The contracting mechanisms known as “turnkey” consist essentially of tendering the design and construction of a work in a single joint process.
The projects or developments known as “turnkey” provide different benefits that make it a great business model for construction, particularly in the case of real estate. The advantages are based on time, resources and investment.
Speed up processes
When a single company is hired to take charge of all the disciplines necessary to carry out a project, not only the delivery time but also the communication is facilitated, which makes the project more agile and effective.
Fewer risks involved
A turnkey development reduces the risk and conflict of having several contractors responsible for the design and the work. A specialist is put in charge from the first stage of the construction, which prevents unforeseen costs that not only make the work more expensive but also lengthen the delivery time.
Time-saving
By bringing together two bidding processes in one, time is saved, the processes are executed more quickly and help to accelerate disbursements, saving transaction costs.
Reduction of conflicts
When the same contractor is responsible for both the design and the work, the conflict that usually occurs with traditional methods of contracting is avoided.
Under these traditional methods, any design errors must be corrected during construction. This makes the project more expensive and delayed, generating cost overruns and delays in infrastructure.
Possibilities for modification
Unlike traditional construction contracts. in turnkey contracts, the project is elaborated in a detailed manner once the contract has been concluded. This justifies that the contractor has the right to introduce modifications to their blueprints. Its costs and risks, although respecting the contract parameters that have been agreed but without the approval of the client.
Completed work
This type of contracts implies not only the contractor’s specialization but also the obligation to deliver the finished project, a highly complex project that requires diverse activities and disciplines.
Idea of costs
Turnkey contracts allow you to have a good control over the cost of the project at the beginning of it since it is known what the client and the promoter wants and how they intend to carry it out.
Savings of resources
In a turnkey project, the client or developer does not need to allocate many resources for the project. It decreases responsibility for administration and coordination, increases organization, while the client only has to deal with a single organization that handles all the stages.
With this type of contract, a better quality is achieved, a more effective and organized execution, the delivery time is reduced, as well as the cost of the project. While there are risks in any type of contract, the great advantages make it a more than viable option.