A turnkey contract is a type of contract usually used in construction projects where a contractor is responsible for designing, building, and delivering a project to the client. The term “turnkey” derives from the idea that the client only needs to “turn the key” to start using the completed project. Turnkey contracts are also known as design-build contracts or EPC contracts (engineering, procurement, and construction).
In a turnkey contract, the contractor takes on the responsibility of delivering the project to the client within a specified budget and timeline. This means that the contractor is responsible for the design, engineering, procurement of materials and equipment, construction, and commissioning of the project. The client usually provides the land or site where the project will be built.
The advantage of a turnkey contract is that it allows the client to have a single point of contact for the entire project. This means that the contractor is responsible for coordinating the various aspects of the project, including subcontractors, vendors, and suppliers. The client can also benefit from the contractor`s expertise in project management, design, and engineering.
Another advantage of a turnkey contract is that it provides the client with a fixed price for the project. This means that the client will not have to worry about cost overruns or delays. The contractor is responsible for managing the project within the agreed budget and timeline.
However, there are also some risks associated with turnkey contracts. If the contractor fails to deliver the project within the agreed timeline or quality standards, the client may have to bear the cost of delays or rework. The client may also face challenges if the contractor goes bankrupt or fails to meet their contractual obligations.
In conclusion, a turnkey contract is a type of contract that provides clients with a single point of contact for the entire project. Turnkey contracts can help clients to manage costs, time, and quality of the project, but they also come with risks. It`s important for clients to carefully evaluate their options and choose a reliable contractor with a proven track record of delivering turnkey projects.