Design build operate maintain DBOM

[edit] Outline

Design build operate maintain (DBOM, also referred to as ‘turnkey’ procurement and ‘build-operate-transfer’) is a variation of the classic design and build method of procurement in which the main contractor is appointed to design and construct the works. This contrasts with the traditional procurement route, where the client first appoints consultants to design the development and then appoints a contractor to construct the works.

In DBOM, in addition to being responsible for the design and construction of the works to the employer’s requirements, the contractor is also responsible for operating and maintaining the completed facility. The operation and maintenance period can span as much as 20 to 30 years during which the contractor is said to have the ‘concession’ and is responsible for the safe and smooth operation of the facility, and may benefit from operational income. The facility itself however remains the property of the employer.

In the case of infrastructure that does not produce operational income, such as a non-toll motorway, the contractor is paid fees by the employer in the form of availability payments or shadow tolls (see below).

DBOM is commonly used for projects such as shopping and leisure centres, light rail, motorways, tunnels, bridges and other infrastructure. DBOM contracts are typically awarded through competitive bidding under a transparent tender process. Projects are procured from the private sector in a single contract while works are typically financed by the government (although employers can also be from the private sector). DBOM contracts are commonly a form of public private partnerships (PPP).

As work progresses, the employer pays the contractor for undertaking the works; maintenance is also paid for by the employer at an agreed price. At the end of the agreed maintenance and operation period, the contract may be renewed or the responsibility for operation and maintenance may revert to employer. Whether the contract is subject to renewal is usually stated at tender stage.

[edit] Pros and cons

Advantages include:

• A single source of responsibility for usually disparate functions of design, construction and maintenance.
• The DBOM contractor can establish a long-term maintenance programme up-front, plus estimated costs.
• Knowledge of methods and materials to be used allows the DBOM contractor to develop a tailored maintenance plan that anticipates and addresses potential issues thereby reducing risk and costs.
• It relieves the owner of the time and trouble spent on operational and maintenance issues.

Disadvantages of DBOM include:

• Long term needs must be specified up front to enable correct specifications to be drawn up.
• Owners lose much of the control they usually have with traditional contracts.
• Great care is needed to ensure correct standards are specified for design, construction and maintenance, especially if owners are not accustomed to the process
• Much risk is placed on the contractor but this is usually reflected in its price.
• Prices can turn out to be excessive in the long term (see PFI for more information)

[edit] Availability payments and shadow tolls

With availability payments, the employer must pay the contractor the same fees whether the facility is used or not. Such projects are therefore risky to embark upon but may nevertheless be in the employer's interest.

Shadow tolls are applied where, for whatever reason, there are no tolls exacted on the project in which case the employer pays the operator a per-vehicle amount as compensation for operating and maintaining the facility.

[edit] Related articles on Designing Buildings Wiki

• Build, own, operate and transfer (BOOT).
• Design and build.
• Design and build - pros and cons.
• Design build operate (DBO).
• Government Construction Strategy.
• Infrastructure UK.
• PF2.
• Procurement route.
• Private Finance Initiative.
• Public Private Partnership.
• Public procurement.