Amid a decrease in new commercial projects, more developers are avoiding turnkey projects due to high costs and operational challenges. Turnkey projects involve a contractor overseeing all stages, from planning to construction, under one contract. Despite being a practical option in the past, these projects are seeing less interest.
Previously, turnkey solutions were popular for small and medium-sized projects that required quick and simple implementation. They targeted property owners who wanted to accelerate commercial development by proposing contracts that made their properties more appealing. The goal was to streamline operations and avoid red tape.
According to industry experts, the major difficulty for developers is the unpredictability of prices, which causes budget issues and cost overruns. The methodology became inefficient, according to Kazeem Owolabi, Managing Partner of RefinHomes, because material prices vary unpredictably, forcing projects to run over budget.
Owolabi emphasises that, while turnkey projects require a one-time payment for speedy completion, issues occur when material costs fluctuate. This could lead to developers using lower-quality materials or taking on more projects with the same budget, reducing quality.
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To ensure quality and build confidence with clients, developers are now moving towards incremental project development. According to Dotun Bamigbola, past Chairman of the Nigerian Institution of Estate Surveyors and Valuers, real estate projects frequently require specialised engineering, making turnkey projects appear pricey.
Tola Oyenekan, Head of Research at Diya, Fatimilehin & Company, admits that some developers are still interested in turnkey projects, but they are cautious. To solve problems and increase adoption in the sector, he proposes promoting professionalism and awareness.
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