PRINCIPAL ADVANTAGES OF A NEGOTIATED TURNKEY CONTRACT
Projects, particularly very large scale ones, undertaken on a
negotiated turnkey contract basis can offer a number of substantial
advantages to a client. The main benefits can be summarised as:
earlier starting date
more effective phasing of work leading to a reduced time
scaled completion with resulting savings in costs and an
earlier date from which revenue is earned.
easier negotiation of finance and the possibility of
securing a complete financial package from the outset.
simpler, more direct communication with the consultant/
contractor and the opportunity to integrate the client's
own staff into the project management. team.
the need for the commitment of fewer management resources
on the client's part.
The way in which these advantages operate is explained in the
following paragraphs. The note concludes with some suggestions as to
how a client can ensure that he receives the best value for money
under the negotiated contract procedure.
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SAVINGS IN TIME
Negotiated turnkey contracts permit a substantial reduction in the
overall time required for their completion as compared with the
multiple tender approach. The savings can amount to as much as
20% depending upon the nature of the project resulting in significant
cost savings.
In addition, a shorter timescale
can offer better protection
against inflationary factors; the need to provide for cost escalation
over say 4 years instead of 5 will
allow a contractor to quote
a keener price. The benefits will also be felt on the revenue side
since an earlier completion date will mean that earnings will be
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