Short Definition
Turnkey describes a contract or deal in which the contractor or developer undertakes to deliver the project or unit complete and ready for immediate use, designed, built, equipped and tested, for a lump-sum price, so that the client only has to 'turn the key'.
Overview
Turnkey describes a contract or deal in which the contractor or developer undertakes to deliver the project or unit complete and ready for immediate use, designed, built, equipped and tested, for a lump-sum price, so that the client only has to 'turn the key'. In residential marketing it usually means a fully finished unit ready to move into, and furniture is not included unless the contract expressly says so.
In Saudi Arabia, Art. 95 of the Implementing Regulation of the Government Tenders and Procurement Law defines the turnkey contract as a contracting pattern for major construction, infrastructure and industrial facilities and the like, in which the contractor is responsible for the conformity of designs and execution on site, performs according to the technical specifications in the tender at a lump-sum price, and the government entity may include equipping and furnishing items; note that a new procurement law was published in September 2026 and applies 120 days after publication. In the private sector, the Civil Transactions Law provides that a contractor under a lump sum based on an agreed design may not claim an increase even if material prices and wages rise (Art. 471). In March 2024 the Ministry of Justice and the Saudi Contractors Authority also launched the unified complete-construction contract and recognised it as an executive instrument.
In practice, turnkey gives the owner more certainty on price and time, but shifts the burden of detail onto the contract: specifications must be precise (tiles, sanitary ware, air conditioners, kitchen, lighting and the scope of external works), as must acceptance criteria, commissioning and warranties. When buying an off-plan 'turnkey' unit, check that the advertised specifications are written into the sale contract and not only in the advertisement.
⚖️ Legal Basis
Implementing Regulation of the Government Tenders and Procurement Law (issued by Royal Decree No. M/128 dated 13/11/1440H): Art. 94 (types of contracts) and Art. 95(2) (the turnkey contract and its conditions, including the lump sum and the option to include equipping and furnishing), noting that a new procurement law was published in September 2026 and applies after 120 days. Civil Transactions Law issued by Royal Decree No. (M/191) dated 29/11/1444H: Art. 471 (lump sum based on an agreed design) and Art. 463 (contractor's responsibility for materials it supplies meeting the specifications). The Organization of the Saudi Contractors Authority issued by Council of Ministers Decision No. (510) dated 23/11/1436H, which empowers it to prepare model contract forms.
💡 Practical Example
Faisal agreed with a contractor to build a turnkey villa in Madinah for a lump sum of SAR 1,450,000, covering design, permit, structure, full finishing, air conditioners, kitchen and landscaping, for delivery within 14 months. A specification schedule attached to the contract set the tiles, sanitary ware and the AC capacity and brand, and stated that furniture was excluded. During construction steel prices rose and the contractor asked for an extra SAR 60,000, but a lump sum based on an agreed design does not allow this, so the contractor finished at the original price and Faisal took over the villa after test-running the air conditioners and pumps.
⚠️ Common Mistakes
- ✗Believing 'turnkey' automatically includes furniture and appliances, whereas only the contract decides this.
- ✗Relying on a general description of finishes without a specification schedule of types, brands and quantities.
- ✗Making repeated changes during construction under a lump sum and then being surprised by justified extra claims.
- ✗Taking handover without test-running systems (AC, pumps and electrics) and recording the results.
- ✗Relying on advertised specifications when buying off-plan without having them written into the sale contract.
🌍 International Differences
In FIDIC contracts, the Silver Book is the EPC/turnkey form that shifts most risk to the contractor. In Turkey the term anahtar teslim is common in sales of new homes and in industrial projects; in the UAE it is used in marketing ready villas and flats and in infrastructure contracts; and in Egypt the equivalent is delivery 'fully finished'. The key difference between markets is what the term actually covers, so what matters is always the specification schedule in the contract rather than the label.
FAQs
Does turnkey mean the unit is furnished?▾
Not necessarily; the usual meaning is a fully finished unit ready to move into. Furniture or appliances are included only if the contract expressly says so.
What is a turnkey contract in Saudi government procurement?▾
It is a contracting pattern permitted by the procurement law's implementing regulation for major construction, infrastructure and industrial facilities, in which the contractor is responsible for the conformity of design and execution for a lump sum. It may include equipping and furnishing items.
Can the contractor raise the price under a turnkey contract?▾
If the contract is a lump sum based on an agreed design, the contractor may not claim an increase even if material prices or wages rise, unless the change results from the owner's fault or was authorised with an agreed increase. The court may rebalance the contract in unforeseeable general exceptional circumstances.
What should a turnkey contract include?▾
It should include the scope of works, a schedule of specifications and brands, the lump-sum price and payment schedule, the programme and penalties, acceptance and commissioning criteria, and warranties. The more precise the schedule, the fewer disputes at handover.
Is the unified construction contract an executive instrument?▾
Yes. In March 2024 the Ministry of Justice and the Saudi Contractors Authority launched the unified complete-construction contract and recognised it as an executive instrument. Rights established in it can be enforced directly before the Execution Court without lengthy merits litigation; note that the new Execution Law issued by Royal Decree (M/237) dated 3/11/1447H takes effect around late October 2026.
