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Author:Laitinen, Eino Oskari
Title:Customer Value in Turnkey Project Deliveries
Publication type:Master's thesis
Publication year:2007
Pages:128      Language:   eng
Department/School:Tuotantotalouden osasto
Main subject:Teollisuustalous   (TU-22)
Supervisor:Artto, Karlos
Instructor:Kujala, Jaakko
OEVS:
Electronic archive copy is available via Aalto Thesis Database.
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Location:P1 Ark Aalto     | Archive
Keywords:turnkey projects
customer value
value creation
purchasing strategy
shipbuilding
marine industry
Abstract (eng):The amount of outsourcing has increased significantly in last decades.
This has also been the case in project-based industries.
When outsourcing increases, purchasing strategies in projects become more critical to the overall success of the projects but also for the more long-term success of the firms participating in the projects.
To create profitable and fit-to-purpose purchasing strategies, companies need to understand how their suppliers actually create value for their business and based on that knowledge select the right suppliers for their projects.
On the other hand, for suppliers it is at least equally important to understand the value creation logic of their offering in customer's business to be able to develop those offering further and to succeed in project marketing.

This study unveils how value is created in turnkey project deliveries from customer's viewpoint.
The turnkey project deliveries are understood as sub-projects that are as part of customer's own larger project and are delivered on turnkey basis by the supplier.
The value that is created in these turnkey project deliveries can be conceptualised to value creation elements, namely benefits and sacrifices.
In this study these elements were identified and analysed.
The value creation is also analysed from the value realization from time-perspective to emphasize the long-term value creation.

The empirical study is based on cabin area turnkey project deliveries in the Finnish shipbuilding industry.
The data was collected through in total 14 interviews in the shipyard company and the cabin area supplier.
The interviewees included personnel involved in purchasing, project marketing, project execution and product development from both firms.
Also some additional documents from the firms were used.
The empirical data was collected during Autumn 2006.

The potential value creation elements were first identified from the literature and they were categorised into short- and long-term benefits and sacrifices.
The value creation elements were then also identified from the empirical data and categorised also into short- and long-term benefits and sacrifices, and then compared to the findings from the literature.

The competitive tendering purchasing strategy, which is widely used in shipbuilding industry, seems to prevent suppliers to participate into the projects' early phases and also decreases suppliers' motivation for the development work.
The supplier selection criteria have to be revaluated to realize the full value creation potential of the turnkey project deliveries and the purchasing strategies have to be modified to motivate better suppliers' early involvement in the projects On the other hand, to realize the full value creation potential of turnkey project deliveries suppliers have to take a more comprehensive responsibility over the turnkey project deliveries and also over the development of the turnkey project entities.
ED:2007-03-07
INSSI record number: 33171
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