End-to-end, single source, pre-integrated, multi-utility, single vendor, pre-packaged… however you couch your terms, the key principle behind a turnkey operation remains the same. It is a project delivery mechanism in which a single entity works with the business/building owner from design through to delivery under a single overall contract.
In other words, a turnkey contract run by the main equipment supplier involves delivering an entire project with more than one element from start to finish. (The word ‘turnkey’ relates to the customer merely having to ‘turn an ignition key’ to fire up its business activity).
We need to stress that we’re not talking here about a contractor-led installation where the contractor has little direct responsibility for the performance of the actual equipment which they will have bought from a supplier like us. Rather, with the main equipment supplier (us) running the whole thing, it is in our interests to supply and install our equipment that then performs well.
So, for us, a turnkey project might, for example, include removing old HVAC equipment such as chillers, connecting pipework, installing electrical works, booking ‘lift & shift’ cranage, conducting building management system works, running builders’ works, fitting acoustic treatment and steelwork, commissioning, and being involved in elements of the design.
Business benefits of a turnkey project
A turnkey project can deliver a host of solid business benefits.
Single point of delivery: reduces the risk and lowers the cost of a HVAC installation. After all, your project is more likely to be on budget and to schedule if a single entity carries full responsibility for the outcome.
Price certainty: because the total project cost can more accurately be calculated than with a piecemeal contract involving several different parties. Plus, there is no hidden and potentially expensive value engineering involved.
Cost savings: a turnkey contract will probably be less expensive than a contract with a number of disparate suppliers because the contractual chain is shorter, and jobs happen more quickly.
As a turnkey operator, we could be replacing two, sometimes three, levels of contracting (typically, a principal contractor, an M&E contractor, and a designer). And every time you have another ‘finger in the pie’, as it were, you add to the cost, because each player will add their own markup.
Minimise cost overruns: because the company responsible for managing the project is likely to have agreed a fixed lump sum cost during negotiations at the outset of the project
Quality control: quality can be improved with a turnkey contract because the project manager can set quality standards and ensure co-ordination and consistency across the entire team from design through fabrication to installation by the contractor.
Reduced project times: shrink project timelines because different stages can be overlapped. So, for example, equipment procurement can occur at the same time as the design is being finalised. As well as accelerating the project, this also reduces the likelihood of delays.
Legacy support: beyond the installation itself, there can be a legacy component to a turnkey contract which is able to encompass processes outside the design and installation of a project including elements such as operation and maintenance.
Meet the CDM Regulations: turnkey operations can help ease the passage of construction design management rules that must be followed in keeping with the 2015 CDM Regulations (the main legislation for managing the health, safety, and welfare of construction projects).
There is an onus on whoever’s managing the project to ensure that these strict rules concerning client health and safety, welfare, waste disposal, environmental conditions, and so on are followed. Generally, a turnkey project ensures that there is a site presence and management meetings with the client to make this happen.
Encourage collaboration: perhaps the greatest advantage of turnkey projects is the collaborative approach they encourage. The fact that the traditional adversarial nature of protects is nullified and the entire team has interests that are aligned in a turnkey project has the effect of preventing the temptation to finger-point.
As a business, we have operated several contracts on a turnkey basis including the London Stock Exchange, as well as major hospitals, pharmaceutical companies, and data centres and this has enabled us to develop some particularly close working relationships with our customers. After all, in all these cases, we find ourselves dealing with the same people years after initial contact, and they come to know and trust us.
And they know that we remain accountable and must deliver the project to their satisfaction. Indeed, we would argue that the biggest benefit the owner gets when it hands over responsibility for the project to us is peace of mind; it’s far easier for the owner to manage and communicate with a single provider, which means there is only one party to blame if things turn south!
If you are interested in Klima-Therm’s turnkey project solutions, contact us to find out more.