Renovation & construction
Turnkey or Staged Contract: What an Investor Should Choose
Turnkey gives one price and one responsible party, but only for a clearly described scope. Staged is more flexible and cheaper at the start, but coordination and control fall on the client.
A "turnkey" contract (reforma llave en mano) means one contractor, one price and one party responsible for the result. A staged contract splits the work into parts: either one firm carries them out in turn, or a separate specialist does each chapter. Turnkey suits a case where the scope is known and described in a budget with measurements. Staged suits a case where the scope is unclear and the client is ready to coordinate personally or to hire technical supervision.
What "turnkey" means in law
In Spanish law a "turnkey" job is usually drawn up as work for a fixed price, ajuste alzado. Under art. 1593 of the Código Civil, such a contractor may not demand a higher price because materials or labour have become more expensive, but may demand an extra payment if a change increasing the scope was made under the agreed plan and the owner authorised it (BOE). The client may withdraw from the work by compensating the contractor for expenses, labour and lost profit (art. 1594). The contractor answers for the people he brought in (art. 1596).
These are the general rules of the Código Civil (articles 1588–1600). In Book VI of the Código Civil de Cataluña (Ley 3/2017), the general section on service contracts, which include the contrato de obra (works contract), is reserved, and I found no separate rules on works contracts there. Which rules apply to your contract in Catalonia is checked by an abogado (lawyer).
The main point follows: a "turnkey" price is fixed only within the described scope. Anything not in the budget that you agree on later becomes an extra payment.
What a staged contract is
Here the work is divided by chapters or by trades: demolition, electrics, plumbing, finishes. Payment more often follows measurement. Under art. 1592 of the Código Civil, a contractor working in parts or by measurement may require the client to accept the work in parts and pay proportionally, and the paid part is deemed accepted. A payment made without checking the quantity closes the question of quality for that part, and this is exactly where the independent control described in the article on technical supervision is needed.
Separately: if more than one firm works on site, the promotor (client) must appoint a coordinador de seguridad y salud (health and safety coordinator) (art. 3 of Real Decreto 1627/1997). In a "staged" arrangement with several contractors this cost line appears almost always.
Comparing the two arrangements for an investor
| Criterion | Turnkey (fixed price) | Staged |
|---|---|---|
| Price | One sum, with the contractor's risk built in | A sum by chapters, usually by measurement, with a floating total |
| Changes | Extra payment for agreed changes (art. 1593) | The scope changes within chapters, and the total changes |
| Responsibility | One contractor for the result and for the people he brought in | Spread out, with more disputes at the joints between chapters |
| Load on the client | Lower, if the scope is described | Higher: schedule, joints, acceptance in parts |
| When it suits | The scope is clear, there is a budget with measurements and a project | The state of the building systems is unclear, opening up in stages |
| Risk | A price understated at tender and extra payments along the way | Losing control of the final sum |
I found no open data on how much cheaper one arrangement is than the other in Barcelona. The claim that "staged is cheaper" is worth testing with chapter-by-chapter budgets from two or three contractors, as in the article on comparing contractors.
Worked example: what the choice of arrangement costs
A worked example, not a forecast. The scope of work by a budget with measurements: 70,000 €. Option A, turnkey: a fixed price of 75,000 € (an assumption: the contractor builds in 5,000 € for risk and coordination). Option B, staged: 70,000 € plus technical supervision of 3,500 € (5%, an assumption) plus a 10% contingency reserve, 7,000 €. The maximum for B is 80,500 € if the reserve is spent in full.
If opening up the walls reveals nothing, option B comes to 73,500 €, which is 1,500 € cheaper than A. If the reserve goes entirely, B is 5,500 € more expensive than A. Under arrangement A, if the client adds work along the way, it becomes an extra payment under art. 1593. The difference depends on how clear the scope is, not on the arrangement.
How to choose
- If the state of the building systems and structure is unclear, plan stages: first demolition and opening up, then the price of the remaining chapters.
- If the scope is described by measurements and a project, ask for a "turnkey" price with a list of exclusions.
- If there will be more than one contractor on site, budget for the coordinator and supervision straight away.
- In either arrangement, fix the procedure for changes: who approves, within what time, and before the work is done.
- Tie payments to accepted stages, as described in the article on milestones and retention under the contract.
When an arrangement will not work
Turnkey will not work if the price was obtained "over the phone" with no measurements: an error in the scope will later be covered by the client's extra payments. Staged will not work without a technician and without a schedule: the total sum will be lost. Both arrangements are bad if there is no written budget attached to the contract, as in the article on the renovation budget. The reserve stays a separate client line under any arrangement, see the contingency reserve.
The choice of arrangement is easy to test in the investor calculator: renovation and reserve are separate lines there.
Questions and answers
What does a "turnkey" renovation mean in Spain?
The contractor carries out the whole scope for a fixed price. In law this is usually ajuste alzado: the price does not rise because materials get more expensive, but it does rise for changes the client authorised (art. 1593 Código Civil).
Is a staged renovation cheaper?
I found no open data. At the start the total by chapters is sometimes lower, but supervision and a reserve have to be added to it. Compare budgets chapter by chapter.
Can a renovation contract be terminated?
The client may withdraw from the work by compensating the contractor for expenses, labour and lost profit (art. 1594 Código Civil). The termination terms in your contract are checked by an abogado.
Who answers for a subcontractor's mistakes?
The contractor answers for the work of the people he brought in (art. 1596 Código Civil). Subcontractors may claim payment from the client only up to the client's debt to the contractor (art. 1597).
