Most developed economies have well-developed road and highway networks. From time to time new highways are built to relieve congested cities, but by and large most developed countries are not embarking on major road-building projects. Reducing government expenditures in developed countries post the 2008 economic crisis prohibited many major new projects. The opposite happened in many developing countries, with foreign contractors doing most of the work. One project in Kenya delivered 50 km of four-lane highway from Nairobi to Thika at a cost of 27 billion Kenyan Shillings (about \($270\) million), which was completed in early 2012. In early 2015, the Kenyan government announced a plan to double the paved road in the country within 5 years through public–private partnerships. The total value of these contracts was noted as approximately \($3\) billion. While some money is from exchequer funding and Kenyan banks, some is to be provided by foreign development aid partners. This means competitive tendering and cost controls are an integral part of the bidding and construction process. Contractors will be required to submit tenders and cost reports to government departments or agencies, which in turn are likely to be closely monitored by funding providers. Based on a report from the Standard in mid-2016, Chinese firms had successfully bid for a highway project valued at 10.4 billion Kenya Shillings (about \($104\) million). They had previously worked on the Thika highway mentioned above.
Questions:
1 Assuming a non-African construction company is submitting its first ever price to bid for a road construction project in Africa, what special considerations might it need to consider in forming the price?
2 Assuming less profitable road maintenance projects are available in its home country, how would the firm evaluate on the basis of costs/revenues alone, whether or not to pursue a project like those described above?