Turnkey Contract
A turnkey contract is an agreement where a contractor takes full responsibility for designing, procuring, installing, and commissioning a complete project or system, handing the client a fully operational result at a single agreed price.
A turnkey contract is an agreement in which one party - typically a contractor or systems integrator - takes full responsibility for designing, procuring, installing, and commissioning a complete project or system. The client hands over a brief and receives a fully operational result. They are not involved in managing the supply chain, coordinating subcontractors, or overseeing installation. The name comes from the idea of handing the client a key they can simply turn to start using what has been delivered.
Where Turnkey Contracts Are Used
Turnkey arrangements are common in construction, audio-visual systems integration, renewables installations, and commercial fit-out. A solar PV installer taking on a commercial roof project - surveying, designing, procuring panels and inverters, arranging scaffold, completing the installation, and obtaining the MCS certificate - is operating on a turnkey basis even if the contract does not use that exact term. An AV integrator designing and installing a complete conference room system, including all cabling, displays, control processors, and commissioning, is doing the same.
The key distinction from a supply-only or install-only contract is that the contractor owns the entire process from design to handover. This simplifies the client's role but increases the contractor's responsibility. Any coordination failures between design, procurement, and installation sit with the contractor rather than being passed back to the client.
Scope definition is critical
Turnkey contracts are clean in concept but disputes usually arise from scope gaps - things the client assumed were included that were not explicitly written down. A detailed scope of works and a clear list of client-supplied items at the outset prevents most of those arguments.
Pricing a Turnkey Contract
Turnkey projects are typically priced as a lump sum. The contractor builds in their margin to cover design time, procurement, installation, and project management. Because the contractor absorbs the coordination risk, the price reflects that. Variation orders are rarer than on a traditional measured or schedule-of-rates contract, but they do arise - usually when the client changes the specification after sign-off or when site conditions differ materially from what the survey identified.
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