Purchasing strategies and value creation in industrial turnkey projects
By: AHOLA, Tuomas
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Contributor(s): LAITINEN, Eino | KUJALA, Jaako | WIKSTRÖM, Kim.
Material type: 
ArticlePublisher: Amsterdam : Elsevier, January 2008International Journal of Project Management 26, 1, p. 87-94Abstract: This paper evaluates how turnkey project deliveries create value for their customers and how the purchasing strategy of the buyer affects value creation. Literature focusing on the distinguishing characteristics of turnkey projects and the different strategies available for purchasing them is reviewed. The concept of customer value is opened up and divided into value elements, benefits and sacrifices, which jointly determine the extent of value realized for the customer. Value elements discussed in existing literature are categorized and contrasted to empirical findings of a case study conducted in the Finnish marine industry. According to our findings, several short-term and long-term value elements are emphasized in the delivery of complex and bespoke turnkey projects for industrial customers. Further, the selection of the purchasing strategy affects the creation of value for the buyer. More specifically, competitive tendering-based strategies emphasize short-term value creation while purchasing strategies relying on a close interorganizational relationship between the buyer and the seller emphasize long-term value creation. Our findings illustrate that if the project marketing process of the seller and the purchasing strategy of the buyer are well aligned, value creation can be further facilitated
This paper evaluates how turnkey project deliveries create value for their customers and how the purchasing strategy of the buyer affects value creation. Literature focusing on the distinguishing characteristics of turnkey projects and the different strategies available for purchasing them is reviewed. The concept of customer value is opened up and divided into value elements, benefits and sacrifices, which jointly determine the extent of value realized for the customer. Value elements discussed in existing literature are categorized and contrasted to empirical findings of a case study conducted in the Finnish marine industry. According to our findings, several short-term and long-term value elements are emphasized in the delivery of complex and bespoke turnkey projects for industrial customers. Further, the selection of the purchasing strategy affects the creation of value for the buyer. More specifically, competitive tendering-based strategies emphasize short-term value creation while purchasing strategies relying on a close interorganizational relationship between the buyer and the seller emphasize long-term value creation. Our findings illustrate that if the project marketing process of the seller and the purchasing strategy of the buyer are well aligned, value creation can be further facilitated
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