Design & Build PROCUREMENT

Build Operate TransferPROCUREMENT

Build Lease TransferPROCUREMENT

Build Own Operate TransferPROCUREMENT

Build Own OperatePROCUREMENT

Design Build Finance OperatePROCUREMENT

Turn KeyPROCUREMENT

Design & Build PROCUREMENT

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Build Operate TransferPROCUREMENT

Points1. Usually in infrastructure project & PPP2. Parties involved: Host government, Concessionaire, Lending banks, Lenders (development banks, etc), Project

Contractors. 3. Typically used to develop a discrete asset rather than a whole network4. Generally entirely new in nature5. Obtains revenue from fee charged to the utility/ government rather than tariffs charged to the users6. BOT projects example: Toll road projects7. Risk involved:

a. Political riskb. Technical riskc. Financing risk

8. Example of countries that use BOT:a) Thailandb) Turkeyc) Taiwand) China e) Japanf) Malaysiag) India

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Build Lease TransferPROCUREMENT

Points1. Private entity builds a complete project and lease to the government2. O&M authority (from project owner to lessee)3. Ownership (by shareholders)4. After lease period, ownership of the asset & O&M responsibility transferred back to the government5. BENEFIT for foreign company: maintains the Property Rights while avoiding Operational Risk

Build Own Operate TransferPROCUREMENT

Points1. Different between BOOT and BOT is that private entity owns the works2. Why? It is to recover the costs of investment and maintenance while trying to achieve higher margin on project3. Advantage of BOOT:

a) Encourage private investmentb) Inject new foreign capital to the countryc) Transfer of technology and know-howd) Completing project within time frame and planned budgete) Providing additional financial source for other priority projectsf) Releasing the burden on public budget for infrastructure development

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Build Own OperatePROCUREMENT

Points1. Project ownership usually remains with the project company2. Large amounts of finance and long payback period3. Example of projects:

a) Water treatment plants – process raw water

Design Build Finance Operate

PROCUREMENT

Points1. Similar to BOOT but no actual ownership transfer2. Contractor to assumes the risk of financing for the project plus the responsibility for maintenance and operation3. Disadvantage:

a) Difficulty with long term relationshipb) Threat of possible political change

4. Responsibility of private construction companya) Designb) Constructc) Raise fundd) Reward shareholdere) Periodical payment to government (true owner)

5. Government benefited by:\a) Avoided direct payment from the usersb) Remain as owner but do not need to facilitatec) Avoided debt due to spread out of cost over the years

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Turn KeyPROCUREMENT

Points1. the constructor builds an item to the buyer's exact specifications, or when an incomplete product is sold with

the assumption that the buyer would complete it.2. generally used in the sale or supply of goods or services.3. upon receiving the product, just needs to turn the ignition key to make it operational, or that the key just needs

to be turned over to the customer4. In real estate, turnkey is defined as a home or property that is ready for occupation for its intended purpose

a) a home that is fully functional, needs no upgrading or repairs5. an client enters into a contract with one party (normally a developer or a contractor) to finish the entire project

without any further input from the client.6. the project is handed over only once it is fully operational. In effect, the developer or contractor is finishing the

project and 'turning the key' over to the client.7. Advantage:

a) In a turnkey contract, the client is generally left out of the building process entirely as the developer or contractor handles all decisions and problems related to construction.

b) developer or contractor normally owns the project until it is complete, and therefore it has the financial motivation to complete the job as quickly and efficiently as possible

c) provides more time for a client to seek financing and investors before he/she is required to pay

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Abbreviation1. PPP: Public-Private Partnership2. O & M: Operate and Manage3. DCMF: Design Construct Manage Finance4. BOT: Build Operate Transfer5. BLT: Build Lease Transfer6. BOOT: Build Own Operate Transfer7. DBFO: Design Build Finance Operate8. BOO: Build Own Operate

1. Concession: a thing that is granted, especially in response to demands; a thing conceded.2. Procurement: action of obtaining or procuring something

Glossary