Utah General Contractors - Business and Law Practice Exam

What type of contract allows a contractor to obtain financing and land in addition to completing the project?

1. Design-Build

2. Cost-Plus Contract

3. Turnkey Contract

4. Fixed Price Contract

The correct answer is: Turnkey Contract

A turnkey contract is designed to allow a contractor to manage every aspect of a construction project, providing a single point of accountability. This type of contract encompasses various elements, including financing, land acquisition, design, and construction. The contractor is responsible for delivering a finished project ready for use, completing all necessary tasks, and ensuring the project meets the specified requirements. This approach is advantageous for clients who prefer a streamlined process, as they do not need to interact with multiple contractors or navigate different contracts for various phases of the project. The contractor takes on the risk and responsibility of managing all components from concept to completion, which often includes securing financing for the project and acquiring the land on which the construction will take place. In contrast, other types of contracts, such as design-build, cost-plus, and fixed price contracts, may not provide the same comprehensive coverage for securing land and financing. Design-build focuses on the design and construction phases under a single contract but does not inherently include financing. Cost-plus contracts base contractor payments on actual costs plus a fee but do not typically involve land acquisition responsibilities. Fixed price contracts provide a set price for the completed project but rely on external arrangements for financing and land.