After reading the course text, I have developed curiosity on need to explore risk factors associated with turnkey projects to determine if the method would be a recommendable mode of entry in foreign markets relative to other entry modes. The textbook posits that foreign banks and donors often provide a plethora of recommendation to developing nation on turnkey deliveries to mitigate risks. My interest is spurred by the need to unravel the specific risks posed by adoption of turnkey projects as mode of business operation. Additionally, my interest has been sparked by the urge to understand how to manage risks inherent in turnkey deliveries which would enable a contractors meet objectives of a project.
Explanation of the Key Term
Turnkey project is an entry mode in foreign market niches. A client company for example government agency contracts another firm to build and deliver a project that is ready to operate such a port, industrial plant, a highway or power plant (Brian, 2018). The contractor in turnkey projects assumes all risks until completion of the project. On behalf of the buyer, the project developer commits to complete an entire project and later turn over keys to the buyer upon project completion ( Mittal, 2018 and Müllner, 2016) . Turnkey projects encapsulate an entire process comprising of design, specifications, construction, facility commissioning and operation.
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Major Article Summary
The scholarly article by Syeduzzaman, Dutta and Hassan (2018) explores the benefits of turnkey projects with reference to a power plant contract undertaken in Bangladesh. The text defines a turnkey project as a capital construction undertaking where a firm or contractor designs and builds a facility, trains local personnel how to operate the plant and later hands over a self-sustaining project to the buyer ( Syeduzzaman et al., 2018) . The term turnkey is common in the construction sector for example, it is used to refer to bundling of labor and materials by sub-contractors. Turnkey project term is also used in technology industry to refer to pre-built computer package where a supplier performs all tasks such as audio editing and sells everything as a bundle. According to the article, in turnkey projects separate entities set up a plant or equipment in operation and can include contractual actions for example during equipment, system or subsystem installation phase. Syeduzzaman et al., (2018) delineates that in the modern world, many government owned housing projects are turnkey deliveries where a private developer undertakes activities such as land purchase, permit acquisition, designing plans and construction.
As the text explain, a turnkey project hands over a deliverable to a customer that is fully tested for use upon delivery. Turnkey projects offers tremendous advantages to customers, since the buyer does not need to manage the contract. Time and resource sensitive projects such as power plants can impair a company’s ability to progress with normal business while focusing on the project as multiple personally are engaged in working on the project. In turnkey projects, project managers contend with the challenge of accomplishing multiple tasks necessary to complete the contract within stipulated timeframe ( Syeduzzaman et al., 2018) . Typical stages of a turnkey project include identification, planning, project development, contact implementation, termination or closure followed by evaluation. Turnkey projects are characterized by steps such as site selection, negotiations, space planning, coordination of construction and complete installation. Turnkey contacts can be extrapolated commonly referred as turnkey plus, where an equity interests is imposed on the supplier which continues through licensing or management contact. The article concludes that turnkey projects cannot be easily visualized by human mind due due their enormous size and complexity. Formal planning in execution of turnkey projects is necessary in providing a basic foundation for organizing the contact and allocating responsibilities to different players ( Syeduzzaman et al., 2018) . Additionally, formal planning induces project stakeholders to look ahead, instils sense of time consciousness and establishes basis for monitoring and control.
Discussion
The cited work relates to the above explanations and module content by further expounding on the intrinsic details of turnkey projects as mode of entry in foreign markets. The cited sources elucidate that turnkey operations are suited in countries where regulations prevent foreign direct investment (FDI), and where there is a skill set requirement on how to run a technologically complex process. The cited work also posit that in comparison to investment strategies, turnkey projects are less risky. The cited materials are interconnected with course module reading which terms turnkey projects as a type of project marketing. Similarly, the sources refer turnkey undertakings as a form of marketing perspective and a complex transaction entailing a package of works, services and products designed to realize a specific asset for a client with a certain period. The cited works relates to the given explanation on degree of risk in turnkey projects by recommending the need for feasibility analysis in the process of turnkey project process implementation.
The cited work relates to the four other articles which recommend turnkey mode of contract delivery as a suitable entry strategy in emergency situations. The cited work similarly terms turnkey project approach as well suited in preventing multiple entities on a single project and as an expedient method in completion of projects with technical requirements. The four other articles explore the criteria for evaluation of turnkey contract delivery. The cited work explain that turnkey contract delivery evaluation is informed by experience and capability of a bidder in similar projects, the contractor’s financial position and ability to perform feasibility study and proficiency in designing appropriate specifications. The relationship between the cited work and four other articles is exhibited by the explanation of success factors in turnkey contacts. The cited work and other four works agree that swift payment of completed works, provision of relevant information related to the project and prompt handing over of sites to the contractor are important in determining the degree of turnkey projects’ success ( Vassileva & Nikolov, 2016 and Goyat & Nain, 2016) . The materials concur that turnkey projects procurement success is dependent on factors such as safety of site, coordination with stakeholders, fair procurement practices and tax exemption for expatriate contractors.
References
Brian, S. C., (2018). Cross-Border Commerce, Third Edition Author:
Goyat, S., & Nain, A. (2016). Strategies of entering in foreign market. International Journal of Management Research and Reviews , 6 (10), 1382.
Mittal, S. (2018). Choice of market entry mode: A critical issue in international business. Choice , 4 (6).
Müllner, J. (2016). From uncertainty to risk—A risk management framework for market entry. Journal of World Business , 51 (5), 800-814.
Syeduzzaman, M., Dutta, S. K., & Hassan, Y. (2018). Benefits of Turnkey Project in Bangladesh. International Journal of Engineering and Management Research (IJEMR) , 8 (2), 193-195.
Vassileva, B., & Nikolov, M. (2016). Market entry strategies to emerging markets: A conceptual model of turnkey project development. Serbian Journal of Management , 11 (2), 291-310.
