Turnkey
Encyclopedia
A turn-key or a turn-key project is a type of project that is constructed by a developer and sold or turned over to a buyer in a ready-to-use condition.
(engine, transmission, etc.) to contrast with a vehicle sold without one so that other components may be re-used.
Similarly, this term may be used to advertise the sale of an established business, including all the equipment necessary to run it, or by a business-to-business supplier providing complete packages for business start-up. An example would be the creation of a "turnkey hospital" which would be building a complete medical center with installed high-tech medical equipment.
Turnkey is also the name given to a civilian or Police officer working in a Scottish police office whose duties are to assist in looking after prisoners and detainees.
facility, a chemical plant, a packing line or a refinery demands expertise which is not available with a single firm. The owner organizes the overall project with a turnkey firm and 'receives' the project on its completion and can then start to operate it. The 'agents' of the owner are: the principal engineering firm, the licensor (if any),service subcontractors (e.g. electrical contractor) and the suppliers. There may be several contracts drawn up by the principal engineering firm but they only identify the latter as the recipient of the services. The principal contract is the one that binds the owner and principal engineering firm.
A turnkey business is a business that includes everything you need to immediately start running the business. A business that is being sold as a turnkey business would include tangibles such as inventory and equipment through intangibles such as a previously established reputation and goodwill. The most common type of business sold as a turnkey business is a franchise. In the case of franchises, a turnkey business often includes a building that has been constructed to the franchise's specifications, and an exclusive territory.
Entrepreneurs considering buying a turnkey business should always do their due diligence and be sure they know exactly what a particular turnkey operation includes; not all turnkey businesses are created equal.
A turnkey project could involve the following elements depending on its complexity:
A project-consultancy firm is often involved but it is required to stay independent of the turnkey engineers and be responsible only to the owner - a watchdog so to speak. The project-consultancy firm has access to all sections of the infrastructure or plant (as applicable) but cannot direct the staff involved.
The turnkey-contractor furnishes a wide variety of warranties and guarantees and accepts several liabilities. These include :
Turnkey projects can also be extended, known as 'turnkey plus', where there is perhaps a small equity interest by the engineering firm or the main suppliers to ensure allegiance during the initial operational phases. Once the turnkey phase is over and the engineering firm receives the 'completion certificate', (from the owner), the latter will work independently or with the licensor (if any).
The term turnkey is also often used in the technology industry, most commonly to describe pre-built computer "packages" in which everything needed to perform a certain type of task (e.g. audio editing) is put together by the supplier and sold as a bundle. This often includes a computer with pre-installed software, various types of hardware, and accessories. Such packages are commonly called appliances
. And a site with a ready-made solutions and configurations is called Turnkey website.
Turnkey products are synonymous to "off-the-shelf
" solutions, i.e. not bespoke
.
In the United States
, the precise definition of the types of allowable contractual features for government contracts are contained in the Federal Acquisition Regulations
.
In real estate, turn-key is defined as delivering a location that is ready for occupation. The turn-key process includes all of the steps involved to open a location including the site selection, negotiations, space planning, construction coordination and complete installation.
Historically, the term once referred to jailers, as the holders of a prison's keys, as in Charles Dickens' 1840 novel Barnaby Rudge
.
Common usage
Turn-key refers to something that is ready for immediate use, generally used in the sale or supply of goods or services. Turnkey is often used to describe a home built on the developer's land with the developer's financing ready for the customer to move in. If a contractor builds a "turnkey home" they frame the structure and finish the interior. Everything is completed down to the cabinets and carpet. "Turnkey" is commonly used in the construction industry, for instance, in which it refers to the bundling of materials and labor by sub-contractors. 'Turnkey' is also commonly used in motorsports to describe a car being sold with drivetrainPowertrain
In a motor vehicle, the term powertrain or powerplant refers to the group of components that generate power and deliver it to the road surface, water, or air. This includes the engine, transmission, drive shafts, differentials, and the final drive...
(engine, transmission, etc.) to contrast with a vehicle sold without one so that other components may be re-used.
Similarly, this term may be used to advertise the sale of an established business, including all the equipment necessary to run it, or by a business-to-business supplier providing complete packages for business start-up. An example would be the creation of a "turnkey hospital" which would be building a complete medical center with installed high-tech medical equipment.
Turnkey is also the name given to a civilian or Police officer working in a Scottish police office whose duties are to assist in looking after prisoners and detainees.
Use in business
In a turnkey business transaction different entities are responsible for setting up a plant or a part of it. A complex project involving infrastructureInfrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
facility, a chemical plant, a packing line or a refinery demands expertise which is not available with a single firm. The owner organizes the overall project with a turnkey firm and 'receives' the project on its completion and can then start to operate it. The 'agents' of the owner are: the principal engineering firm, the licensor (if any),service subcontractors (e.g. electrical contractor) and the suppliers. There may be several contracts drawn up by the principal engineering firm but they only identify the latter as the recipient of the services. The principal contract is the one that binds the owner and principal engineering firm.
A turnkey business is a business that includes everything you need to immediately start running the business. A business that is being sold as a turnkey business would include tangibles such as inventory and equipment through intangibles such as a previously established reputation and goodwill. The most common type of business sold as a turnkey business is a franchise. In the case of franchises, a turnkey business often includes a building that has been constructed to the franchise's specifications, and an exclusive territory.
Entrepreneurs considering buying a turnkey business should always do their due diligence and be sure they know exactly what a particular turnkey operation includes; not all turnkey businesses are created equal.
A turnkey project could involve the following elements depending on its complexity:
- Project administration
- licensing-in of process
- design and engineering services
- subcontracting
- management control
- procurement and expediting of equipment;
- materials control
- inspection of equipment prior to delivery
- shipment, transportation
- control of schedule and quality
- pre-commissioning and completion
- performance-guarantee testing
- inventorying spare-parts
- training of owner's/plantsub-systemoperating and maintenance personnel
- Advanced Loop Schemes (primary used in the Electric Utility Industry)
A project-consultancy firm is often involved but it is required to stay independent of the turnkey engineers and be responsible only to the owner - a watchdog so to speak. The project-consultancy firm has access to all sections of the infrastructure or plant (as applicable) but cannot direct the staff involved.
The turnkey-contractor furnishes a wide variety of warranties and guarantees and accepts several liabilities. These include :
- (a) warranties for the timeliness of deliveries of equipment, of erection and of completion times of civil and mechanical works;
- (b) warranties for workmanship in construction and erection of the works,according to specifications, and warranties guarantees that proper standards will be used
- (c) liability for property or equipment under the control of the engineering company who contracts out the agreement to the turnkey-company
- (d) proper safety standards being implemented
- (e)civil and mechanical engineering warranties; in the latter case the turnkey-contractor undertakes to assure that mechanical performance will be maintained for a definite period
- (f) training warranties of operating personnel in charge of specific operations, and
- (g) the very important process warranties and guarantees.
Turnkey projects can also be extended, known as 'turnkey plus', where there is perhaps a small equity interest by the engineering firm or the main suppliers to ensure allegiance during the initial operational phases. Once the turnkey phase is over and the engineering firm receives the 'completion certificate', (from the owner), the latter will work independently or with the licensor (if any).
Specific usage
Computer appliance
A computer appliance is generally a separate and discrete hardware device with integrated software , specifically designed to provide a specific computing resource. These devices became known as "appliances" because of their similarity to home appliances, which are generally "closed and sealed" –...
. And a site with a ready-made solutions and configurations is called Turnkey website.
Turnkey products are synonymous to "off-the-shelf
Commercial off-the-shelf
In the United States, Commercially available Off-The-Shelf is a Federal Acquisition Regulation term defining a nondevelopmental item of supply that is both commercial and sold in substantial quantities in the commercial marketplace, and that can be procured or utilized under government contract...
" solutions, i.e. not bespoke
Bespoke
Bespoke is a term employed in a variety of applications to mean an item custom-made to the buyer's specification...
.
In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the precise definition of the types of allowable contractual features for government contracts are contained in the Federal Acquisition Regulations
Federal Acquisition Regulations
The Federal Acquisition Regulation is the principal set of rules in the Federal Acquisition Regulation System. This system consists of sets of regulations issued by agencies of the Federal government of the United States to govern what is called the "acquisition process"; this is the process...
.
In real estate, turn-key is defined as delivering a location that is ready for occupation. The turn-key process includes all of the steps involved to open a location including the site selection, negotiations, space planning, construction coordination and complete installation.
Historically, the term once referred to jailers, as the holders of a prison's keys, as in Charles Dickens' 1840 novel Barnaby Rudge
Barnaby Rudge
Barnaby Rudge: A Tale of the Riots of Eighty is a historical novel by British novelist Charles Dickens. Barnaby Rudge was one of two novels that Dickens published in his short-lived weekly serial Master Humphrey's Clock...
.