Question

What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?

Answer 1

Turnkey operations are a form of joint partnership wherein one organization contracts another to build complete, ready-to-operate facilities. Companies which create turnkey operations are often manufacturers of industrial machinery and construction firms. The customer for a turnkey operation is often a governmental agency

One characteristic which distinguishes the turnkey company from most other foreign operations is the scale of the contracts. For hundreds of millions of dollars, most arrangements are, and others are for billions. Smaller companies frequently serve as subcontractors to primary turnkey suppliers. Nevertheless, as states terminate large contracts, major businesses are vulnerable to economic downturns. Payment for a turnkey service usually takes place in stages, as a project evolves

The organization conducting turnkey operations will face currency fluctuations due to the lengthy time period between design and execution, and can protect itself by contingency provisions or cost-plus contracts.