Risk Profile in Turnkey Projects
There has been a transition in the construction industry as a result of innovations in the partnering relationships between the client and the project coalition actors. Today there is a number of different ways to form project coalitions in the industry. The different project structures come with different risks for actors involved in the project. The trend today is use of the integrated project coalition, also called turnkey, characterised by a single contract for both execution and design of the project. This type of contract provides low risk and mission uncertainty for the client. (5.4.5) But this provides more uncertainties for actors such as contractors, designers and consultants.
This type of project management approach requires a thorough risk profile for the project coalition actors. It will always be numerous risks in construction contracts. But without a comprehensive risk profile it could leave the contractor, designer or the consultant dangerously exposed to unexpected responsibilities and risks. This wiki-article will establish the leading contractual risk factors for the consultants in turnkey contracts in the construction industry.
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Turnkey Projects
Definition
A turnkey project, also known as integrated coalitions or single–point responsibility, is a type of project that is constructed as a complete product for a client. (5.4.2) This type of contracting is getting more used in the building industry because the client transfer maximum risk to the supplier.
Structure
You can see the relationships under at the figure.
As you can see in the figure, the main responsibility is centralized with the turnkey contractor. Normaly they guarantee compensation for delays and take full responsibility for overall project cost.(1) In a general contract it is a threeparty arrangement between the client, designer and the contractor. Here the client must relate to two parties and get responsible for design defects(2).
In the turnkey contract the objective of the contractor is to satisfy the clients performance specifications compared to the disigners plans and specifications.
Benefits
One of the main benefits with this type of contracts is the savings in production cost.
