Construction Arbitration And Turnkey Projects

Introduction

A 'turnkey' project is so called because (in theory at least) the employer, after taking over the project, has only to 'turn the key' to activate the plant or other project that has been constructed. It is a frequently used model of procurement for power stations, processing plants and where work is funded by way of project financing, as it is generally considered to be a more 'bankable' procurement model. The contractor takes the vast majority of responsibility in terms of design, engineering, procurement and construction. The owner specifies the output or performance that it requires of the facility or plant but rarely provides detailed specifications. It is for the contractor to determine how it intends to achieve the required output or performance. The contract price is almost always a lump sum and there is a fixed completion date that can only be adjusted in a limited number of circumstances (e.g., acts of prevention by the owner).