A turnkey contract is where the project owner hires a single entity to complete a project. In other words, it places most of the responsibility of a project on the contractor. Turnkey contracts combine procurement, financing, project design, subcontracts, and construction into one solution. Here are some benefits of turnkey guaranteed contracts.
In a turnkey contract, the supplier can understand your design needs. They have the information on the cycles involved, from the planning to the final stages. This means they can execute the plan according to your requirements. The plan and the execution are generally harmonious in a turnkey contract.
Unlike the conventional design and build approach, turnkey contracts decrease financial unknowns. They allow project owners to compute their return on investment (ROI) since they are less vulnerable to rising project costs.
In projects with different organizations involved, the owner will find it hard to determine the cost of the project. It will only become clear once the parties involved have signed their contracts. The project owner might also have to replace an organization that is unable to deliver its job. This makes it difficult to finalize the financial plan, leading to further price complications.
There is usually no relationship among the organizations involved in a design and build approach. This can bring about confusion if one of the parties suggests a change. If the communications are inaccurate, the final design will not match the project owner's requirements. Furthermore, a slight change can prompt changes that can easily drive up the project's total cost.
Blunders and omissions attract more changes, leading to an increase in cost. Some planned projects may not receive recognition until the development stage. This can lead to tremendous expense overruns. This challenge is non-existent in turnkey contracts because the cost is all-inclusive.
In turnkey contracts, the project owner is liable for a single amount. This is the amount settled after the initial arrangement. Hence, any increase in costs is to be accounted for by the contractor.
This is because of the continuity of the group from designing to development. Besides, it is useful to have construction members involved during the planning stage. It helps with forestalling project delays that could bring about cost overruns.
Many phases of a turnkey contract might overlap. The procurement of materials and subcontractors can happen as plans are finalized. This usually results in reduced timelines and minimizes delays at every phase of the project.
The turnkey contract is a model collaborative approach. The architect and developer fill in collectively, with their interests aligned. This takes out the ill-disposed nature present in the design and build strategies. The approach eliminates the accusing and blame-shifting that may arise in the design and build projects.
For more on the benefits of turnkey guaranteed contracts, visit Randazzo Builders Inc. at our office in Sorrento, Florida. You can call (888) 281-4983 to book an appointment today.