The advantages and disadvantages of turnkey contract

Advantages Disadvantages

Less management work Limited client involvement.

Turnkey contracts relieve building owners of the This type of contract will have a limited ability to
burden of managing or monitoring projects. This is participate in the various activities that are associated
because the contract makes the business or individual with client project. For instance, client may have no
who was awarded the contract responsible for the authority to make decisions in selecting the sub-
whole project. As a result, client can simply wait for contractors that will offer different services during the
the keys to an operational building to be delivered at project. This may prevent client from choosing
the conclusion of the approved project period. preferred service providers.

Reduced project timelines. Strong scope definition is required

The contractor selected to complete a turnkey Before beginning the engineering and design phase of
construction project is in charge of both planning and a turnkey project, the scope must be properly
executing the project. When a result, as the plans are defined. In other words, after the scope has been
finalised, the contractor may begin selecting determined, changing changes and adding extra
subcontractors and material suppliers. This early components to the project should not be done.
purchase of suppliers and subcontractors allows the Because construction, procurement, and planning
project to be finished faster because no time is activities may have already begun, changes during
wasted during the procurement process. engineering must be kept to a minimum.

Reduced cost overruns. Budgets may be higher than necessary.

Turnkey projects also deliver cost savings to client Turnkey contractors may generate project budgets
because client is only responsible for the lump sum that are higher than necessary. This is because those
agreed upon during contract negotiations. Any budgets are presented before the designs of the
increases in costs, such as rises in the prices of project have been finalised. Secondly, turnkey
materials, are covered by the contractor. contracts may have higher budgets in order to cover
any unpredictable increases in budget requirements,
such as price increases due to inflation. Client may
therefore end up paying much more to the turnkey
contractor than you would have paid in another kind
of contract where you have more say over the
execution of the project.
Problem occurring in the KLIA 2 project affecting project performances

occurring in
the KLIA 2 project affecting
project performances,
Problem Solution
Due to lack of proper management, even the Allowing continuous scope changes while
best-prepared plans might lead to project controlled by the configuration management
failure. The working relationships among the process and clustering all scope changes
participants and stakeholders, as well as together to be completed later as an
whether or not they support the project enhancement project are the two most often
management, are important aspects of project used strategies for scope change control. There
execution. The concept of a future modification are risks and benefits in both of these
in the project was not well received by the strategies. When to choose one over the other
linked parties or agencies, who saw it as a black is more of a grey region than a black-and-white
hole that may lead to a project defect. It is decision. Furthermore, the project manager
critical for individuals working on the KLIA2 must collaborate with the client to either
project to deal or adapt to changing negotiate a later project delivery date or
circumstances, but they did not succeed. If the minimise the scope of the project once the
scope of work expands as a result of a change deadline has been set. Furthermore, successful
in a concept, the workforce or workload for initiatives require a clear and well-managed
workers must expand as well. scope.

The ground had to settle for some 24 months A feasibility study is a preliminary investigation
which leading to additional costs overruns and carried out at the beginning of a project.
construction delays. The challenges that occur They're usually carried out when there's a lot of
during the construction process of KLIA2 uncertainty or conflict over a prospective
include that the airport's completion has been development. If an environmental impact
delayed five times, and many people are assessment (EIA) is required, assessments that
sceptical that the contractors will be able to are best completed as part of feasibility studies
meet the new opening date of May 2, 2014. may be required.   As a result, it is important to
Malaysia Airports Holdings Bhd (MAHB) blamed do the research so that they may learn more
AirAsia in June 2011 for the delay, citing about the soil conditions in the development
AirAsia's request to increase passenger capacity area. If there are any concerns with the soil
from 30 million to 45 million per year, as the before the project begins, the parties involved
cause of the delay. According to an inside can figure out the best alternatives. The
source, the main issue with the project was the problem with the soil condition at the
earth's instability in the area, which international airport was solved by repairing
necessitated additional piling and reinforcing and resurfacing the problem areas and injecting
work. polyurethane under the ground.
According to the research, several decisions Because of the time limitation, MAHB should
made during the building of the KLIA 2 project reduce design and order changes while also
had an impact on the project's performance minimising additional work during construction
Furthermore, when the Home Ministry to tackle this problem. However, if those
demanded that the government's security modifications are required, a thorough plan
measures regarding immigration controls must be developed and an effective control
include a complete separation between the system must be followed. It has the ability to
international arrivals and departure halls, as reduce cost increases while maintaining
well as a separation of the halls between expected performance. Thus, in order to reach
domestic and international passengers, more the project goal, the client should make a quick
scope changes were required. To fulfil these and efficient decision and increase the quality
requests, the design was modified from the of the provided project, as a delayed decision
original 2-story terminal building of 150,000 would disrupt the project's timeliness and
square metres to a revised 9-story terminal cause unnecessary delays, as well as have a
structure of 257,000 square metres, as negative impact on the project's quality.
illustrated in figure 3.0. Furthermore, the Contractors should plan and schedule the
Department of Immigration realised that the project well since it provides as a blueprint for
intended 35 immigration counters would not how the project will be carried out. Because the
meet their demand for a ten-minute service construction of an international airport is a
turnover, and sought additional revisions to mega project with great complexity, there is a
raise the immigration counters to 45.Because considerable risk of delays and cost overruns. A
of these adjustments, the principal contractor good project schedule includes accurate
was unable to meet the completion schedule estimates of resource needs, labour, and work
and requested an extension. The issue became durations. It also outlines how the team will
even worse when AirAsia reversed its decision keep track of the schedule and deal with
on the completely automatic luggage handling modifications once the baseline timetable is
system that had been approved upon a year accepted. As a result, proper project planning
and a half before. KLIA2 opened on May 2, and scheduling are critical in order to deliver
2014, at a cost of RM4 billion rather than the the project on time or ahead of schedule, as
original RM1.7 billion. well as to complete the project within the
allowed budget.