Risk Profile in Turnkey Projects - Revision history

Tkokotas at 15:26, 18 December 2018

2018-12-18T15:26:05Z

← Older revision		Revision as of 15:26, 18 December 2018
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			''Developed by Ida Tvedt''


	As a result of innovations in the partnering relationships between the client and the project coalition actors, there has been a transition in the construction industry. There is a number of different ways to form construction projects, and the different structures come with unique risks for actors involved in the project. The currently trend is use of the integrated project coalition, also called turnkey, characterised by a single contract for both execution and design of a project. Benefiting from this is the client, who pay for low risk and project uncertainty. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010) Chapter 5.4.5, Second edition, Wiley-Blackwell'' </ref>On the other hand, this provides more uncertainties for actors as contractors, designers and consultants. [[Managing Uncertainty and Risk on the Project]] is especially important in turnkey.		As a result of innovations in the partnering relationships between the client and the project coalition actors, there has been a transition in the construction industry. There is a number of different ways to form construction projects, and the different structures come with unique risks for actors involved in the project. The currently trend is use of the integrated project coalition, also called turnkey, characterised by a single contract for both execution and design of a project. Benefiting from this is the client, who pay for low risk and project uncertainty. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010) Chapter 5.4.5, Second edition, Wiley-Blackwell'' </ref>On the other hand, this provides more uncertainties for actors as contractors, designers and consultants. [[Managing Uncertainty and Risk on the Project]] is especially important in turnkey.

Andkamp: /* Conclution */

2015-10-04T16:09:37Z

Conclution

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	Further, a valid risk profile depends on the risk-taking and innovating culture of the workers in the company. It has no effect if the head of the firm has a high acceptance of risk if the workers are not included and work with the same innovating goal.		Further, a valid risk profile depends on the risk-taking and innovating culture of the workers in the company. It has no effect if the head of the firm has a high acceptance of risk if the workers are not included and work with the same innovating goal.

	=~~Conclution~~=		=Conclusion=

	The main characteristic of turnkey is the financial aspect where the contractor is the center of risk responsible. Further, if the contract does not state otherwise, the contractor handles all risk included in the start-phase of the project, design and construction.		The main characteristic of turnkey is the financial aspect where the contractor is the center of risk responsible. Further, if the contract does not state otherwise, the contractor handles all risk included in the start-phase of the project, design and construction.

	As discussed in the article, the risk in turnkey basically frames the contractor and the sub-contractors. Therefore for the contractor, the barrier for use of turnkey should be high. With for example program management of several turnkey project, a constructor face high probability of deficit. There need to be a balance between the risks identified and measures to handle it. On the other hand, a successful turnkey project will be ~~timesaving~~ and consequently profitable.		As discussed in the article, the risk in turnkey basically frames the contractor and the sub-contractors. Therefore for the contractor, the barrier for use of turnkey should be high. With for example program management of several turnkey project, a constructor face high probability of deficit. There need to be a balance between the risks identified and measures to handle it. On the other hand, a successful turnkey project will be time saving and consequently profitable.

	Risk profiling ~~basicly~~ paint a picture of the risk situation within a company related to a specific project. After defining turnkey and the risks contractors face, it is clear that consultants, sub-contractors and contractors will benefit from risk profiling. When all parties communicate their risk profile it will be a better overall understanding of the projects realistic time perspective and costs. This is ~~benefitting~~ pre-work for all parties involved in the project. The coalition actors now has a tool to pick suitable projects.		Risk profiling basically paint a picture of the risk situation within a company related to a specific project. After defining turnkey and the risks contractors face, it is clear that consultants, sub-contractors and contractors will benefit from risk profiling. When all parties communicate their risk profile it will be a better overall understanding of the projects realistic time perspective and costs. This is benefiting pre-work for all parties involved in the project. The coalition actors now has a tool to pick suitable projects.

	=References=		=References=

IMT: /* Risk Profile in Turnkey Projects */

2015-09-29T03:53:07Z

Risk Profile in Turnkey Projects

← Older revision		Revision as of 03:53, 29 September 2015
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	\|-		\|-
	\|Risk Tolerance		\|Risk Tolerance
	\|''.		\|''. COWI has to look at the risks that NCC has taken on when they confirmed the project, and if they are transferred to them as consultants. Are these acceptable risks to COWI - can they handle a worst-case scenario? There is often more pressure for a consultant in a turnkey situation as the constructor is in a tense situation.
	\|-		\|-
	\|Risk Capacity		\|Risk Capacity
	\|''.		\|''. After COWI has established the risk required and their tolerance level, they can evaluate if they have the necessary financial capacity to handle the risk-picture.
	\|-		\|-
	\| Risk Required		\| Risk Required
	\|'' .		\|'' . This is the first step COWI needs to address. Here, COWI needs to figure out the qualitative and quantitative risks of the project. After they have made a overall picture of the risks required to complete their task from NCC, they can evaluate their tolerance towards them.
	\|}		\|}

IMT: /* Limitations */

2015-09-29T03:40:36Z

Limitations

← Older revision		Revision as of 03:40, 29 September 2015
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	The construction business is a competitive industry and compared to other sectors there is high risks and low profit. In turnkey contracts tendering is the normal way to get the job. Then there is a fixed price and a packaged deal for the client. Therefore, the client decides the criteria. Sometimes they want specific firms or qualifications, but the lowest price is often the winner. A consequent of this is how the constructor price and handle the risks involved in the project. Often, the constructions are simple to get the cost-effectiveness at a level so they achieve an attractive price for the project. Another result can be deficient design, and without detailed checking from a third-part, this can be expensive.		The construction business is a competitive industry and compared to other sectors there is high risks and low profit. In turnkey contracts tendering is the normal way to get the job. Then there is a fixed price and a packaged deal for the client. Therefore, the client decides the criteria. Sometimes they want specific firms or qualifications, but the lowest price is often the winner. A consequent of this is how the constructor price and handle the risks involved in the project. Often, the constructions are simple to get the cost-effectiveness at a level so they achieve an attractive price for the project. Another result can be deficient design, and without detailed checking from a third-part, this can be expensive.

	Where there is not a fixed price, the ~~owner~~ has to negotiate the price after hiring a contractor based on design. This way the contractor make sure they do not waste money on a proposal design. On the other hand the owner may not get the lowest possible price for the project.		Where there is not a fixed price, the client has to negotiate the price after hiring a contractor based on design. This way the contractor make sure they do not waste money on a proposal design. On the other hand the owner may not get the lowest possible price for the project.

	Further, nordic standards for turnkey contracts, for example ABT 93 in Denmark, there is only a general risk distribution. There is a lot of uncertainties for the turnkey contractor and the sub-contactors, and it is a need for a safety net in the contract so that they have controll over variations under the project. A way to solve this could be payment at fixed milestones. Where there is a lump sum price for the project, the uncertainties are even bigger. This is mostly because it is hard to know the precise timeline and costs of a building project. Therefor the contract must be specified carefully.		Further, nordic standards for turnkey contracts, for example ABT 93 in Denmark, there is only a general risk distribution. There is a lot of uncertainties for the turnkey contractor and the sub-contactors, and it is a need for a safety net in the contract so that they have controll over variations under the project. A way to solve this could be payment at fixed milestones. Where there is a lump sum price for the project, the uncertainties are even bigger. This is mostly because it is hard to know the precise timeline and costs of a building project. Therefor the contract must be specified carefully.

	With turnkey the client of the project will have a limitation to the amount of influence on design details. Examples of limitation can be knowledge of delays, defective work and extension of the time schedule. Overall they will have less control over the process. Since the client is not part of the construction part and have little verification options, they are exposed in a turnkey. This could result in improper payment and non-conforming work. In the traditional turnkey there is no party that protect the client’s interests, so they have to be extra aware of liquidity and responsibilities in different situations. Overall, the client have to relay on accurate information from the contractor about the progress of the project.		With turnkey the client of the project will have a limitation to the amount of influence on design details. Examples of limitation can be knowledge of delays, defective work and extension of the time schedule. Overall they will have less control over the process. Since the client is not part of the construction part and have little verification options, they are exposed in a turnkey. This could result in improper payment and non-conforming work. In the traditional turnkey there is no party that protect the client’s interests, so they have to be extra aware of liquidity and responsibilities in different situations. Overall, the client have to relay on accurate information from the contractor about the progress of the project.

	=Risk Profile as a tool=		=Risk Profile as a tool=

IMT: /* Benefits */

2015-09-29T03:34:41Z

Benefits

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	One of the main benefits with this type of contracts is the possibility of savings in production cost. The client pay the contractor to take on the risks of the whole project. Further, because the contractor has responsibility for both design and construction, the building process can start before the design specifications are completed. This way, the contractor saves time and money. It is also more efficient when they are responsible for law related and local neighbour problems.		One of the main benefits with this type of contracts is the possibility of savings in production cost. The client pay the contractor to take on the risks of the whole project. Further, because the contractor has responsibility for both design and construction, the building process can start before the design specifications are completed. This way, the contractor saves time and money. It is also more efficient when they are responsible for law related and local neighbour problems.

	Turnkey contracts are most of all benefiting the client of the project in a risk-prospective. First of all, this type of contracting provides the client with just one source of responsibility. In contrast, the contractor alone has the responsibility of defects caused by both design and construction. Meaning that the ~~owner~~ does not have to determine if a defect is caused by a misstep in design or construction - nevertheless, it is not their responsibility to fix it. The contractor must pay for any additional cost because of defective design or construction. Nothwithstanding, if the ~~owner~~ authorized the construction plan in the start, then they are responsible of extra costs caused by insufficient plans.		Turnkey contracts are most of all benefiting the client of the project in a risk-prospective. First of all, this type of contracting provides the client with just one source of responsibility. In contrast, the contractor alone has the responsibility of defects caused by both design and construction. Meaning that the client does not have to determine if a defect is caused by a misstep in design or construction - nevertheless, it is not their responsibility to fix it. The contractor must pay for any additional cost because of defective design or construction. Nothwithstanding, if the client authorized the construction plan in the start, then they are responsible of extra costs caused by insufficient plans.

	Additionally, turnkey contracts will be attractive for client without proper technical knowledge. Owners do not need to have the detailed qualifications, that will be one of the constructor’s prerequisites.		Additionally, turnkey contracts will be attractive for client without proper technical knowledge. Owners do not need to have the detailed qualifications, that will be one of the constructor’s prerequisites.

	On the other hand, the turnkey structure benefits contractors as well. Here, the contractor can choose their own team based on experiences. With good relationships to the sub-contractors, they have better overall control when they price the project. This way they limit the possibility of risks and increases the chance of profit.		On the other hand, the turnkey structure benefits contractors as well. Here, the contractor can choose their own team based on experiences. With good relationships to the sub-contractors, they have better overall control when they price the project. This way they limit the possibility of risks and increases the chance of profit.

	==Limitations==		==Limitations==

IMT at 20:23, 28 September 2015

2015-09-28T20:23:29Z

IMT at 20:06, 28 September 2015

2015-09-28T20:06:55Z

← Older revision		Revision as of 20:06, 28 September 2015
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	As a result of innovations in the partnering relationships between the client and the project coalition actors, there has been a transition in the construction industry. There is a number of different ways to form construction projects, and the different structures come with unique risks for actors involved in the project. The currently trend is use of the integrated project coalition, also called turnkey, characterised by a single contract for both execution and design of a project. Benefiting from this is the client, ~~with~~ low risk and project uncertainty. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010) Chapter 5.4.5, Second edition, Wiley-Blackwell'' </ref>On the other hand, this provides more uncertainties for actors as contractors, designers and consultants. [[Managing Uncertainty and Risk on the Project]] is especially important in turnkey.		As a result of innovations in the partnering relationships between the client and the project coalition actors, there has been a transition in the construction industry. There is a number of different ways to form construction projects, and the different structures come with unique risks for actors involved in the project. The currently trend is use of the integrated project coalition, also called turnkey, characterised by a single contract for both execution and design of a project. Benefiting from this is the client, who pay for low risk and project uncertainty. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010) Chapter 5.4.5, Second edition, Wiley-Blackwell'' </ref>On the other hand, this provides more uncertainties for actors as contractors, designers and consultants. [[Managing Uncertainty and Risk on the Project]] is especially important in turnkey.

	This type of project management approach requires a thorough risk profile for the project coalition actors to avoid damaging missteps. It will always be numerous risks in construction contracts, and without a risk profile it could leave the contractor, designer or the consultant dangerously exposed to unexpected responsibilities and risks. However, without risks there will not be innovation. Risks and opportunities are related and you need a balance between the two. This wiki-article will look at the leading contractual risk factors and risk profile for ~~the~~ actors in turnkey contracting in the construction industry.		This type of project management approach requires a thorough risk profile for the project coalition actors to avoid damaging missteps. It will always be numerous risks in construction contracts, and without a risk profile it could leave the contractor, designer or the consultant dangerously exposed to unexpected responsibilities and risks. However, without risks there will not be innovation. Risks and opportunities are related and you need a balance between the two. This wiki-article will look at the leading nordic contractual risk factors and risk profile for actors in turnkey contracting in the construction industry.


	=Turnkey Projects=		=Turnkey Projects=
	== Definition ==		== Definition ==
	Turnkey is also named integrated coalitions or single–point responsibility. This type of project is constructed as a complete product for a client. This means that within the clients order there is both design and execution. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010), Chapter 5.4.2, Second edition, Wiley-Blackwell'' </ref> In turnkey the goal of the contractor is to satisfy the clients performance specifications. Where in general contracting the contractor address designer's plans and specifications. Turnkey contracting is getting more used in the building industry because the client transfer maximum risk to the ~~supplier~~.		Turnkey is also named integrated coalitions or single–point responsibility. This type of project is constructed as a complete product for a client. This means that within the clients order there is both design and execution. <ref>[''Managing Construction Projects''] ''Winch, G.M. (2010), Chapter 5.4.2, Second edition, Wiley-Blackwell'' </ref> With design it means engineering and architectural design. In turnkey the goal of the contractor is to satisfy the clients performance specifications. Where in general contracting the contractor address designer's plans and specifications. Turnkey contracting is getting more used in the building industry because the client transfer maximum risk to the contractor.

	==Structure==		==Structure==
	~~You can see~~ the relationships between the actors in a turnkey at the figure below:		First of all, it is the client who decides the contract structure of the project. The relationships between the actors in a turnkey is illustrated at the figure below:

	[[File:1.png\|600px\|]]		[[File:1.png\|600px\|]]
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	As you can see in the figure above, the main responsibility is centralized with the turnkey contractor. Normally they guarantee compensation for delays and take full responsibility for overall project cost. <ref>[''Reliability through Experience''] ''"Full Turnkey Construction(Internet)", ''Available from: http://www.dsengineers.com/en/contracting-services/full-turnkey-epc-construction.html'', Read: 10.09.15'' '' </ref> In a general contract it is a three-party arrangement between the client, designer and the contractor. Here, the client must relate to two parties and get responsible for impact caused by design defects <ref>[''Shapiro, B.S''] "Design/build and turnkey contracts - advantages and disadvantages(Internet)",''Shapiro Hankinson & Knutson'', ''Available from: http://www.shk.ca/wp/wp-content/uploads/2013/02/Design-Build-and-Turnkey-Contracts-Advantages-and-Disadvantages.pdf'', Read: 10.09.15'' '' </ref> .		As you can see in the figure above, the main responsibility is centralized with the turnkey contractor. Normally they guarantee compensation for delays and take full responsibility for overall project cost. <ref>[''Reliability through Experience''] ''"Full Turnkey Construction(Internet)", ''Available from: http://www.dsengineers.com/en/contracting-services/full-turnkey-epc-construction.html'', Read: 10.09.15'' '' </ref> In a general contract it can be a three-party arrangement between the client, designer and the contractor. Here, the client must relate to two parties and get responsible for impact caused by design defects <ref>[''Shapiro, B.S''] "Design/build and turnkey contracts - advantages and disadvantages(Internet)",''Shapiro Hankinson & Knutson'', ''Available from: http://www.shk.ca/wp/wp-content/uploads/2013/02/Design-Build-and-Turnkey-Contracts-Advantages-and-Disadvantages.pdf'', Read: 10.09.15'' '' </ref> .

	~~Often,~~ the ~~client hires an independent consultant to advise in the pre-contract phase,~~ and ~~sometimes throughout~~ the project. This way they make shore the constructor holds the requirements of the project. The third-party can be a project manager, engineer or another kind of consultant. As there often occur conflict of interest when a single contractor is responsible for the ~~overall project on behalf of the client, a consultant could be wise~~. ~~The constructor wants to complete~~ the ~~work as fast~~ and ~~cheap as possible. Consequently their financial goals often collide with the quality of the finished project~~.		The responsibility that lays with the contractor does not only include risks and finishing the project. They are also responsible for the sub-contractors. Meaning social-dumping and the health and safety executive's.

	The turnkey structure is most applicable when there is a large amount of information early in the process, the building is repeated or it is a simple type.		Often, the client hires an independent consultant to advise in the pre-contract phase, and sometimes throughout the project. This way they make shore the constructor holds the requirements of the project. The third-party can be a project manager, engineer or another kind of consultant. As there often occur conflict of interest when a single contractor is responsible for the overall project on behalf of the client, a consultant could be wise. The constructor wants to complete the work as fast and cheap as possible, with a good quality of the finished project. Unfortunately, these goals often collide.

			The turnkey structure is most applicable when there is a large amount of information early in the process, the building is repeated or it is a simple type. With these requirements, there is often less conflicts.

	==Benefits==		==Benefits==
	One of the main benefits with this type of contracts is the savings in production cost. ~~Because~~ the contractor has responsibility for both design and construction, the building process can start before the design specifications are completed. This way, the contractor saves time and money. It is also more efficient when they are responsible for law related and local neighbour problems. ~~There~~ is a ~~lot~~ of ~~money to be spared when these situations~~ are ~~handled gently and effectively~~.		One of the main benefits with this type of contracts is the possibility of savings in production cost. The client pay the contractor to take on the risks of the whole project. Further, because the contractor has responsibility for both design and construction, the building process can start before the design specifications are completed. This way, the contractor saves time and money. It is also more efficient when they are responsible for law related and local neighbour problems.

			Turnkey contracts are most of all benefiting the client of the project in a risk-prospective. First of all, this type of contracting provides the client with just one source of responsibility. In contrast, the contractor alone has the responsibility of defects caused by both design and construction. Meaning that the owner does not have to determine if a defect is caused by a misstep in design or construction - nevertheless, it is not their responsibility to fix it. The contractor must pay for any additional cost because of defective design or construction. Nothwithstanding, if the owner authorized the construction plan in the start, then they are responsible of extra costs caused by insufficient plans.

	~~Turnkey~~ contracts ~~are most off all benefiting the owner of the project~~. ~~First of all, this type of contracting provides~~ the ~~owner with just one source of responsibility. In contrast~~, ~~the contractor alone has the responsibility of defects caused by both design and construction. Meaning~~ that the owner does not have to determine if a defect is caused by a misstep in design or construction - nevertheless, it is not their responsibility to fix it. The contractor must pay for any additional cost because of ~~defective design or construction. Nothwithstanding, if the owner authorized the construction plan in~~ the ~~start, then they are responsible of extra costs caused by insufficient plans~~.		Additionally, turnkey contracts will be attractive for client without proper technical knowledge. Owners do not need to have the detailed qualifications, that will be one of the constructor’s prerequisites.

	~~Additionally~~, turnkey ~~contracts will be attractive for owners without proper technical knowledge~~. ~~Owners do not need~~ to have the ~~detailed qualifications, that will be one~~ of the ~~constructor’s prerequisites~~.		On the other hand, the turnkey structure benefits contractors as well. Here, the contractor can choose their own team based on experiences. With good relationships to the sub-contractors, they have better overall control when they price the project. This way they limit the possibility of risks and increases the chance of profit.

	==Limitations==		==Limitations==
	The construction business is a competitive industry and compared to other sectors there is high risks and low profit. In turnkey contracts tendering is the normal way to get the job. Then there is a fixed price and a packaged deal for the client. ~~The~~ lowest price is often the winner. A consequent of this is how the constructor price and handle the risks involved in the project. Often, the constructions are simple to get the cost-effectiveness at a level so they achieve an attractive price for the project. Another result can be deficient design, and without detailed checking from a third-part, this can be expensive.		The construction business is a competitive industry and compared to other sectors there is high risks and low profit. In turnkey contracts tendering is the normal way to get the job. Then there is a fixed price and a packaged deal for the client. Therefore, the client decides the criteria. Sometimes they want specific firms or qualifications, but the lowest price is often the winner. A consequent of this is how the constructor price and handle the risks involved in the project. Often, the constructions are simple to get the cost-effectiveness at a level so they achieve an attractive price for the project. Another result can be deficient design, and without detailed checking from a third-part, this can be expensive.

	Where there is not a fixed price, the owner has to negotiate the price after hiring a contractor based on design. This way the contractor make sure they do not waste money on a proposal design. On the other hand the owner may not get the lowest possible price for the project.		Where there is not a fixed price, the owner has to negotiate the price after hiring a contractor based on design. This way the contractor make sure they do not waste money on a proposal design. On the other hand the owner may not get the lowest possible price for the project.

	Further, ~~there are no adequate standard~~ contracts for ~~turnkey~~. There is a lot of uncertainties for the turnkey contractor and the sub-contactors, and it is a need for a safety net in the contract so that they have controll over variations under the project. A way to solve this could be payment at fixed milestones. Where there is a lump sum price for the project, the uncertainties are even bigger. This is mostly because it is hard to know the precise timeline and costs of a building project. Therefor the contract must be specified carefully.		Further, nordic standards for turnkey contracts, for example ABT 93 in Denmark, there is only a general risk distribution. There is a lot of uncertainties for the turnkey contractor and the sub-contactors, and it is a need for a safety net in the contract so that they have controll over variations under the project. A way to solve this could be payment at fixed milestones. Where there is a lump sum price for the project, the uncertainties are even bigger. This is mostly because it is hard to know the precise timeline and costs of a building project. Therefor the contract must be specified carefully.

	With turnkey the ~~owner~~ of the project will have a limitation to the amount of influence on design details. Examples of limitation can be knowledge of delays, defective work and extension of the time schedule. Overall they will have less control over the process. Since the ~~owner~~ is not part of the construction part and have little verification options, they are exposed in a turnkey. This could result in improper payment and non-conforming work. In the traditional turnkey there is no party that protect the ~~owner’s~~ interests, so they have to be extra aware of liquidity and responsibilities in different situations.		With turnkey the client of the project will have a limitation to the amount of influence on design details. Examples of limitation can be knowledge of delays, defective work and extension of the time schedule. Overall they will have less control over the process. Since the client is not part of the construction part and have little verification options, they are exposed in a turnkey. This could result in improper payment and non-conforming work. In the traditional turnkey there is no party that protect the client’s interests, so they have to be extra aware of liquidity and responsibilities in different situations. Overall, the client have to relay on accurate information from the contractor about the progress of the project.

	=Risk Profile as a tool=		=Risk Profile as a tool=

IMT: /* Annotated Bibliography */

2015-09-25T19:38:11Z

Annotated Bibliography

← Older revision		Revision as of 19:38, 25 September 2015
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	= Annotated Bibliography=		= Annotated Bibliography=


	''Managing Construction Projects - Winch, G.M. (2010), Second edition, Wiley-Blackwell''		''Managing Construction Projects - Winch, G.M. (2010), Second edition, Wiley-Blackwell''

	This book is first of all about “managing construction projects in an information processing approach”. It is intended for master students and other that want to develop their managing skills. The theories are supported by case studies, which make it easy to understand the basic. Additionally, it is updated after current standards and practice in the industry. Further, this book is used as class material at DTU at the Civil Engineer Department, which make it a legit and secure source. In my study, this book was highly relevant, especially for the sections about turnkey structure and the risks involved.		This book is first of all about “managing construction projects in an information processing approach”. It is intended for master students and other that want to develop their managing skills. The theories are supported by case studies, which make it easy to understand the basic. Additionally, it is updated after current standards and practice in the industry. Further, this book is used as class material at DTU at the Civil Engineer Department, which make it a legit and secure source. In my study, this book was highly relevant, especially for the sections about turnkey structure and the risks involved.


	''Taylor, S. & Mbachu, J.(2014) - "Profiling and mitigation risks in construction contracts",School of Engineering and Advanced Technology, Massey University, Auckland, Available from: http://construction.massey.ac.nz/NZBERS-2014_proc_fp_Taylor-S.pdf''		''Taylor, S. & Mbachu, J.(2014) - "Profiling and mitigation risks in construction contracts",School of Engineering and Advanced Technology, Massey University, Auckland, Available from: http://construction.massey.ac.nz/NZBERS-2014_proc_fp_Taylor-S.pdf''

	This article is made as a case study of “profiling and mitigating risks in construction contracts”, mainly looking at New Zealand. General terms and risk factors were presented in an enlightening way. The text is easy to read and the structure fits the content. I used the article as a base for my explanation on tender biding and pricing on risky projects. The study is written on behalf of “New Zealand built environment research symposium,” and therefore a legit source.		This article is made as a case study of “profiling and mitigating risks in construction contracts”, mainly looking at New Zealand. General terms and risk factors were presented in an enlightening way. The text is easy to read and the structure fits the content. I used the article as a base for my explanation on tender biding and pricing on risky projects. The study is written on behalf of “New Zealand built environment research symposium,” and therefore a legit source.


	''Shapiro, B.S - "Design/build and turnkey contracts - advantages and disadvantages(Internet)",Shapiro Hankinson & Knutson, Available from: http://www.shk.ca/wp/wp-content/uploads/2013/02/Design-Build-and-Turnkey-Contracts-Advantages-and-Disadvantages.pdf, Read: 10.09.15''		''Shapiro, B.S - "Design/build and turnkey contracts - advantages and disadvantages(Internet)",Shapiro Hankinson & Knutson, Available from: http://www.shk.ca/wp/wp-content/uploads/2013/02/Design-Build-and-Turnkey-Contracts-Advantages-and-Disadvantages.pdf, Read: 10.09.15''

	The law corporation “Shapiro Hankinson & Knutsen” from Vancouver, Canada, publishes this article. In the study there is a discussion about advantages and disadvantages of design/build and turnkey contracts. It has a good structure where the definitions come first, then benefits and limitations, conclusion and in the end alternatives for contractual arrangements. It gave me a good overall picture over turnkey contracting and how it is benefitting the different actors involved in a turnkey project.		The law corporation “Shapiro Hankinson & Knutsen” from Vancouver, Canada, publishes this article. In the study there is a discussion about advantages and disadvantages of design/build and turnkey contracts. It has a good structure where the definitions come first, then benefits and limitations, conclusion and in the end alternatives for contractual arrangements. It gave me a good overall picture over turnkey contracting and how it is benefitting the different actors involved in a turnkey project.

IMT: /* A real life example */

2015-09-25T19:37:39Z

A real life example

← Older revision		Revision as of 19:37, 25 September 2015
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	\|-		\|-
	\|Risk Tolerance		\|Risk Tolerance
	\|''. ~~<ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>~~		\|''.
	\|-		\|-
	\|Risk Capacity		\|Risk Capacity
	\|''. ~~<ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>~~		\|''.
	\|-		\|-
	\| Risk Required		\| Risk Required
	\|'' ~~<ref name="PMI"> PMI~~. ~~(2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>~~		\|'' .
	\|}		\|}

IMT: /* A real life example */

2015-09-25T19:37:04Z

A real life example

← Older revision		Revision as of 19:37, 25 September 2015
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	\|Risk Tolerance		\|Risk Tolerance
	\|''Examines project performance over time to determine whether performance is improving or deteriorating. Graphical analysis techniques are valuable for understanding performance to date and for comparison to future performance goals in the form of completion dates. <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>		\|''. <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>
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	\|Risk Capacity		\|Risk Capacity
	\|''Comparing the progress along the critical path can help determine schedule status. The variance on the critical path will have a direct impact on the project end date. Evaluating the progress of activities on near critical paths can identify schedule risk. <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>		\|''. <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>
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	\| Risk Required		\| Risk Required
	\|''Comparing the amount of buffer remaining to the amount of buffer needed to protect the delivery date can help determine schedule status. The difference between the buffer needed and the buffer remaining can determine whether corrective action is appropriate. <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>		\|'' <ref name="PMI"> PMI. (2013). "A Guide to the Project Management Body of Knowledge (PMBOK® Guide)", Fifth Edition </ref>
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← Older revision		Revision as of 20:23, 28 September 2015
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	= Risk Profile in Turnkey Projects =		= Risk Profile in Turnkey Projects =
	Risk and uncertainty are damaging factors in the construction industry. The industry is characterized by complexity, time pressure and a competitive marked. It can be very costly for ~~stakeholders~~ not to account for risk. The chance of failure in turnkey shows that project coalition actors, especially contractors, need to have a framework for risk analysis. As the risks are subjective, risk profile in turnkey vil be different from [[Risk Profile in General Contracting]].		Risk and uncertainty are damaging factors in the construction industry. The industry is characterized by complexity, time pressure and a competitive marked. It can be very costly for actors not to account for risk. The chance of failure in turnkey shows that project coalition actors, especially contractors, need to have a framework for risk analysis. As the risks are subjective, risk profile in turnkey vil be different from [[Risk Profile in General Contracting]].

	Ling (2005)<ref>[''Taylor, S. & Mbachu, J.(2014)''] "Profiling and mitigation risks in construction contracts",''School of Engineering and Advanced Technology, Massey University, Auckland'', ''Available from: http://construction.massey.ac.nz/NZBERS-2014_proc_fp_Taylor-S.pdf'' '' </ref> identified contractual global risk factors:		Ling (2005)<ref>[''Taylor, S. & Mbachu, J.(2014)''] "Profiling and mitigation risks in construction contracts",''School of Engineering and Advanced Technology, Massey University, Auckland'', ''Available from: http://construction.massey.ac.nz/NZBERS-2014_proc_fp_Taylor-S.pdf'' '' </ref> identified contractual global risk factors:
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	These factors can be modified and used in analysis of turnkey contracts:		These factors can be modified and used in analysis of turnkey contracts:
	*Pricing of the project; ~~owner’s~~ unreasonable expectations.		*Pricing of the project; client’s unreasonable expectations.
	*The amount and use of subcontractors; inexperience, lac of skilled labour.		*The amount and use of subcontractors; inexperience, lac of skilled labour.
	*The contractor; poor project management, incompetent team.		*The contractor; poor project management, incompetent team.
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	As explained under the section about turnkey contracts, the use of tendering forces contractors to deliver as low price as possible for projects. A way to cut down on prices is to shorten the length of the project. It is not easy to know the amount of work or the exact timeline of a construction project. With this [[Management of risk]], the project manager can make a more likely picture of worst-case scenario of the project. This way the cost will match the amount of work to finish.		As explained under the section about turnkey contracts, the use of tendering forces contractors to deliver as low price as possible for projects. A way to cut down on prices is to shorten the length of the project. It is not easy to know the amount of work or the exact timeline of a construction project. With this [[Management of risk]], the project manager can make a more likely picture of worst-case scenario of the project. This way the cost will match the amount of work to finish.

			Further, in turnkey contracts the client pay contractors to take on the risk included in the responsibility of a overall project. If a project is successful or not depends on the contractors ability to take on the economic risk he agrees to. The client knows that unforeseen risks costs, that is why they prefer turnkey.

	As a result of long experience and innovation, new technical solutions and building methods are being developed. Risk caused by this development are most often the clients responsibility. Meaning that the contractors responsible are based on result and effort<ref>[''Byggejuss''] "Kort om utviklingsrisikoen i entrepriseretten", ''Available from: http://byggejuss.no/kort-om-utviklingsrisikoen-i-entrepriseretten/'' ''Read 25.09.15'''' </ref>.		As a result of long experience and innovation, new technical solutions and building methods are being developed. Risk caused by this development are most often the clients responsibility. Meaning that the contractors responsible are based on result and effort<ref>[''Byggejuss''] "Kort om utviklingsrisikoen i entrepriseretten", ''Available from: http://byggejuss.no/kort-om-utviklingsrisikoen-i-entrepriseretten/'' ''Read 25.09.15'''' </ref>.
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	The main characteristic of turnkey is the financial aspect where the contractor is the center of risk responsible. Further, if the contract does not state otherwise, the contractor handles all risk included in the start-phase of the project, design and construction.		The main characteristic of turnkey is the financial aspect where the contractor is the center of risk responsible. Further, if the contract does not state otherwise, the contractor handles all risk included in the start-phase of the project, design and construction.

	As discussed in the article, the risk in turnkey basically frames the contractor and the sub-contractors. Therefore, the barrier for use of turnkey should be high. With for example program management of several turnkey project, a constructor face high probability of deficit~~. Often to secure themselves for unexpected risks, contractors overpay consultants~~. There need to be a balance between the risks identified and measures to handle it. On the other hand, a successful turnkey project will be timesaving and consequently profitable.		As discussed in the article, the risk in turnkey basically frames the contractor and the sub-contractors. Therefore for the contractor, the barrier for use of turnkey should be high. With for example program management of several turnkey project, a constructor face high probability of deficit. There need to be a balance between the risks identified and measures to handle it. On the other hand, a successful turnkey project will be timesaving and consequently profitable.

	Risk profiling basicly paint a picture of the risk situation within a company related to a specific project. After defining turnkey and the risks contractors face, it is clear that consultants, sub-contractors and contractors will benefit from risk profiling. When all parties communicate their risk profile it will be a better overall understanding of the projects realistic time perspective and costs. This is benefitting pre-work for all parties involved in the project. The coalition actors now has a tool to pick suitable projects.		Risk profiling basicly paint a picture of the risk situation within a company related to a specific project. After defining turnkey and the risks contractors face, it is clear that consultants, sub-contractors and contractors will benefit from risk profiling. When all parties communicate their risk profile it will be a better overall understanding of the projects realistic time perspective and costs. This is benefitting pre-work for all parties involved in the project. The coalition actors now has a tool to pick suitable projects.