FIDIC Workshop WS 12, Beijing Conference Design – Build – Operate a new Contract Wednesday, 7th September 2005 Dipl.-Ing., Dipl.-Wirt.-Ing. Axel-V. Jaeger, EC Member NEK Ingenieure, Berlin, Germany

FIDIC DBO ( Definition ) The Design – Build – Operate approach combines design, construction, long term plant / facility operation and maintenance into a single contract, with one legal entity, known as the Contractor.

FIDIC DBO Format “green field” scenario : a sequence of Design – Build – Operate “brown field” scenario : a sequence of Operate – Design - Build

CONDITIONS OF CONTRACT published 1999

FIDIC DBO Motivation Time Schedule Advantages Financial Compliance Single Point of Responsibility Allocation of Project Risk Fitness for Purpose ACEC / FIDIC CC

Design – Build – Operate Organisation

DBO FLOW CHART(Typical Sequence of Principle Events)

DBO FLOW CHART ( TIMELINE PART 1 )

DBO FLOW CHART ( TIMELINE PART 2 )

FIDIC DBO Independent Auditor Appointment of an Independent Auditor is a common practice globally for compliance with Quality Assurance procedures . ( Performance Criteria ) It is required to assess the Contractor’s Performance in carrying out the Contract, and also to examine the Employer’s Management and Monitoring of the Contractor. Defects in the performance of both the Contractor and the Employer will be identified and addressed.

FIDIC DBO “Asset Replacement Fund” In order to ensure that the condition of the Plant in the Works is properly maintained, replacement of major items of Plant will be required over the Contract Period. Therefore capital sums will be need to be expended throughout the Operation and Maintenance Period. This money will be held as an “Asset Replacement Fund”.

FIDIC DBO “Asset Replacement Fund” Monies provided under the DBO Contract on the schedule presented by the Contractor, specifying the major items of Plant to be replaced and timing and cost of such replacement. The following cost are excluded : Routine maintenance items Correction of defects Replacement of Plant and Material which have a life expectancy of less than (5) to 7 years Providing spares between scheduled dates for major plant replacement Replacement of Plant and Materials not identified in the schedule of major plant items

FIDIC DBO “Maintenance Reserve Fund” The “Maintenance Reserve Fund” is required to provide an incentive to the Contractor to ensure that the Works are in proper condition at the end of the Operation and Maintenance Period. Definition: A retention of 5 % from payments due to the Contractor in the last five years of the Operation and Maintenance Period, up to a contracted ( capped ) amount, to be released after issuing the Contract Completion Certificate.

FIDIC DBO “Facility Management Plan” The Facility Management Plan means the operation and maintenance methodology submitted by the Contractor with his Tender and the requirements are as detailed in the Employer’s Requirements.

FIDIC DBO “Variation / Change Management” Typically, it is anticipated that the following must be provided for i.e. : Changing load Major industry ( arrival / departure ) Technical obsolescence Increased performance standards Interaction with networks managed by others Changes legislation Contractor goes into liquidation Failure to meet performance standards

DBO FLOW CHART ( TIMELINE PART 2 )

FIDIC DBO Joint Inspection The Employer’s Representative and the Contractor shall carry out Joint Inspection on the condition of the Works identifying maintenance works, replacements and other works.

FIDIC DBO Final Inspection The Contractor shall notify the Employer that the Works are complete and ready for Final Inspection. After issuing the Contract Completion Certificate when passing the Final Inspection satisfactory the Employer shall be responsible for the care, safety, operation, servicing and maintenance of the works.

FIDIC DBO Risks One of the advantages of the DBO approach is the value for money achieved through effective risk allocation. The Employer’s and Contractor’s risks have to be clearly defined.

DBO FLOW CHART(Typical Sequence of Principle Events)

FIDIC DBO CC Questions: Word and Content “Facility Management Plan” to assist and advise on the management and monitoring of the operation and maintenance of the facilities provided “Asset Replacement Fund” to ensure proper condition of Plant in the Works over the O & M Period “Maintenance Reserve Fund” to provide an incentive to ensure that the Works are in proper condition at the end of O & M Period Independent Auditor issues on compliance process in relation to the operation and performance criteria 5. Which colour for the DBO Conditions of Contract – golden ?