Question

What is the difference between a turnkey contract and a cost-plus contract? Include in your discussion the advantages and disadvantages of each

Answer 1

Ans: As the name literally describes, turnkey contract, a contract with a negotiated and fixed price. A cost-plus contract, a contract that the price may change due to uncertain factors. Thus, the biggest difference between two types of contract is the budget, one is fixed, vice versa. It is not scrupulous to discuss the advantages and disadvantages of those two contracts without the consideration of specific conditions, one could be better or worse than another due to various factors of a project. However, I could discuss it based on my experience since the architecture business uses both types of contract widely. The advantage of a turnkey project is the buyer has no concern of the budget will go over the limit, and also the buyer has less stress during the whole phases from design to build since the project has to meet the requirement to delivery. The disadvantage to a turnkey project is the product quality may not be perfect on all perspectives since sometimes contractor needs to cut cost from some high-quality product to get profit. And this always happens since architecture business has too many uncertain factors from weather, environment, and material delivery delay. Also in order to guarantee the profit, the contractor always leaves a bigger profit zone when negotiating a turnkey contract, thus the product quality may set lower than it should be at the beginning. The advantage of a cost-plus contract is it guarantees the profit of the contractor, thus there was no chance that the product quality will be affected by the cost cut on material unless the buyer chooses to. Also, the price could be even lower than the turnkey contract since the contractor won't overestimate the cost in order to guarantee their own profit. The disadvantage of the cost-plus contract obviously is the over-budgeting, the cost of a project could keep growing due to all factors during the project.

Answer 2

As the name in a real sense portrays, turnkey contract, an agreement with an arranged and fixed cost. An expense in addition to get, an agreement that the cost might change because of dubious variables. In this way, the greatest distinction between two sorts of agreement is the financial plan, one is fixed, the other way around. It isn't conscientious to examine the benefits and weaknesses of those two agreements without the thought of explicit circumstances, one could be preferable or more awful over one more because of different variables of a project. Be that as it may, I could talk about it in view of my experience since the engineering industry utilizes the two kinds of agreement broadly. The upside of a turnkey project is the purchaser has no worry of the spending plan will go over the breaking point, and likewise the purchaser has less pressure during the entire stages from plan to work since the project needs to meet the prerequisite to conveyance. The hindrance to a turnkey project is the item quality may not be amazing on all viewpoints since now and then worker for hire needs to reduce expense from some great item to get benefit. And this generally occurs since engineering business has such a large number of dubious elements from climate, climate, and material conveyance delay. Likewise to ensure the benefit, the worker for hire generally leaves a greater benefit zone while arranging a turnkey contract, along these lines the item quality might set lower than it ought to at the start. The upside of an expense in addition to contract is it ensures the benefit of the worker for hire, consequently there was zero chance that the item quality will be impacted by the expense cut on material except if the purchaser decides to. Additionally, the cost could be even lower than the turnkey contract since the project worker won't misjudge the expense to ensure their own benefit. The weakness of the expense in addition to contract clearly is the over-planning, the expense of a project could hold becoming because of all factors during the project.