Yesterday, one of our readers sent me a rough draft of their Turnkey Contract budget and their terms and conditions.
It’s a 5-page document.
Our reader asked me to review the draft once and give my feedback on it.
It’s too much work for me to do. Still, I decided to give my feedback on it.
He also specifically asked about the construction cost estimation.
I usually don’t comment on cost estimation because it varies greatly depending on the Engineer’s Plan and Construction Quality they will use.
As it’s a turnkey project, the reader seems like they got a rough estimation from some construction company and asked for feedback.
It’s the wrong way of thinking.
The reason is that they still have not yet received the Building Plan. We cannot decide the building construction cost by just seeing the quote.
If the owner approves the budget, the construction company will start working on their building plan.
Now, while doing their plan, they can design small pillars, less steel, normal footing, reduce rcc thickness, etc.
If they do this in their design, first-time home builders don’t notice this. If builders do these things, they can easily save much money on their construction budget.
Next…
Coming to the Turnkey project contract terms:
Yesterday, I took 2 hours to review that 5-page document to comment on the contract terms.
After going through one thing I understood is… No matter how well they frame their contract, there is always room to add more specific details.
The less specific the contract, the more chances of getting a difference between the owner and construction company during construction time.
I noticed a lot of such incidents in the contract.
It is a big no-no for me.
My suggestion to anyone planning to go with the turnkey project is…
1) Get a Building Plan and cost estimation from different engineers so you don’t compromise on quality (steel and cement usage)
2) Now take that plan to the construction company to get a construction cost estimation
3) Once you have a few quotes and contract terms, take those and discuss them with your building plan engineer. They can easily spot loopholes in contracts and help them fixed.
4) Keep another engineer (not from the construction company) to monitor the construction quality. The reason is that new users won’t be able to identify steel usage in pillars, RCC, etc., so…
This is an extra step I suggest if any users want to go with turnkey construction.
If possible, I recommend avoiding going with a Material/Turnkey project. They don’t always have a happy ending.
A turnkey project is more of a headache than a labour contract.
In a turnkey project, someone has to always monitor quality.
Example: Cement Ratio in construction. If you don’t monitor, labours always use the less cement ratio. This is one example.
Anyway, if you want to see the Turnkey Project contract Draft and my comments on it, click on the link below.
https://docs.google.com/document/d/1Xb5nIUcEWM0iLqxUvoQSsMsUfOugCVSXW0Y8C5LY4UA/edit?usp=sharing
View in PC for a better experience. This document is shared with the reader’s permission.