Question

Discussion Items 1-What are the major traits of turnkey type contract? A turnkey contract is a business agreement in which a company is given the responsibility of planning and building a product that can generate cash flow for the client upon completion A primary benefit of a turnkey contract is that the solution is ready to use as soon as the project is completed, according to Cambridge Dictionaries Online. The client also normally does not pay for the solution until it is finished. A primary drawback is that the contractor designs and develops the solution, which minimizes the client's ability to control project details

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Answer 1

In a turnkey project, the contractor first 'owns' the project and after completing all the requirements of the project (e.g. the design, technology components, supply, erection and so on), make it operational. Only after that, the project is delivered to the client who needs to do nothing but to "turn the key" i.e. take the ownership of the project from the contractor.
The primary benefit of the turnkey project is that the client gets the finished project, operationally apt as per the requirement since the payment terms are linked to the very requirement that the project will be operational. It implies that the success of the project thus entirely depends on the capability of the contractor. The client needs minimum involvement during the implementation. However, the obvious limitation is that the lack of participation from the client also results in its lack of control. The client also needs to provide full access to the internal resources to the client for complete execution of the project.