A key the client only has to turn, and a Korean path from the early 1970s

As trade among countries grew more active, the notes write, opening and integration among states also gathered speed, and firms came to see a need to go abroad. Among the contract forms used at home and abroad is the Turn key Base contract, spelled that way in the notes. The contractor provides every service from the planning of a project to its completion — financing, securing land, design and construction, and operation — and bears responsibility across the work. The client takes delivery of the finished object in a state in which it is enough to turn a key, and the name, they say, comes from that image. The method was developed in the United States, and is used worldwide. It has also been spoken of as a package contract, or as Design-Construct, and in Korea a comprehensive bid set out in the national contract law is called a Turn key Base work.

The method, the notes say, was first introduced in Korea in the early 1970s. From the 1975 “Special Provisions of the Enforcement Decree of the Budget and Accounting Act Concerning Large Works” through 2002, when an expansion of Turn key Base works to about 50 percent of large works was announced, orders of this kind, they write, kept rising sharply. That “about 50 percent” stays in the notes’ window, and is not rewritten as a later official share.

Build Own Transfer, and the merits and faults the notes list

BOT is given as Build Own Transfer. After a piece of social infrastructure is completed, ownership is recognised for the project operator for a set period, and when that period ends it reverts to the local authority or the state. The project owner raises the needed funds, finishes the plant and the facilities, runs the project for a time, uses surplus revenue to repay debt and to pay dividends to equity investors, and, when the operating period ends, transfers the project to the client. As a way of bringing in private capital, a single private firm or a consortium finances and builds the facility, operates it for a period, and then transfers ownership to the government. BOT projects, the notes say, are to be arranged so that a suitable return of about 15–20 percent can be secured. That range is left as they state it.

The advantages of a Turn key Base contract, in this telling, are a clear limit of responsibility, a chance to cut construction costs, more efficient research into new methods, a shorter period of work, smoother communication between design and construction, and payment in instalments that lightens the client’s burden. A completed production system can also be handed to a client in the host country, and technical gaps can be treated with more flexibility. The disadvantages, they add, are that it can be hard to reflect the client’s intention, that quality may fall if the lowest bidder is chosen, and that it is difficult to grasp the total cost in advance, so several risks remain. BOT, they write, can offer a chance of profit if demand or operating results rise during the operating period, can ease the burden of the operator’s debt ratio, can draw in financial institutions and relax regulations, and can spread risks so that they do not appear as debt. Against that, the payback period is long, economic risk is high, negotiations among participants are complicated, lenders bear risk, and long, continuous management is needed.

A Ssangyong award, won on design, not on the lowest price

Ssangyong Construction, the notes write, entered the Turn key Base market by winning a metropolitan water-supply reliability project, the second Cheon section, at 132.7 billion won. In the bidding, design counted for 60 points and price for 40, and the firm took a high score on design, so it could win even though it was not the lowest bidder. The notes present the award as a successful Turn key Base case. The same Korean report, at fuller length, is on CampusDown.

Sources

1. The notes’ account of Turn key Base contracts and of BOT as Build Own Transfer, including the Ssangyong Construction case

Last updated: 14 November 2026