Academic journal article Trames

International Joint Venture between ASEAN and Gulf: Bidding and Delivering Bahrain International FORMULA-1 Circuit

Academic journal article Trames

International Joint Venture between ASEAN and Gulf: Bidding and Delivering Bahrain International FORMULA-1 Circuit

Article excerpt

1. Introduction

It is interesting to note that international contracting firms manage to secure sufficient workload that makes their initiatives worthwhile (Yeet al. 2013). International joint ventures are mostly project-specific in nature (Kim et al. 2009, Hung et al. 2002, Chou and Yang 2013). The Bahrain FORMULA-1 Circuit is considered as one of the best international racing car track in terms of technical aspects and architectural quality (an aerial shot in Fig. 1). Two FORMULA-1 races have been hosted in the Kingdom of Bahrain, in 2004 and 2005. The FORMULA-1 Circuit had recently won the award of the best international racing car circuit. The Bahrain FORMULA-1 Circuit (as illustrated in Fig. 2) has a total capacity for 50,000 spectators. The racing circuit includes amongst others, a 9-storey VIP tower (Sakhir Tower as shown in Fig. 3); a main grandstand for 10,000 spectators and first-class hospitality suites; dedicated buildings for 18 international racing teams; a technical resource centre; administration buildings and broadcast centre; a second pit building with lounges and grandstand for 3,000 spectators, under track pedestrian and vehicle tunnels and a medical centre. Fig. 4 shows the picture of the Oasis Complex.

In the initial stage, 34 contractors from the Middle East, Europe, United States of America, China and Australia submitted their bids to secure the project. This number was then shortlisted to 9 international contractors and lastly the project was awarded to a Bahrain-Malaysia joint venture construction company. The project was considered successful because it was completed earlier than the allotted time and has attained the stringent quality control of race-track and building construction. This paper focuses on the reasons in which a construction firm from a developing economy can penetrate the international market in terms of securing the project and subsequently delivering the project deliverables successfully, in which case, a rare feat and not by accident.

2. Determinants for success in international construction projects

The definition of international project has evolved for the past twenty years (Halawa et al. 2013). Strassman and Wells (1988) defines an international construction project as one undertaken by an enterprise outside its home-country, for example, firms from one country building under contract in another country. However, this definition is not appropriate nor is it sufficient to depict the workings of the global market today. This definition should include projects in home-country but involving foreign firms as competitors (West 1992, El-Sayegh 2008, Momaya and Selby 1998). There exists a construction market where construction work is undertaken by the international construction system comprising firms operating throughout the world (Adams and Fuss 2010, Drewer 2001, Li 2013). Due to the location specificity of construction outputs, construction industry is 'local' by nature in terms of climate, regulations, political, institutional and social conditions that exist in a particular locality (Ozorhon et al. 2007, Hillerbrandt 2000). This inadvertently gives competitive advantage to home-grown firms over foreign contractors in terms of language, culture, taxation charges, currency restrictions and project logistics in terms of securing networks of local suppliers and sub-contractors (Flanagan 1994). The global construction market has been estimated to be about USD 3, 000 billion annually and around one-third of this figure has been undertaken by the international construction system (Bon and Crosthwaite 2000).

2.1. International players

The international construction market has been dominated by contractors from a few developed countries (ENR 1991, 1992, 2000, World Bank 2000). An analysis was done on the figures depicted in the annual Engineering News-Record (ENR) survey on the top 30 international contractors during 1999 to 2000 worldwide. …

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