PDP Turnkey Model and

PDP model

To deliver the project on-time time and within cost. In return gets a fees and reimbursed for other expenses Does not take financing risk. Only completion risk within cost and time, which tends to be`adjusted’ on the grounds of additional work from the project owner. On the face of it, margins are fixed at about 6% of total cost. However there is a profit sharing element should project be completed within cost. And the PD is also reimbursed for additional cost incurred, which is more than the 6%. Project owner awards jobs to work package contractors (WPCs). WPCs have to give performance warranty and performance bond guarantee to Prasarana. Payment comes from Project owner; ie: Prasarana, MRTCorp to WPCs Bankers favour PDP model to extend line of credit to WPCs because payment is from a government entity.

Turnkey contractor

Delivery of project within cost and time to project owner is entirely the responsibility of turnkey contractor Financing risk is with turnkey contractor. Hence turnkey contractor needs a large financing facility and will get paid by project owner upon completion of construction based on mile-stones Margins are not fixed. Profits or losses will depend on how well the turnkey contractor manages the project Turnkey contractor gets fixed lump sum contract from project owner and appoints WPCs. Who are now deemed as sub-contractors, to undertake job Sub-contractor has to give performance bond guarantee and warranty to turnkey contractors Banks more stringent in giving line of credit to sub-contractors because the paymaster is not the government