What are type of contracts used in construction industry ? Why is that Turnkey contract is getting more and more implemented?

Simply: the peace of mind of the owner

I won't say that Turnkey contract is taking over Design build contract ( I think it means the same of Head con)

It depends on industry and country.

The advantages of a turnkey project, some of which are misguiding and the opposite ends up happening:

1. Reduced total time during the contractual process by having just one process instead of two separate ones. This does not necessarily imply less construction time.
2. A seemingly “lower cost” when integrating “all” the elements under one provider.
3. Minimizing orders of change during the implementation of the project because the changes and adjustments fall under the responsibility of the only contractor.
4. This is a practical solution for smaller projects, such as communications rooms or small computer rooms, these usually have a limited budget for the project.
5. Definitely, the main advantage of this service is the peace of mind the owner gets when it hands over full responsibility of the project to “only one contractor”, it is much easier for the owner to manage and communicate with one provider, which means “one neck to choke”.


On the other hand, assuming that the company that makes the design does not have any conflict of interest in the implementation phase and expecting it to be really independent from the construction companies, the advantages of this “Design and construction” scheme, are as follows:

1. The disparity of the construction proposals is notably reduced. This is due to previous studies and designs. The amount of information available helps to limit risk, the scopes, specs and even the equipment needed is much more precise. In other words, construction bids can better map the needs and scope for the project, generating a clearer picture of the project itself.
2. This simplifies the provider decision-making process for the construction, having homogenous proposals that facilitate the “apples to apples” comparison and making the negotiation process a lot faster.

I am not sure this is the rornal name of those contracts but we either use Fixed Price Contracts when scope is very defined and the tendnecy for major changes is low. On the other hand, we use a type of contract in Canada called CCDC 5B which is construction management at risk. It is in a way Cost plus Management Fee but lots of risks are carried by the contractor and we normally adjust the supplementary conditions through an addendum and tailor them to suit each project and situation.