Difference Between EPC and Turnkey Contracts Explained

India is in this dynamic era of advanced infrastructure, industrial, and construction projects. Two types of contracts often lead the way in ensuring project completion within the given timeline—EPC (Engineering, Procurement, and Construction) and turnkey contracts. While both models share similarities in that they simplify project delivery for clients, they are not identical.

If you own a project, are a contractor, or are even a curious investor, understanding the difference between EPC and turnkey contracts is necessary. In this in-depth blog, we are going to explore both concepts, compare them side by side, and explain where each is best suitable for each case.

What Is an EPC Contract?

EPC stands for Engineering, Procurement, and Construction. It is a project delivery methodology where the contractors are liable for the complete design standard, procurement process, and end-to-end construction of a project. Once completed, the finished facility will be handed over to the owner.

In an EPC contract, the contractor is loaded with full responsibility for the whole project, from the blueprint phase to the operational handover.

Key Elements of EPC:

Engineering: Fully responsible for end-to-end engineering work (civil, structural, mechanical, electrical, etc.).

Procurement: The contractor purchases all required materials and equipment for the completion of the project.

Construction: Complete execution of project, testing, and commissioning.

Example:

Let’s assume a company wants to construct a wastewater treatment plant. Firmly with an EPC contract, they appoint one company that designs the plant, sources all the materials, and machinery, constructs the entire structure, tests it for assurance, and hands it over in operational condition.

What is a turnkey contract?

A turnkey contract is also a project delivery method where the contractor undertakes the responsibility to design, build, test, and hand over the facility ready for operation. The term “turnkey” denotes that once the project is completed, the owner just has to “turn the key” and start operating for further processing.

Although turnkey contracts often include EPC services, they typically emphasize a higher level of contractor responsibility, including training, performance guarantees, or even initial operations.

Key Elements of a Turnkey Contract:

The contractor is single-handedly responsible for delivering a fully operational facility.

The client has very little involvement during the project execution.

Includes design, detailing, engineering, procurement, construction, commissioning, and often operational readiness.

Example:

If a government organization is willing to set up a new metro line using a turnkey contract, the contractor must be responsible not only for constructing the line but also for supplying trains, setting up control systems, training staff, and running the system for a short period before transferring operations to the ownership.

EPC vs Turnkey Contracts: Key Differences

Now that we understand both types, let’s dive into their key differences.

Feature	EPC Contract	Turnkey Contract
Scope	Engineering + Procurement + Construction	Full execution until operational handover
Ownership of Design	Contractor	Contractor
Involvement of Owner	Moderate involvement	Minimal involvement
Responsibility	Shared or limited post-handover	Fully on contractor until facility is ready
Testing and Commissioning	Included	Included + Operational readiness
Training & Operations	Usually not included	Often included
Complexity	High	Higher
Risk Allocation	Shared	Mostly on the contractor

Similarities Between EPC and Turnkey Contracts

Despite their differences, both contracts have overlapping features:

Single-Point Responsibility: The client deals with one contractor.

Fixed Timeline and Cost: Budget and schedule are typically fixed.

Design-Build Nature: Both involve integrated services from concept to commissioning.

Risk Transfer: Most of the construction and performance risk lies with the contractor.

Which One Should You Choose?

The choice between an EPC and a turnkey contract depends on several factors:

Choose EPC if:
You want more control over engineering and procurement.

You have an in-house team that can supervise the project.

You’re focused on customization and flexibility.

Choose Turnkey if:
You want a hands-off, hassle-free solution.

You need a project ready for immediate operation.

You require a single point of accountability, even post-handover.

Real-World Applications

EPC in Action:

Carbyne Infrastructure, one of India’s trusted EPC contractors, handles several projects under the EPC model—especially under the Jal Jeevan Mission, where timely design, procurement, and construction are crucial for public utility services. The company ensures water supply systems are commissioned with precision while maintaining timelines.

🚆 Turnkey in Action:

Large metro rail systems and smart city projects are often executed on a Turnkey basis. Contractors are tasked not just with constructing the infrastructure but also supplying hardware, installing IT systems, and ensuring operational readiness.

Legal and Financial Implications

Choosing the right contract model also has legal and financial consequences:

Risk Exposure: Turnkey transfers more risk to the contractor, making it more expensive.

Litigation Risk: In EPC, owners may face legal disputes if specifications aren’t followed clearly.

Contract Clauses: Turnkey contracts have stricter clauses about deadlines and performance guarantees.

Payment Terms: Milestone-based in EPC; often lump-sum or performance-based in Turnkey.

Advantages of EPC Contracts

Faster timelines through parallel workstreams.

Greater transparency in procurement and construction.

Easier for clients with technical oversight capability.

Cost-effective due to competitive bidding for materials.

Advantages of Turnkey Contracts

Minimal involvement from the client.

One vendor handles everything end-to-end.

Ideal for non-technical clients or governments.

Simplifies project delivery and accountability.

Challenges in Both Models

Challenge	EPC	Turnkey
Contractor Delays	Affects timelines	Affects project readiness
Budget Overruns	Less common (fixed price)	Possible if changes arise late
Scope Creep	Harder to manage mid-project	Not allowed without change orders
Legal Disputes	Arise if specs aren’t followed	Arise if performance isn’t met

Emerging Trends

With increasing infrastructure complexity, hybrid models are emerging:

EPC+O&M (Operations & Maintenance) contracts

Turnkey with PPP (Public-Private Partnership) integration

Smart contracts based on blockchain for payment milestones

Additionally, governments and industries now demand sustainability, digital integration, and performance guarantees, which favor Turnkey models.

Final Thoughts

While both EPC and Turnkey contracts aim to deliver complete projects, the key difference lies in how much control and risk the owner wants to retain. EPC is ideal for collaborative development with shared oversight, while Turnkey is best for full-service delivery without the owner getting involved in daily execution.

Understanding these differences can lead to better planning, smarter budgeting, and more successful outcomes for any infrastructure or industrial project.