What to Check in a Turnkey Construction Contract

In turnkey construction, the contractor takes on design, permits, construction and handover from a single source. While this integration is an advantage, what the work covers must be defined in detail in the contract. This article is for general information only and does not replace legal, technical or financial advice.

011. Scope of work

The contract should draw clear limits around the work: design services, permit procedures, utility connections, landscaping and excluded items should be written out. Any item left vague can become a later dispute.

022. Technical specification and material class

The quality class of materials, brand or equivalent criteria and workmanship standards should appear in the technical specification. The specification and design should be annexes to the contract, so that the nature of the building to be delivered is known from the start.

033. Delivery schedule

The start date, interim stages and final delivery date should be in writing. How situations that may affect the period, such as force majeure and weather conditions, will be handled should also be determined.

044. Payment plan

The stage to which each payment is tied, the progress-payment method and the route to follow in case of differences or additional work should be clearly regulated. Linking payments to progress of the works is a balanced approach for both parties.

055. Delay, defect and penalty terms

The sanctions applying in case of delay, the notification and rectification of defects arising after handover, and warranty and maintenance obligations should be stated clearly in the contract. These provisions must comply with the relevant legislation.

066. Completion cover

You should ask what security is provided against the risk of the project being left unfinished. Under Falcon Assurance we offer completion and construction-completion cover, and its scope and conditions are shared transparently at the contract stage.

07Managing changes and additional work

Change requests can arise during the process. Making them in writing and notifying the parties of their effect on time and price before approval prevents disputes. Defining a change procedure in the contract is good practice.

At handover, the building’s compliance with the design and specification should be checked, defects recorded and a schedule set for correcting them. The acceptance process and the start of the warranty should be clearly defined in the contract.

Before signing, the whole text should be read together with its annexes and every unclear clause clarified. Putting all verbal commitments in writing minimises possible disputes later. If needed, the contract should be reviewed by an independent lawyer before signing.

If you would like to assess the scope of your turnkey project together, you can contact the Falcon team for a site visit and preliminary assessment.