Turnkey project

economic-dictionary

A turnkey project is one where the contractor performs the engineering, construction function and manages administrative matters. In this way, your counterpart receives the work without having to incur major expenses or paperwork.

A turnkey project, in other words, is one in which the client receives it ready for use or operation, commissioning everything necessary from the contractor to avoid additional outlays.

This type of contract can be applicable to investments of different sizes, from a home to an infrastructure project.

What is sought with this type of project is to simplify contracting, so that the client only coordinates with one contractor and not with different professionals (such as engineers or architects). In addition, the contractor saves the effort and time that it would imply to carry out the procedures, for example, to obtain the construction license from the corresponding authorities.

Obligations in a turnkey project

The obligations of a contractor in a turnkey project are mainly the following:

  • Design of the work.
  • Implementation of the technological elements that are part of the project.
  • Obtaining the permits and licenses required by the authorities.
  • Delivery of the work on an agreed date.

Meanwhile, the obligations of the contractor are the following:

  • Pay the previously agreed price.
  • Give the contractor facilities to access the work.
  • Collaborate with the contractor as much as possible to obtain the required permits and licenses.

Turnkey project example

Suppose a person has bought an apartment that is still under construction.

Within a year the house will be ready to be occupied, but the contractor will take care of everything, what's more, the design of the real estate is already ready, all in plans that were duly explained to the client.

The contractor, for his part, agrees to make the corresponding payments, obtaining a mortgage loan through. The agreed monthly installment will depend, among other variables, on the agreed interest rate, the period of indebtedness and the initial installment paid.

In this case, it would be a turnkey project, because the real estate agency is in charge of the design of the apartment, construction permits and others, so that the user finally has the apartment ready to be occupied.

Tags:  opinion administration banking 

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