A turn-key contract involves a company being responsible for planning, building, and delivering a functioning product or solution to a client. Key traits include merging design and execution under one entity, delivering a fully operational system, and transferring responsibility to the contractor. In contrast, a unit-type contract is used for routine services where total costs are calculated by multiplying work units by fixed unit prices. It defines required services but uncertain demand, and payment is made based on actual work units completed. When comparing the two, a turn-key contract transfers more responsibility to the contractor, including design, procurement, and construction of a project for a fixed price upon handover. A unit-type contract relies on estimated quantities of work items that are paid
A turn-key contract involves a company being responsible for planning, building, and delivering a functioning product or solution to a client. Key traits include merging design and execution under one entity, delivering a fully operational system, and transferring responsibility to the contractor. In contrast, a unit-type contract is used for routine services where total costs are calculated by multiplying work units by fixed unit prices. It defines required services but uncertain demand, and payment is made based on actual work units completed. When comparing the two, a turn-key contract transfers more responsibility to the contractor, including design, procurement, and construction of a project for a fixed price upon handover. A unit-type contract relies on estimated quantities of work items that are paid
A turn-key contract involves a company being responsible for planning, building, and delivering a functioning product or solution to a client. Key traits include merging design and execution under one entity, delivering a fully operational system, and transferring responsibility to the contractor. In contrast, a unit-type contract is used for routine services where total costs are calculated by multiplying work units by fixed unit prices. It defines required services but uncertain demand, and payment is made based on actual work units completed. When comparing the two, a turn-key contract transfers more responsibility to the contractor, including design, procurement, and construction of a project for a fixed price upon handover. A unit-type contract relies on estimated quantities of work items that are paid
A turn-key contract involves a company being responsible for planning, building, and delivering a functioning product or solution to a client. Key traits include merging design and execution under one entity, delivering a fully operational system, and transferring responsibility to the contractor. In contrast, a unit-type contract is used for routine services where total costs are calculated by multiplying work units by fixed unit prices. It defines required services but uncertain demand, and payment is made based on actual work units completed. When comparing the two, a turn-key contract transfers more responsibility to the contractor, including design, procurement, and construction of a project for a fixed price upon handover. A unit-type contract relies on estimated quantities of work items that are paid
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1. What are the major traits of turn-key type contracts?
A turn-key contract is a business argument in which a company is given the responsibility
of planning and building a product that can generate cash flow for the client upon the completion. A primary benefit of a turn-key contract is that the solution is ready to use as soon as the project is completed. The client also normally does not pay for the solution until it is finished. A primary drawback is that the contractor designs and develops the solution which minimizes the client’s ability control project details. Characteristics of the turn-key type contracts: Merging missions conception and executions of the work in one person. The overall obligations assumed by the contractor to the client to deliver a free equipment work. A project in perfect working. One contract between the client and the contractor. The contractor assumes the full implementation of the work. 2. What are the major traits of unit type contracts? Unit type contracts may be used for the routine contracted services. Service requirements where the total value of the contract can be calculated by multiplying identical units of work by a fixed unit price. Characteristics of the unit type contracts: The requirements of the services are clearly defined. The total demand for the services is not certain. A legal commitment for the services required. 3. Contrast turn-key type contracts with those of unit type contracts? In a turn-key contract the whole responsibility of Architectural Engineering Design, Procurement and the construction is transferred to the contractor. Sometimes, owner tend to give construction turn-key contracts only, where Architectural Engineering Design is run by a separate agency. Before awarding turn-key contract the owner usually give a detailed requirement to the contractor. The contractor, in general, quotes a fixed price or quotes price per square foot of built up area for a given specification. These rate usually includes all the work until handover. Once the contract is awarded , the rest of work shell is contractor’s responsibility. Payment terms are mutually agreed between the contractor and the owner. Since all the responsibilities lies with the contractor, a lot of time saves for the owner. In the unit type contract, an estimated quantity of bill of quantities is prepared. Estimated quantities are surveyed or verified by an Architect. The estimated quantities are then shared with contractors for quotation. Contractors enter unit prices against the estimated quantities of work. The contract is based on estimated quantities of work items and unit price for each of these work items. Payment is made on the basis of units of work actually done and measured in the field multiplied by their unit prices. 4. Is the owner right in demanding the price reduction of the $30000 Frigidaire? The law of demand states that conditional on all else begin equal, as the price of a good increases, quantity demanded decreases conversely as the price of the good decreases, quantity demanded. In other words the law of demand describes an inverse relationship between price and quantity demanded of a good. So the owner right in demanding the price reduction of the $30000 is not so fair to decrease the price which decreases the demand of the product as well. 5. Is the contractor right in refusing the price reduction of the $30000 Frigidaire? Yes. In our opinion the contractor is right in refusing the price reduction because the owner demand for the cost reduction is contractually not justified. The contractor estimated the cost of $30000 for the cooling device. The owner has agreed and signed the contract and so the contractor provided the cooling device from a special industrial Frigidaire in Germany which is meeting the contract requirements.