Concession agreement
A concession agreement is a negotiated contract that grants rights to a company by a government, local authority, or other legal entity.
There are two types of concession agreement:
- Works: Where a contractor is contracted to perform construction works in return for payment which is, in full or in part, the right to exploit the works. For example, a contractor who builds a bridge may be given the right to levy a toll on bridge-users.
- Services: Where a contractor is contracted to provide a service and payment is received, in full or in part, from the usage of that service. For example, a contractor is contracted to operate, maintain and invest in public utilities such as water or rail services.
Both types of concession agreement involve a transfer to the contractor of the ‘operating risk’, i.e. the risk that either the demand or supply are not sufficient to make the service or work a profitable venture.
Complex Private Finance Initiative (PFI) projects may include a concession agreement, providing private contractors with the rights to use certain assets. In conferring these rights, however, the government or legal authority may stipulate certain expectations with regard to the level of maintenance and investment that is undertaken, as well as operational standards that must be met.
An example of a high-profile concession agreement is that which exists between the French and British governments and the private contractors The Channel Tunnel Group Ltd. and France-Manche S.A. for the operation of the Channel Tunnel.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Net zero electricity grids BSRIA guide NZG 5/2024
Outlining the changes needed to transition to net zero.
CIOB Global Student Challenge 2024
Universitas Indonesia wins for second year running.
New project and cultural district described in detail.
The nature of EPCs, crticism and inaccuracies.
History, issues and redesign.
From waste recycling to energy performance the hierchy.
An introduction to WERCS and WEEE responsibilities
Dealing 2 million tonnes of waste equipment a year.
Global BACS Market: analytics and optimisation
A BSRIA glance at building automation and control systems.
What it is and how to use it.
Types of insulating plaster by binder and insulant.
Investors in People: CIOB achieves gold
Reflecting a commitment to employees and members.
Scratching beneath the surface; a guide to selection.
ECA 2024 Apprentice of the Year Award
Entries open for submission until May 31.
UK gov apprenticeship funding from April 2024
Brief summary the policy paper updated in March.
For the World Autism Awareness Month of April.