The terms Turnkey or Lump Sum are frequently used when we really mean the Design-Build scenario.
The original concept of a Turnkey project is a type of project that is constructed so that it can be sold to any buyer as a completed product. So a Turnkey contract would be “a contract where the essential design emanates from, or is supplied by the Contractor and not the owner, so that the legal responsibility for the design, suitability and performance of the work after completion will be made to rest … with the contractor. ‘Turnkey’ is treated as merely signifying the design responsibility as the contractor’s.”
When a Construction project is a turnkey, it means that the company who is contracted to do the construction work manages the entirety of the project, from conception to completion.
Advantages of a turnkey project from a buyer’s point of view are:
Disadvantages include: The Owner will have no control of the end result. Turnkey projects limit the input and choices owners can make, which can be frustrating especially if they have their own experiences and specifications.
The Turnkey and Lump Sum terms are frequently used in the pharma market, but we all know that the related projects are normally built after the URS developed by the owners not by the contractors and based on their own experiences and specifications. So, rather than turnkey we should be normally be talking about build to order, where the constructor builds an item to the buyer’s exact specifications, or when an incomplete product is sold with the assumption that the buyer will complete it. This is called a Design Build contract.
Design-build projects follow the owners’ requirements and particular specifications, time schedule and budget. Owners have a certain control over what decisions get made regarding design choices, schedule, spending and other matters.
One of the most important advantages is the involvement of the owner with the project, both in decisions and in the follow up of almost every step of the process, avoiding sudden unexpected situations.
The main disadvantage will be for construction companies who lack experience of handing complex projects.
These are the two main contract strategies when you want to have most of your project assigned to a single responsible company.
As discussed there are other possibilities such as EPCM plus several subcontractors specialized in the subject. In this case responsibilities are more difficult to fix and the risk of dealing with conflicts, delays or budget deviation are highly probable. Initially it may be less expensive than a Design-Build or a Turn Key, though the final results may be different than planned both in cost and time delivery.
Telstar is an expert provider of Specialist Construction Services to the Life Science and Healthcare Sectors. We understand not only how to erect, commission and qualify your facility but as a specialist equipment supplier we understand the interface between the facility and the equipment better than any of our competitors. Telstar has an unrivalled understanding of the key clean room and equipment needs for your facility.
Telstar is regarded as one of Spain´s most notable pharmaceutical construction companies and has the construction expertise to execute complex and challenging pharmaceutical projects.
Design and Build construction is our strength, providing our client`s with cost and schedule assurance. We have the procedures and programs in place to mitigate your risk and the pharmaceutical design and construction expertise in house to optimize cost and schedule by utilizing our experts when working through the project delivery program.
Telstar’s construction organization has a deep commitment to the health and safety of employees in the field and to safeguarding the environment.
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