Is Turnkey More Expensive?

21 February 2023

“Turnkey is too expensive!”

You may have thought this if you have upcoming factory expansion plans and are worried whether it will fit into your budget as well as being the best solution for your needs. The short answer is yes, turnkey is typically a larger investment for a number of reasons.

We have listed the top three below…

  • Prevents the project becoming a major distraction – Turnkey relieves you and your management team of the stress and distraction of trying to run the project. Trying to juggle your business and a project can leave both worse off. See our recent blog about this topic!
  • Removes risk – Turnkey transfers the risk from you to the turnkey partner. This approach means that you have a fixed project cost before works commence giving you budget certainty eg. If material costs rise this becomes their problem, not yours!
  • End-to-end from design to handover – Turnkey covers all aspects of the project from start to finish including smaller elements that fall between the larger packages of work. These are often overlooked by companies managing their project in-house and lead to budgets slipping further on in the project.

What are the alternatives?

Aside from turnkey, there are plenty of alternative ways to approach your factory design, build and fit-out project. The best solution for you and your business depends on a number of factors, including the time you can dedicate to the project, the level of in-house experience you have and of course the budget you have available.

We have shared three of these below along with their pros and cons…

  • Manage it yourself – if you feel you have the time and experience to commit to the project, one option is bringing in the various subcontractors and managing it yourself. This will often be a lower cost solution and will give you greater hands-on control over the day-to-day running of the project, but if you are considering this route don’t underestimate the time and energy this will require! Also, ensure you don’t skip the design process as this is key for a successful project delivery.
  • Pay a third party project manager to manage it for you – if you don’t have the time to manage the day-to-day site activities another option is to delegate this to a project manager or a project management company. These would typically charge a management fee (often as a percentage of the project value) which at face value can be more cost effective than turnkey, however they don’t usually guarantee a fixed cost for the project, and you will be liable if costs slip. In addition, you will need to take care of the design before the project commences. If you have a competent project manager and are comfortable with the budget risks, this could be a good option for you.
  • Go down the traditional route – this involves appointing an architect, QS, and main contractor etc. This method is commonly used for larger projects involving construction but can be frustratingly slow and inefficient and will often require a lot of input from you as the client. Also, a common frustration is a lack of food industry specific knowledge with many architects and contractors, which sometimes leads to the project being done twice! However, if you do have the time on your hands, and sufficient expertise to bring to the project, then this may be a viable option for you.

For small and medium sized food manufacturers, food factory expansion can be a daunting prospect. There are many aspects to think about in the design, build and fit-out stages with plenty of potential pitfalls. A factory expansion project will often be the largest investment you’ve made to date so it’s important to get it right first time!

If you are the owner of an SME food manufacturing business considering expansion plans you may be feeling overwhelmed and not sure where to start. If you don’t think the alternatives above are right for you, then we may be able to help – get in touch with us for a no-obligation chat about your plans and we’ll advise what we think is best for you.