Design Build Finance Operate

The contractual arrangements for the delivery of larger waste infrastructure by the private sector for the public sector can be framed as a combination of the elements of Design Build Finance Operate DBFO of a project. The Design and Build elements are often framed and delivered under an EPC contract.

Delivery

Historically projects typically progressed under PFI and PPP arrangements, and accelerated with the introduction of the Waste Infrastructure Delivery Programme (WIDP) in 2006 intended to deliver residual waste treatment such as Energy from Waste plants. With this construction broadly completed, and with the grants available under the Waste Infrastructure Initiative (WI) now no longer available, the focus is currently on the operational phase and the delivery of value for money from existing contracts.

Contractual Arrangements

Elements				Arrangements/Description
Design	Build	Operate	Finance	Separate Elements. The waste authority contracts separately for the works and services needed, and provides funding by raising capital for each of the main contracts. The contract to build the facility would be based on the authority’s design and specification and the authority would own the facility once constructed.
Design and Build		Operate	Finance	Grouped Design and Build. A contract is let for the private sector to provide both the design and construction of a facility to specified performance requirements. The waste authority owns the facility that is constructed and makes separate arrangements to raise capital. Operation would be arranged through a separate Operation and Maintenance (O&M) contract.
Design, Build, Operate			Finance	Separate Finance.The Design, Build, Operation and Maintenance contracts are combined. The waste authority owns the facility once constructed and makes separate arrangements to raise capital.
Design, Build, Operate, Finance				DBFO. This contract is a Design, Build and Operate but the contractor also provides the financing of the project. The contractor designs, constructs and operates the plant to agreed performance requirements. Regular performance payments are made over a fixed term to recover capital and financing costs, operating and maintenance expenses, plus a reasonable return. At the end of the contract, the facility is usually transferred back to the client/authority in a specified condition.
Design, Build, Operate, Finance				DBFO with WI. This is a Design, Build, Finance and Operate contract, but was procured under the Waste Infrastructure (WI) Initiative. In this case the waste authority obtained grant funding from Government as a supplement to finance from its own and private sector sources. The WI grant was only eligible for facilities treating residual waste and was only payable once the capital expenditure was incurred.