Design-build-finance-operate
Also called: DBFO · Topic: Infrastructure: Transport, Communications and Energy · NCERT: Beyond NCERT
Meaning
Design-build-finance-operate (DBFO) is a public-private partnership (PPP) model in which one private party does four jobs. It designs the facility, builds it, raises the money for it and runs it. It recovers its cost in one of two ways. The first is user charges such as tolls. The second is availability payments, which the government pays as long as the asset stays open and meets agreed standards. Because the same firm designs, builds and maintains the asset, it has a reason to build well and keep upkeep costs low.
Example
A private firm designs, builds, finances and runs a highway. The government pays it every year the road stays open and in good condition, while the government keeps the tolls.
Don't confuse with
- Engineering, procurement and construction (EPC): the government pays 100% of the cost and the contractor only designs and builds for a fee. It does not finance or run the asset.
Related concepts
- Public-private partnership
- Concession agreement
- Engineering, procurement and construction
- Hybrid annuity model
- BOT-Annuity
- Annuity model
- BOT-Toll
- Build-operate-transfer
- Build-own-operate-transfer
- Build-own-operate