Turnkey Projects

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    Turnkey Projects

    It is generally known and accepted that different classes of projects are unique in their nature and they need different approaches.

    Over time different project models have been developed and refined to suit the various classes of projects.

    This article is a brief overview of one of the approaches; Turnkey projects, also referred to as Engineering- Procurement-Construction (EPC). “Turnkey” means that the system is delivered to the client ready for operations and the key feature of EPC is that project price and schedule have a high degree of certainty.

    Within this project approach the client, who is normally a manufacturer precisely defines all their needs, clearly presents his problem and the lists the expected project outcomes. They then invite bidders to present possible solutions to the problem. Each potential supplier then presents proposed complete solution packages, the proposals are the reviewed and evaluated by the client in order to choose a suitable contractor.

    The contractor, assumes responsibility for design, engineering services, procurement, construction, commissioning, and a trial operation. The project is largely contractor-managed and the cost risk and control are weighted towards the contractor and away from the owner. Because the EPC contractor assumes greater responsibility, it is critical to award the contract to a firm with the right qualifications, experience and management skills.

    The major advantages of this approach as compared to others like the Design – Bid – Build (DBB) are:

    • The client transacts with a single supplier for both the design and the execution of the project
    • The possibility of adopting a solution that may not have been known by the client

    However some of the disadvantages may include:

    • Comparison of different suppliers’ proposed solution may be difficult as they may be many different proposals as there are bidders.
    • Since the supplier assumes more risks, he may increase his bid price correspondingly.

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