Which contract makes the drilling contractor responsible for the entire drilling operation and pays a fixed fee when the job is finished?

Which contract makes the drilling contractor responsible for the entire drilling operation and pays a fixed fee when the job is finished?

• A. Time-and-materials contract
• B. Daywork contract
• C. Footage contract
• D. Turnkey contract

Answer: (D)

Turnkey contracts are about delivering a completed result for a single fixed price, with the contractor responsible for the whole job from start to finish. In this setup the drilling contractor plans, mobilizes, drills, completes, and meets all agreed specifications, and the client pays a lump sum when the well is finished. The contractor bears the risk of cost overruns and schedule slippage, while the owner gets a finished product for a predictable price. Time-and-materials and daywork arrangements pay for actual hours and materials as the work progresses, so costs aren’t fixed in advance and the owner retains more control (and risk) over the final cost. A footage contract pays based on the amount drilled, not on delivering a complete, finished well for a fixed price, so the contractor’s scope and risk are different.

Turnkey contracts are about delivering a completed result for a single fixed price, with the contractor responsible for the whole job from start to finish. In this setup the drilling contractor plans, mobilizes, drills, completes, and meets all agreed specifications, and the client pays a lump sum when the well is finished. The contractor bears the risk of cost overruns and schedule slippage, while the owner gets a finished product for a predictable price.

Time-and-materials and daywork arrangements pay for actual hours and materials as the work progresses, so costs aren’t fixed in advance and the owner retains more control (and risk) over the final cost. A footage contract pays based on the amount drilled, not on delivering a complete, finished well for a fixed price, so the contractor’s scope and risk are different.