Turnkey (Design-and-Build) Factory Construction in Vietnam: What One Contract Covers, Step by Step, and What to Get in Writing

A turnkey factory construction contract puts one contractor in charge of design, permits, building and handover. You pay a fixed price at the start, and the contractor delivers a finished, operational plant. But fixed price is only as good as the terms that define it—and what happens if the timeline slips, the site discovers new risks, or defects emerge after you take over.

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Say you're leasing a plot in an industrial park and have signed a master plan with your contractor. The site is ready, the drawing appraisals are back, and you're about to commit. You need to know: what's included in the price, what shifts it, how long you're tied to the site, and what recourse you have if handover is late or the building has defects.

What does a turnkey factory contract include?

A turnkey contract for a factory bundled under one contractor typically covers architectural design, structural and MEP (mechanical, electrical, plumbing) systems, fire protection, interior fit-out, and all legal filings. It also covers site preparation, master plan and traffic flows, industrial power capacity, HVAC, cleanrooms (ISO Class 1,000 / 10,000 / 100,000 if specified), effluent and exhaust treatment, and heavy equipment installation. Some contractors, like those with in-house fabrication works, supply structural steel from their own plant, plus AAC block, ALC panel, concrete, sand, stone and brick.

The scope also includes smart-factory systems—automation controls, data networks, supervisory software—if the design calls for them. The contractor's job is to take the finished building and all its systems to acceptance, meaning they pass the tests you've agreed on and the relevant authorities sign off.

Who files the construction permit and fire approval?

The contractor files. Under Construction Law 135/2025 (in force 1 July 2026), all industrial works require a construction permit from the provincial Department of Construction—no exemption for land inside industrial zones. The contractor applies to the province after the site and master plan are set and before work begins.

Fire design appraisal is a separate step within the same chain. Law 55/2024 (Fire Prevention and Fighting) and Decree 105/2025 set the timeline: the provincial Fire Department has up to 6 working days to appraise fire designs. Inside industrial zones, the investor can commit to fire safety via an Article 28 affidavit under Law 143/2025, which streamlines the process. Once the contractor has both the construction permit and fire clearance, ground-breaking can begin.

What are the 14 steps in a turnkey factory sequence?

Contractors typically structure the work into these phases:

Planning a plant? Tell us what you make, the floor area and the start month →

What must you get in writing before paying a deposit?

The contract must lock down these terms. Never rely on verbal assurances or appendices added later.

What does a Grade I contractor licence tell you?

A Grade I licence for SUPERVISION and EXECUTION of industrial works signals that the contractor has met the Ministry of Construction's standards for large-scale industrial projects. It's issued by the Ministry and shows the contractor can legally manage the full build sequence—from site organisation through structural, MEP and systems completion—on projects of any value and complexity.

Grade II DESIGN and drawing appraisal licence means the contractor can prepare design documents and submit them for fire and authority review. Some contractors hold both. A contractor with only Grade II cannot legally execute (build); they must subcontract the execution to a Grade I firm or partner with one.

Can you resell or lease a turnkey factory after handover?

Yes. Once you own the finished building, you can lease it to a manufacturer, sell it to another investor or operator, or operate it yourself. Leasing is common: you collect monthly rent and the tenant covers maintenance. Selling can happen any time—there's no lockup. Resale price depends on the building's condition, location, tenant quality (if leased), and the industrial market at that time. The 2026 market shows ready-built factory rents in the southern region at about US$4.9–$5.1 per m² per month (asking), according to Cushman & Wakefield Q2 2026 data.

What happens if the contractor misses the handover date or discovers hidden site risks?

If the contractor misses handover, the contract's liquidated damages clause kicks in. You receive a daily or weekly payment (typically 0.1% of contract value per week, capped at 5% of total price). This is your compensation for delay but not a claim for lost revenue—it's a pre-agreed estimate of your loss.

If the contractor discovers site risks after work starts—poor soil, unexpected utilities, flooding in the wet season—who bears the cost depends on the contract. A well-drafted clause will separate what the contractor knew (or should have known) from the site survey against what emerged later. Unforeseen risks often split the cost or trigger a price change, but only if the contractor notifies you in writing immediately and you agree in advance to the scope and cost of any mitigation.

What about insurance and liability during construction?

The contractor is usually responsible for insuring the site during construction. The policy covers fire, theft, collapse, third-party injury and damage to neighbouring properties. You should receive copies of the insurance certificate before work begins and verify that coverage lasts until handover plus the warranty period. If the site is damaged before handover (e.g., a fire or typhoon), the insurance claim goes to the contractor's insurer, and the contractor rebuilds at no extra cost to you, unless the event is force majeure and the contract says otherwise.

What does "100% no additional cost" mean?

A contractor's commitment to "100% no additional cost" means the fixed price is locked in at the tender stage, and costs are calculated in full before you sign. Any price move happens only if you instruct a change, the law changes (with the cost priced in writing first), or force majeure hits (with cost-sharing defined). It's a statement of pricing discipline, not a guarantee that no unforeseen costs exist—those are covered by the terms on schedule, insurance, and site-risk allocation in the contract itself.

What should you ask the contractor in writing before committing?

1. Performance bond and guarantees: What percentage of the contract value will be held by a bank or surety, for how long, and under what conditions is it released? 2. Liquidated damages cap and trigger: What is the daily or weekly penalty if handover is late, and at what point does it kick in? Is there a maximum total cap?

3. Defects-liability period: How long after handover does the contractor remain responsible for fixing defects? What constitutes a defect, and who decides? 4. Insurance certificates: Request copies of the contractor's site insurance, liability coverage and workers' compensation. Verify they're valid through handover and the warranty period.

5. Acceptance test criteria: Ask for the written specification of each acceptance test—power load capacity, HVAC delta-T, water pressure, effluent pH and flowrate, etc.—and who runs each test (contractor's crew, independent lab, your team).

FAQ

Does the contractor handle all permitting, or do I need to apply for anything?

The contractor files the construction permit and submits designs for fire and environmental appraisal. You should stay informed of deadlines and provide any information the authorities ask for (e.g., land-use documents, environmental impact data). In some cases, you may need to submit an Article 28 commitment affidavit directly to the Fire Department if the zone allows it, which speeds up fire clearance. Confirm with the contractor who does what.

How long does construction actually take?

A simpler warehouse may take 3–5 months. Multi-storey buildings with heavy MEP or cleanrooms can run 9–12 months. The contractor's schedule at Step 4 (costed tender) should break down each phase and confirm the total duration.

What if I need to change the design mid-build?

Changes cost money and time. The contract should require you to approve any change order in writing, with the contractor pricing the scope and schedule impact before work starts. Emergency changes (safety or code compliance) may be approved verbally but must be documented in writing afterward. Avoid mid-build changes; they almost always cause delays and cost overruns.

Can I get the building ready for operation before the contractor's warranty expires?

Yes. Handover means you take possession and can begin production, leasing, or setup. The contractor's warranty (typically 12–24 months) covers defects that emerge during that period, whether you've started operations or not. Plan your ramp-up to overlap with the warranty so you catch and resolve any issues while the contractor is still obligated to fix them.

What's the difference between a Grade I and Grade II licence?

Grade I (SUPERVISION and EXECUTION) means the contractor can legally execute (build) industrial works of any scale. Grade II (DESIGN and drawing appraisal) means they can prepare design documents and submit them for review. A contractor needs Grade I to do the actual construction; Grade II alone does not permit building. Some contractors hold both.

Before you sign, ask your contractor these questions in writing

1. If you instruct a design change after the tender is locked, how will the cost and schedule impact be priced and approved?

Contact the desk over chat to discuss your project scope, timeline and budget. We can connect you with a contractor, review turnkey contracts, and clarify which terms to lock in before you commit. Ask for a current capability profile and a sample costed tender for your building type.