Design construct manage finance DCMF

HMP Altcourse was the first privately designed, constructed, managed and financed prison in the UK. The prison opened on 1st December 1997.

[edit] Introduction

Design construct manage finance (DCMF) is a public private partnership (PPP) arrangement that allows a private contractor to finance, build or refurbish a project based on the requirements presented by a government entity or public client. The project is then leased back to the client; however, there is not necessarily a requirement for the ownership of the project to be transferred to the client at the end of a specific period.

DCMF is sometimes referred to as a type of design build finance operate (DBFO) or design build finance manage (DBFM) model. These two procurement approaches are similar, although the operations and maintenance activities differ upon completion of the project. With DBFM, maintenance refers to actions taken to keep the asset in running order, whereas with DBFO, operations refer to actions taken to achieve business objectives. Maintenance can be considered a subset of operations, since it ensures that buildings and other assets retain a good appearance and operate at optimum efficiency.

[edit] PPP and PFI

DCMF is often used for projects that are developed through the Private Finance Initiative (PFI) form of Public Private Partnership (PPP). PPP refers to a very broad range of partnerships in which the public and private sectors collaborate for some mutual benefit. For more information see: Public Private Partnership.

PFI was one of the three procurement routes favoured by the Government Construction Strategy for central civil government projects. The risk associated with PFI projects is transferred to the building contractors, but as a result, operating companies may charge high prices, and as a result PFI has now fallen out of favour. For more information see: Private Finance Initiative.

[edit] How DCFM works

DCMF is a form of PPP where the private sector finances, builds and operates the asset for a specific time period. This period can be anywhere from 20 to 50 years. The Government pays the contractor to rent the asset during that period.

There are some advantages of this arrangement, including:

• The encouragement of private investment in public assets.
• The sharing of knowledge about technology from the private contractor to the public client.
• The potential for cultivating financial sources for additional public projects.
• The shift of public budgets away from major infrastructure development projects.

Examples of DCMF PPP models include prisons, courtrooms, public hospitals and so on.

[edit] DCFM and prisons

Since the early 1990s, many PPP prisons in the UK were delivered under DCMF arrangements.

The first of these was HMP Altcourse in the Fazakerley area of Liverpool. Construction began in 1995 after the contract was awarded to Tarmac Construction. The project was completed in December 1997 and began operating.

Initial reports about the operation of the facility were positive, although it was later discovered that Group 4 (now known as G4S) made a significant profit from financing arrangements made on behalf of the Category B men's private prison and Young Offender Institution.

Despite the outcome of the HMP Altcourse arrangement, the privatisation of prisons under the DCMF approach (including staffing by private employers rather than the Government) have continued throughout the UK. This has allowed the Government to benchmark the operations of private prisons against government prisons.

The benefits of the DCMF for prisons include:

• Fixed costs for the public sector client.
• Transfer of possible risk to the contractor in both the construction and operations stages.
• Cohesive design, construction and operation of the facility.

In some instances, the public model of prison operations has continued, but in other circumstances, operations were returned to the Government prison services. For those facilities that continue under the private model, the buildings become property of the Government at the end of their 25 year contracts.

[edit] Related articles on Designing Buildings Wiki

• Design, build, finance, maintain DBFM.
• Design build finance and operate.
• Design Build Finance Operate Maintain DBFOM.
• New prisons planned in Spending Review.
• Private Finance Initiative.
• Private sector.
• Procurement route.
• Public private partnerships PPP.
• Public procurement.

[edit] External resources

• Els Van Herck, Belgian Prison Service, Public-Private Partnership.