"Turnkey" Contract Conditions in the Project Management of Building Systems

A common trend in industrial construction, particularly for large projects, is to engage the services of a Design/Construct Contractor. By integrating design and construction management in a single organization, many of the conflicts between designers and constructors might be avoided. In particular, designs will be closely scrutinized for their contractibility. However, an Employer engaging a Design/Construct firm must insure that the quality of the constructed facility is not sacrificed by the desire to reduce the time or the cost for completing the project. Also, it is difficult to make use of competitive bidding in this type of
Design/Construct process. As a result, the Employer must be relatively sophisticated in negotiating realistic and cost-effective construction contracts.
One of the most obvious advantages of the integrated of Design/Construct process is the use of phased construction for a large project. In this process, the Project is divided up into several phases, each of which can be designed and constructed in a staggered manner. After the completion of the design of the first phase, construction can begin without waiting for the completion of the design of the second phase, etc. If proper coordination is exercised, the total project duration can be greatly reduced.
Nowadays in Latvia the priorities for environment infrastructures concern drinking water, waste water and waste management. In order to improve the existing situation of these infrastructures, the Latvian government applies for financing from different Fund organizations. One of the biggest and more available for the last 2 years was the ISPA Fund.
ISPA started as of the year 2000 and can be seen as a forerunner of the Cohesion Fund. It finances major environment and transport infrastructure projects in Latvia and other Candidates to EU. Usually, all the Tenders announced under ISPA financing are required to be implemented according to “Turnkey” Contract conditions. The main idea of these conditions is to involve a single Performer for design, construction and delivery of a complete and operational project.
Hence, within the context of development of a fixed guide way system, the Design/Build Contractor is typically responsible for the following activities:
Designing all guide way and systems elements including structures, stations, control systems, communications systems, vehicles, and maintenance supporting facilities;
Constructing all direct guide way elements, procuring and installing all systems elements and construction of all supporting fixed facilities such as the stations and maintenance facilities;
Selecting, hiring, contracting and managing subcontractors performing design and construction work;
Ensuring that the technical specifications of the contract are met;
The Design/Build Contractor is typically composed of a consortium of firms with the necessary skills to design and build a fixed guide way system, including equipment manufacturers, engineering design firms, systems suppliers, construction contractors and many supporting elements. Depending on the scope of the turnkey contract, the consortium may also include firms with specialties to ensure the development objectives are achieved such as claims avoidance, systems integration, program management, environmental mitigation, and public outreach.
As mentioned above ISPA project in Latvia is quite new and therefore there is a lack of specialists (project managers), who are familiar with a “Turnkey” Conditional Contract requirements (when the Employer can delegate all responsibility to the Design/Construct Company, which will deliver to the Employer a completed facility that meets the performance specifications at the specified price).
The author will investigate the conditions of using the turnkey approach in the project management of Building Systems in order to help modern project managers to succeed in the Project Management under above mentioned conditions.
…