Jurisdiction(s):
United Kingdom

Key definition

Turnkey contract definition

What does Turnkey contract mean? A turnkey contract (often called an epc contract) is a construction procurement in which one contractor engineers, procures, constructs, tests and commissions a project and then hands over a facility that can be operated immediately—literally by turning the key. The term is descriptive rather than defined in legislation or case law, and its use is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Typical legal features include: single point of responsibility; lump‑sum, fixed‑time obligations; broad transfer of design, co‑ordination and interface risk to the contractor; performance guarantees proven by completion and commissioning tests; liquidated damages...

EPC/Turnkey Contracts: Key Features, Risk Allocation, Pricing, Performance, Liability Caps, Standard and Bespoke Forms (FIDIC Silver Book, ICC, IChemE, MF1), and Use in Project Finance and Process Plant

Published by a LexisNexis Construction expert

Practice notes

Comparison with traditional building or engineering contract

The label ‘EPC’ contract (or ‘turnkey’ contract) is not a technical term. Perhaps the clearest way is first to set out how it diverges from other forms of agreement. A turnkey arrangement means that, once the project is finished and ready to pass to the user, it should need nothing more than the ‘turn of a key’ for the user to run it immediately. EPC denotes engineering, procurement and construction, and signals, in particular:

a significant transfer of risk and responsibility placed on the contractor under such agreements, and
a minimal need for the client to participate in the Works (beyond essential monitoring) in normal circumstances

This contrasts with traditional domestic building or engineering contracts, where risks and duties (including those relating to design) are spread more evenly between contractor and client, and the client, through its representatives, may play a substantial role in decision making throughout the construction phase and programme. Many UK domestic contracts now adopt standard forms with contractor design liability and are then so extensively revised in favour of the client that describing them as EPC contracts would appear fitting for them in practice...

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Web page updated on 21/05/2026

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