---
title: "Turn-key contract"
subject: "Construction Management"
chapter: 5
key: "semester_8/construction_management:turnkey-contract"
source: https://www.bctengineer.com/q/semester_8/construction_management/turnkey-contract
site: BCT Engineering
---

# Turn-key contract

Construction Management · Chapter 5: Contract Management

- Asked in: 2079 Shrawan
- Video: [The Best Turnkey Project Contracts | What You Need to Know  | ProjectSkillsMentor.com](https://www.youtube.com/watch?v=SS10zHUbtV8) — ProjectSkillsMentor
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/turnkey-contract
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-5

## Question

Explain the Turn-key contract.

## Short answer

A turnkey contract is a single contract where the contractor handles design, procurement, construction, and commissioning, delivering a complete facility at a fixed lump-sum price and date. The client simply turns the key; the contractor bears most risks, providing price and time certainty with less client control.

## Answer

A **turnkey contract** is one in which a single contractor is responsible for the entire project (design, procurement of materials and equipment, construction, testing and commissioning) and hands over the complete, ready-to-use facility to the client on a fixed date, at a fixed lump sum price. The client only has to "turn the key" to start using it.

```text
 Client -- needs & performance specs -->
   Contractor: Design -> Procure -> Build -> Test
                              -> Hand over (ready)
```

#### Features
- One point of responsibility for design and construction.
- Lump sum price; the client gives the performance requirements.
- The contractor takes most of the risk (design, delay, cost).

#### Merits
Single contract and responsibility; faster delivery through overlapping design and construction; price and time certainty; less management work for the client.

#### Demerits
The client has less control over design and quality; the scope is difficult to change; the contractor may cut quality to save money; the price includes a high contingency; a clear performance specification is needed; fewer bidders are capable.

#### Use
Industrial plants, hydropower electro-mechanical works, hospitals, hotels, and large buildings where the client lacks technical staff.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Responsibility in turnkey lies with:
   A. Separate designers and builders under the client
   B. The client's engineers
   C. A single contractor for design to commissioning
   D. The consultant only
   Answer: C. One point of responsibility. (Key point: Scope)

2. What is the price basis?
   A. Measured quantity at unit rates
   B. Cost plus fee
   C. Daily labour rates
   D. Fixed lump sum with performance requirements from the client
   Answer: D. Client gives performance specs. (Key point: Price)

3. A demerit of turnkey is:
   A. Less client control over design and quality, and high contingency in price
   B. Many bidders can qualify
   C. Client does heavy management work
   D. Slow delivery
   Answer: A. The contractor may cut quality to save money. (Key point: Demerit)

## Related in Construction Management

- [Methods of execution guided by PPR](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Appr-methods-epc-boo-bto) — Construction Management, chapter 5