyzed using confirmatory factor analysis and path analysis within a latent growth curve framework. Results revealed that inadequate cost management (β = 0.687, p < 0.001) and payment delays (β = 0.712, p < 0.001) jointly explain 68.4% of variance in project failure risk (R² = 0.684). Critically, subcontractor performance deterioration and resource unavailability mediate 54.2% of the payment delay → project failure pathway (indirect effect = 0.386, 95% CI [0.301, 0.471]), suggesting that payment cascades operate through supply chain vulnerability channels rather than direct financial stress alone. Moderation analysis revealed that stakeholder coordination quality significantly attenuates the payment delay effect (β = -0.431, p < 0.001), with well-coordinated projects experiencing a 62.3% risk reduction compared to poorly coordinated projects. Model fit indices demonstrated adequate structural validity (CFI = 0.891, RMSEA = 0.068, SRMR = 0.042). These findings elucidate the mechanisms by which financial risks propagate across project ecosystems and demonstrate that interventions targeting supply chain resilience and stakeholder coordination yield disproportionate benefits in mitigating risk. Implications for mega-project governance in Vision 2030 initiatives are discussed.

Keywords

Financial risk cascades, Project failure mechanisms, Structural equation modeling, Mega-project governance, Supply chain resilience, Stakeholder coordination, Saudi construction