Last edited 30 Dec 2020

Design build operate maintain DBOM



[edit] Outline

Design build operate maintain (DBOM, also referred to as ‘turnkeyprocurement 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:

Disadvantages of DBOM include:

[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.

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