- Project plans
- Project activities
- Legislation and standards
- Industry context
- Specialist wikis
Last edited 04 Jan 2021
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.
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.
 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.
- Procurement route.
- Private Finance Initiative.
- Public Private Partnership.
- Public procurement.
- Renovate, operate, transfer (ROT).
 External references
HM Treasury PFI / PPP guidance. 25 July 2013.
Featured articles and news
Predictions about adequate post-pandemic IAQ in non-domestic buildings.
Government publishes plans to 'build back greener'.
The contentious nature of claims associated with cladding, fire safety and EWS1 forms.
ECA comments on low-carbon heating systems initiative and Heat and Buildings Strategy.
Cinders and other forms of domestic rubbish created filth but also generated great wealth.
CIC 2050 Group requests input to find out priorities for future industry leaders.
IHBC publishes response to consultation.
Institute applauds funding initiatives but presses for additional retrofit and tax measures.
The switch from analogue to digital has begun.