Design build finance and operate
An example of a design build finance and operate procurement route is a public private partnership (PPP), the most common form of which is a private finance initiative (PFI) project (ref. HM Treasury Public private partnerships).
A single contractor (perhaps a special purpose vehicle (SPV), with design, construction and facilities management expertise as well as funding capability) is appointed to design and build the project and then to operate it for a period of time. The contractor finances the project and leases it to the client for an agreed period (perhaps 30 years) after which the development reverts to the client.
As this is a very long-term relationship, entered into before any design work is undertaken, it is extremely important that the client defines their requirements very carefully, in particular the quality that is required and how it will be judged. A great deal of risk is given to the contractor, however the price they offer will reflect this.
PFI is one of the three procurement routes favoured by the Government Construction Strategy for central civil government projects.
Variations include: design build operate (DBO), and build, own, operate, transfer (BOOT).
In 2011, two government reports concluded that PFI contracts have not been a good use of taxpayers money, suggesting that PFI cost five times more than conventional government procurement. The banks, funding institutions and professions have not been prepared to take the risk associated with PFI projects, and it has instead been transferred to the building contractors and operating companies which have offered high prices in return.
The attraction to government is that PFI projects do not appear on the balance sheet, albeit piling up debt in the public sector with as much as twenty five year commitments. The recommendation of the reports is that in future PFI liabilities should be shown on treasury accounts. This may reduce this type of government contracting in the future.
For a detailed description of the sequence of activities necessary on a PFI contract see the free work plan: Public project: outline work plan.
[edit] Related articles on Designing Buildings Wiki
- Build, own, operate and transfer (BOOT).
- Design and build.
- Design and build - pros and cons.
- Design, build, finance, maintain DBFM.
- Design Build Finance Operate Maintain DBFOM.
- Design Build Finance Transfer (DBFT).
- Design build operate (DBO).
- Design Build Operate Transfer DBOT.
- Design construct manage finance DCMF.
- Government Construction Strategy.
- Infrastructure UK.
- PF2.
- Procurement route.
- Private Finance Initiative.
- Public Private Partnership.
- Public procurement.
- Renovate, operate, transfer (ROT).
[edit] External references
HM Treasury PFI / PPP guidance. 25 July 2013.
Featured articles and news
The benefits of writing articles for your organisation
How to create a profile for your organisation and publish for free.
No Falls Week. The importance of safe working at height
What to expect and what is on offer to avoid accidents.
Scottish Government action to reach net-zero targets
Retrofit expert group highlight critical actions needed.
A forward thinking, inclusive global community of members.
From engineered product life-spans, to their extension.
Circular economy in the built environment
A brief description from 2021. Where are we now?
Mental Health Awareness Week with ABS
Architects Benevolent Society programme of activity.
CLC publishes domestic retrofit competency framework
Roadmap of Skills for net zero.
May 13-19: Moving more for our mental health.
Understanding is key to conservation.
Open industry engagement survey seeks responses
Institutions and the importance of engagement.
National Retrofit Hub unveils new guide
Digital Building Logbooks and Retrofit: An Introduction.
Enhancing construction site reporting efficiency
Through digitisation and the digital revolution.
Noise in the built environment
BSRIA guide TG 20/2021.
17,000 people suffer conditions as a result of exposure to excessive noise at work.
Turning down the noise: Auditory health
A pervasive risk with far-reaching consequences.
Getting the most out of heat pumps and heating
How heat pumps work and how they work best.
Electrotechnical excellence, now open for entries.
Comments