DBO contracts
Produced in partnership with Victoria McGie

The following Construction practice note produced in partnership with Victoria McGie provides comprehensive and up to date legal information covering:

  • DBO contracts
  • Benefits
  • Drawbacks
  • DBO tender process
  • DBO contractor
  • DBO agreement
  • Key project risks

DBO contracts

The demand for public infrastructure at a time when public purse strings are tight, coupled with a lack of public sector expertise in delivering complex facilities (such as water treatment plants and energy plants), has lead to an increase in the involvement of the private sector in the procurement and operation of public infrastructure.

There are a wide range of possible arrangements for involving public sector risk and expertise in the procurement of public infrastructure. One of these arrangements is Design Build Operate (DBO). It is particularly popular for water treatment plants.

For information on variations of the DBO structure, see Practice Notes: Infrastructure projects—project structure and BOT contracts.

DBO involves a government (often in the form of a government body or local authority) engaging a single contractor to:

  1. design and build the infrastructure facility

  2. operate the facility for a period (typically between 10–30 years)

The government typically finances the infrastructure project, either through tax revenues, grants (eg from international development funds) or debt finance and pays the contractor for developing and operating the facility. The government typically owns the infrastructure facility throughout the process.

The government may either:

  1. let the public use the facility or its services for free (if the facility’s function falls within the remit of public services, such as a prison or some roads), or

  2. charge end-users a fee for use of the facility

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