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🏢 Turnkey Contracts – Project Management & Accounting Lesson ⚙️

Learn about Turnkey Contracts, a key concept in project management, engineering, and construction where the contractor handles every aspect of a project — from design to completion — and delivers it ready for use. This lesson explains the concept, features, advantages, and accounting treatment of turnkey projects.

💡 Key Topics Covered:

Definition:
A Turnkey Contract is an agreement where the contractor designs, procures, constructs, and commissions a project and hands it over to the client ready for immediate operation — the client only needs to “turn the key” to begin using it.

Key Features:

Single Responsibility: One contractor is accountable for the entire project.

Fixed Price & Timeline: Usually completed within a predetermined budget and schedule.

Performance Guarantee: The contractor ensures the facility meets agreed standards.

Transfer Upon Completion: Ownership and operation transfer only after full completion and testing.

Examples:

Construction of a power plant or refinery by an engineering firm

Development of an IT system or manufacturing facility ready for deployment

Advantages:
✅ Reduces client involvement in day-to-day management
✅ Ensures quality and efficiency through single accountability
✅ Minimizes project risk and simplifies coordination

Disadvantages:
❌ Limited flexibility for design changes
❌ High upfront cost for contractors
❌ Client depends heavily on the contractor’s expertise

Accounting Treatment:

Costs incurred are recorded as construction-in-progress (CIP) by the contractor.

Revenue is recognized using the percentage of completion method or upon project handover, depending on terms.

The client capitalizes the total project cost as a fixed asset upon delivery.

🎯 Who Should Watch:

Accounting, finance, and project management students

Engineers, contractors, and project coordinators

Learners aiming to understand contract accounting and project delivery systems

📘 Learn With Manifested Publishers:
Structured lessons with examples, exercises, and clear explanations for accounting, procurement, and project management concepts.

💻 Visit: www.manifestedpublishers.com

📞 Call/WhatsApp: +254 724 173 845

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