As businesses become more intricate, a one-size-fits-all approach to project management no longer suffices. Turnkey contracts are a solution to this problem – but what exactly does turnkey mean?
In essence, a turnkey contract is an agreement where the contractor agrees to deliver a completed product that is ready to use. The client is responsible for specifying the end result, and the contractor handles everything else – from design, to procurement, construction, and commissioning.
The turnkey approach is popular in construction, IT, and engineering projects, where the client wants a single point of responsibility for the finished product. This approach simplifies the process for the client, as they only need to deal with one contractor rather than multiple vendors.
Turnkey contracts have several advantages for the client. Firstly, the client can transfer the risk of project failures and delays to the contractor. Since the contractor is responsible for delivering a working end product, they bear the risk if things go wrong.
Secondly, a turnkey contract means the client can focus on their core business functions without having to invest time and resources in managing a complex project. With a turnkey solution, the contractor takes on all aspects of the project management, freeing up the client’s time.
However, there are also some potential downsides to turnkey contracts that clients should be aware of. Firstly, turnkey contracts can be more expensive than other project management models because the contractor is taking on more responsibility. Clients should expect to pay a premium for the convenience of this approach.
Secondly, the client’s ability to influence the project may be limited. Since the contractor is responsible for everything from start to finish, the client may not have as much control over the project’s details, design, and implementation. For clients who want more control and involvement in the project, turnkey contracts may not be the best option.
In conclusion, turnkey contracts offer a simplified and streamlined project management model, with the contractor taking on all responsibility for delivering a completed end product. While turnkey contracts can be more expensive and limit the client’s ability to influence the project, they are popular in industries where a single point of responsibility is desired. Clients should carefully consider the benefits and drawbacks of turnkey contracts before committing to this approach.