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
Introducing or next Guest Editor Arun Baybars
Practising architect and design panel review member.
Quick summary by size, shape, test, material, use or bonding.
Types of rapidly renewable content
From forestry to agricultural crops and their by-products.
Terraced houses and the public realm
The discernible difference between the public realm of detached housing and of terraced housing.
Put digitalisation and sustainability at the core of curricula
Project management educators are urged.
Looking back at the influence of climate events
From a designer and writer: 'There are limits to growth but no limits to development'.
Terms, histories, theories and practice.
Biophilic design and natural light
Letting in the light and natural elements into spaces.
APM Programme Management Conference 2024
Strategies for Success.
Residential takes the reins as contract awards even out
Contracts down, but remain above the last quarter of 2023.
Celebrating Eid and the largest mud-brick building.
Barry Kingscote claims prestigious CIOB CMYA Award.
The British Mosque: an architectural and social history
The story of some 1,500 mosques or more in Britain.
Heat pump refrigerants, efficiencies and impacts
R12 to R1270 what are the differences?
Global heat pump market in 2023
Challenging times with positive but modest outlook.
Beyond the infrastructure pipeline
Opportunities and chokepoints.
Comments