Last edited 20 Sep 2019

Design build operate (DBO)

A design build operate (DBO) contract is a project delivery model in which a single contractor is appointed to design and build a project and then to operate it for a period of time.

The common form of such a contract is a public private partnership (PPP), in which a public client (e.g. government or public agency) enters into a contract with a private contractor to design, build and then operate the project, while the client finances the project and retains ownership.

This differs from a design build finance and operate (DBFO) contract in which the contractor also finances the project and leases it to the client for an agreed period (perhaps 30 years) after which the development reverts to the client.

It also differs from the traditional design and build contract in that it includes operation and maintenance of the completed works, which means that the contractor’s duties and responsibilities to the client do not end at final acceptance but continue through a defined operational term.

In theory, this encourages the contractor to develop a project with its long-term performance in mind from the outset, rather than just considering the efficiency of its construction, as the contractor will be responsible for any high operating, maintenance or repairs bills. However, it ties both the client and the contractor into a very long-term relationship that can be difficult to price. As a result, contractors may price considerable risk into their tenders, and so the client may not always achieve a best value outcome.

NEC4 Design, Build and Operate Contract (DBO) was released in 2017. This is not only intended for the 'traditional' DBO approach, but is also available for situations in which a client wants to have an existing facility or asset operated by the contractor while it is being upgraded or extended.