ICC Model Turnkey Contract for Major Projects

What are the main features of this model? 

An international business transaction requires a precise and detailed underlying contract. However, it can be expensive and time-consuming to draft such a contract oneself. The ICC Model Turnkey Contract for Major Projects responds to the market’s need for a reliable and equitable template, providing a set of clear and concise standard provisions regarding provision of a turnkey project that will save parties time and money in the negotiation process. 

International turnkey construction projects are often complex transactions, requiring correspondingly complex legal documentation. Moreover, many such major construction projects are an important element in international development, and it is vital that the arrangements put in place be durable, clear and equitable. 

The ICC model provides contractors and employers with a unique, balanced platform that is fair to all parties. At the same time, the model accommodates the desire of all parties for price and scope certainty, the need for swift and effective dispute resolution, and the need for complete and informed allocation of risks.  

In this regard, it treats tradition ‘turnkey’ issues such as the contractor’s obligation to design, procure, supply, install, execute, commission, test and hand over works as defined by the employer, including the remedying of potential defects, on time and within the agreed contract price.  

However, in contrast to more traditional models of turnkey contracting, the model’s concept of “Assumptions” calls upon the employer to increase its efforts and transparency in order to better foresee the final contract price, in turn allowing the contractor to provide a more competitive offer (since the need for a risk premium for uncertain events is reduced).    

Overall, the model responds to changes in the culture of the international construction industry towards a more collaborative relationship between contractor and Employer in terms of rights and obligations.  Focus on successful delivery of the project through a more collaborative relationship centered on successful delivery of major projects is increasingly recognized as more productive in profit and loss terms for both parties.