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 current and future global market dynamics of boilers
Significant challenges but adaptation to sustain for longer.
Designing sustainability and performance into buildings
Specifying and selecting sustainable resilient timber products.
Modifying wood to improve resistance to decay and movement.
A last minute, long look for built environment professionals.
The architecture of creative reuse. Book review.
Installing solar panels on listed structures.
Sustainable development global goals, history in progress?
"Unless we act now, the 2030 Agenda will become an epitaph for a world that might have been."
Mike Kagioglou FCIOB named CIOB President
'Sustainable Development Goals must be focus for construction'
BSRIA training; a look at what's on offer
From energy management to compliance training.
TESP video warns to beware of rogue trainers.
Highlighting the slippery tactics of non-approved providers.
New Building Safety Wiki launched
Boosting awareness and understanding of the new fire safety regime.
New playbook on AI in construction published by CIOB
How to get to grips with, and the best from AI.
Digital Construction Report NBS
BIM, cloud, off-site, immersive tech, AI, twins and sustainability.
Comments