Risks borne by foreign contractors doing business in Turkey

In parallel to the increased demand for infrastructure projects, the number of foreign construction companies working in the Turkish construction market has increased considerably starting from the 1990s. Although Turkish construction market is known to be among the markets that have the highest growth potential, Turkey's high risk rating shadows its attractiveness for foreign investors. As well as the necessity of foreign contractors to effectively manage the country risks, they also face with the challenging task of designing organizational solutions and managerial approaches that are necessary to adapt to market conditions. The objective of this research has been to identify risks faced by foreign contractors that had worked and/or have been working in Turkey and analyse the impact of these risks on the project success. For this purpose, a questionnaire has been designed which is answered by 39 foreign contractors. Within the context of this paper, risk assessments of foreign contractors on the project success will be presented in the light of the survey results. Results demonstrate that, construction-related, financial and legal problems have the highest impact on the project success. Poor communication, organizational and cultural differences with local partners, delays in progress payments, poor dispute resolution mechanism and political instability are among the major difficulties faced by foreign contractors. Majority of the defined risks are impossible to eliminate but impacts can be decreased by effective risk transfer strategies which can be possible mainly by forming successful joint ventures and collaborations during different stages of the construction value chain.