Turnkey project

A turnkey project is a type of project that is fully completed and ready to use when handed over to the client.
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Updated: May 30, 2024

3 key takeaways

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  • A turnkey project is fully completed and operational upon delivery, with the contractor handling all phases from design to implementation.
  • The client receives a ready-to-use facility, reducing their involvement in the project’s execution.
  • Turnkey projects are common in construction, manufacturing, and IT industries, where clients require complete and operational solutions.

What is a turnkey project?

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A turnkey project is a comprehensive project delivery method where a single contractor or developer is responsible for the entire project lifecycle, from initial design and planning through to construction, installation, and final commissioning. The term “turnkey” signifies that the project is delivered to the client in a state ready for immediate use, requiring no further work by the client.

Components of a turnkey project

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Turnkey projects involve several key components:

  • Design and planning: The contractor undertakes all necessary design and planning activities, including architectural and engineering design, obtaining permits, and scheduling.
  • Procurement: The contractor procures all materials, equipment, and services required for the project, ensuring that everything meets the project’s specifications.
  • Construction and installation: The contractor handles all construction and installation activities, overseeing the project site, managing subcontractors, and ensuring compliance with safety and quality standards.
  • Testing and commissioning: After construction, the contractor tests and commissions the facility or system to ensure it operates as intended. This phase includes quality checks, performance testing, and final adjustments.
  • Handover: The completed project is handed over to the client in a ready-to-use state, with all necessary documentation, training, and support provided.

Examples of turnkey projects

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Turnkey projects are common in various industries, including:

  • Construction: Building new manufacturing plants, hospitals, or commercial complexes where the developer completes the facility and hands it over to the client ready for operation.
  • Manufacturing: Setting up complete production lines or factories, including all machinery, equipment, and processes required for production.
  • IT and technology: Implementing complete IT systems or data centers, including hardware, software, network infrastructure, and operational setup.

Benefits of turnkey projects

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Turnkey projects offer several advantages for clients:

  • Simplified project management: Clients benefit from a single point of responsibility, reducing the complexity and coordination required for project management.
  • Time and cost savings: Turnkey projects can be more time-efficient and cost-effective, as the contractor is motivated to deliver the project on time and within budget.
  • Reduced risk: Clients transfer the risks associated with design, construction, and commissioning to the contractor, who is responsible for meeting the project specifications and performance criteria.
  • Ready-to-use solutions: Clients receive a fully operational facility or system, allowing them to focus on their core business activities without being involved in the project execution details.

Considerations for turnkey projects

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While turnkey projects offer numerous benefits, clients should consider the following:

  • Choosing the right contractor: Selecting a reliable and experienced contractor is crucial to ensure the successful completion of a turnkey project.
  • Clear specifications: Defining clear and detailed project specifications and performance criteria is essential to avoid misunderstandings and ensure the final product meets the client’s requirements.
  • Contract terms: Carefully drafting the contract terms, including timelines, costs, and responsibilities, helps protect both parties and ensures a smooth project execution.

Understanding turnkey projects is essential for clients seeking comprehensive and hassle-free project solutions. For further exploration, topics such as project management, contract law, and risk management provide deeper insights into the successful execution and benefits of turnkey projects.



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Arti
AI Financial Assistant
Arti is a specialized AI Financial Assistant at Invezz, created to support the editorial team. He leverages both AI and the Invezz.com knowledge base, understands over 100,000... read more.