Glossary

Design, Build and Operate (DBO)
DBO contracts are contractual relationships between public sector bodies and private sector contractors for the design, construction and operation of public facilities or infrastructure. The private sector contractor designs, builds and operates the facility to meet public sector performance requirements (output specifications) over the lifetime of the project. The contractor is also responsible for maintaining the facility and replacing the assets whose life has expired during the term of the contract, at the end of which time responsibility for maintaining the asset is transferred back to the public sector. The construction of the facility is financed by the public sector and it remains in public ownership throughout the term of the contract.

Design, Build, Operate and Finance (DBOF)
DBOF contracts are contractual relationships between the public sector and private sector contractors for the design, construction, operation and financing of public facilities or infrastructure. The private sector contractor is responsible for designing, building, operating and financing the facility and recovers its costs solely out of payments from the public sector.  These payments are dependant on the private sector contractor’s ability to meet the pre-approved output specifications as part of the performance mechanism.

Concession
Concession contracts are similar to DBOF arrangements, except that the private sector contractor recovers its costs either through direct user charges or through a mixture of user charging and public subventions.

Value for Money (VFM)
Value for money for the Exchequer in PPP projects is achieved through the interaction of the public and private sector leading to greater efficiency, effectiveness and economy.

Optimal Allocation of Risks
Sharing of a project’s risks between the public and private sector parties to the contract so that specified risks are managed by the party best positioned to do so and at least cost.

Quality Public Services
The provision of a service to a level that meets or exceeds the requirements of the grouping to be served by the service and the public at large.

Conventional Public Procurement
Covers the range of procurement methods traditionally used by public procuring agencies in providing public infrastructure projects and services (e.g. contracting the private sector to construct infrastructure to a predetermined public sector commissioned design).  It also includes Design & Build contracts; these are not classified as PPPs in the Irish context.

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