What is Turnkey?

In this a continuing series on commonly misused words in project and contract management we consider the word TURNKEY

 

The word turnkey, clef en maine in French, schlußelfertig in German, has always caused difficulties.  What does it mean?

It implies some form of completeness, to many people the most absolute form of completeness, implying the completion of a project such that it is ready to use i.e. that all that is required is that the owner insert his key on completion and begin full use of the work.

However a US court laid down the best and most widely accepted definition of the term:

The term turnkey construction job under the applicable case law imposes on the contractor the responsibility for providing the design of the project and responsibility for any deficiencies or defects in the design, except to the extent such responsibility is specifically waived or limited by the contract documents..

Turnkey projects are characterized by the owner’s reliance on the contractor’s design.  The law in most jurisdictions is that in such circumstances the contractor is responsible for producing a project that is suitable for its purpose.  As the definition above makes clear, the contractor’s responsibility may be modified in certain circumstances provided for in the contract documents.  Typical examples of such circumstances include where part of the design information is provided by the owner or certain supplies are provided by the owner for inclusion in the project (provided no exclusion of liability attaches to such provisions).  A turnkey project might be a complete house, a complete and fully functioning steel mill or it may be a single particular piect of equipment.  Engineering contractors often wrongly refer to a project as turnley when it includes elements outwith their normal scope of supply.  For example a steel machinery supplier contracted to suppply civil work for the plant as part of the work.