safe roads, reliable journeys, informed travellers regional workshop on ppp in transport riga,...
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Safe roads, Reliable journeys, Informed travellers
REGIONAL WORKSHOP ON PPP IN TRANSPORTRIGA, LATVIA – 6 to 8 MARCH 2007
CONTRIBUTION OF PPP TO ENHANCE TRANSPORT INFRASTRUCTURE – THE UK EXPERIENCE
by
ALEC BRIGGS, SENIOR PROJECT LEADER, HIGHWAYS AGENCY
and
BARRY DREWETT, TECHNICAL DIRECTOR, PELL FRISCHMANN CONSULTANTS LIMITED
Safe roads, Reliable journeys, Informed travellers
OUTLINE OF PRESENTATION
Part 1 - Alec Briggs
• The Role of the Highways Agency
• Funding of Motorway and Trunk Road Improvements
• Methods of Procurement
• Key Advantages of DBFO (PPP)
• DBFO Projects Awarded To Date
Part 2 - Barry Drewett
• Typical Contractual Arrangements
• Congestion Management Payment Mechanism
• Some Lessons Learnt
• Next Privately-Financed/DBFO Project (M25)
Safe roads, Reliable journeys, Informed travellers
THE ROLE OF THE HIGHWAYS AGENCY
An Executive Agency of the Department for Transport
Responsible for operating, maintaining and improving the 8000 km strategic road network in England, valued at £72bn, carrying a third of all traffic and two-thirds of freight traffic(over 170 bn vehicle-kilometres per annum)
In conjunction with its ‘Customer First’ initiative, its primary aims are to provide: Safe RoadsReliable JourneysReal-Time Information for Travellers
Safe roads, Reliable journeys, Informed travellers
FUNDING OF MOTORWAY AND TRUNK ROAD IMPROVEMENTS
Annual Highways Agency Budgets 05-06, 06-07 and 07-08 (£m)
ACTIVITY/YEAR 05-06 06-07 07-08
MAJOR IMPROVEMENTS (TPI) 589 1046 905
MANAGING TRAFFIC (incl. NTCC, RCCs, Traffic Officers)
109 103 98
TECHNOLOGY IMPROVEMENTS (motorway communications)
138 120 159
MAINTENANCE (incl. payments for completed DBFO schemes)
865 862 838
SMALL SCHEMES and R&D 191 167 170
TOTALS 1893 2298 2170
Safe roads, Reliable journeys, Informed travellers
Total Value of Schemes: £11.9bn
Total Number of Schemes: 112(incl. completed schemes)
Comprised of:
Motorway Widenings 28
Trunk Road Widenings 30
Junction Improvements 22
Bypasses 32
Total Number of Schemes Completed: 30
Th
e T
arg
ete
d P
rog
ram
me
of
Imp
rov
em
en
ts (
TP
I) –
Feb
rua
ry 2
00
7
Safe roads, Reliable journeys, Informed travellers
Main Types of Procurement Contracts
●D
esig
n,
Bu
ild
, F
inan
ce a
nd
Op
erat
e (D
BF
O)
(PP
P)
●E
arly
Co
ntr
acto
r In
volv
emen
t (E
CI)
●D
esig
n &
Bu
ild
(D
&B
)
Maj
or
Imp
rove
men
t P
roje
cts:
Mai
nte
nan
ce:
●A
s p
art
of
DB
FO
co
ntr
acts
(P
PP
)
●M
anag
ing
Ag
ent
Co
ntr
acto
r (M
AC
)
Sp
ecia
list
Ser
vice
s:
Fra
mew
ork
Ag
reem
ents
, e.
g.
des
ign
ser
vice
sP
RO
CU
RE
ME
NT
OF
IMP
RO
VE
ME
NT
S A
ND
MA
INT
EN
AN
CE
Safe roads, Reliable journeys, Informed travellers
Categorisation of Major Road Projects (February 2007)
Typ
e MW
TR
W J B
To
tal
No. £
(bn)
No. £
(bn)
No. £
(bn)
No. £
(bn)
No. £
(bn)
EC
I
16 3.88 19 2.20 16 0.76 15 1.58 66 8.42
DB
FO
6
1.77 1
0.08 0 0 0 0 7
1.85
D&
B
6
0.63 10 0.26 6
0.13 17 0.59 39 1.61
Tot
al
28 6.28 30 2.54 22 0.89 32 2.17
112
11.8
8
Ke
y:
MW
= M
oto
rwa
y W
ide
nin
g
TR
W =
Tru
nk
Ro
ad
Wid
en
ing
J
= J
un
cti
on
Im
pro
ve
me
nts
B
= B
yp
as
se
s
Safe roads, Reliable journeys, Informed travellers
Typical Procurement of a Major Highway Scheme (Private Funding)
Task Undertaken by Type of Contract Payment Method
Study work for Scheme Identification Consultants Project Support Framework(PSF)
Target Cost based on timecharges
Assessment ofAlternative Optionsand Public Consultation
Consultants Project Support Framework(PSF)
Target Cost based on timecharges
Development of Preferred Optioninc.
Surveys
Outline Design
EnvironmentalAssessment
Cost Estimates
Draft Order Publication
Consultants Project Support Framework(PSF)
Target Cost based on timecharges
Public Inquiry and Secretary ofState’s Decision
Consultants Project Support Framework(PSF)
Target Cost based on timecharges
Detailed Design and Construction,and Operation and Maintenance
Consultants and Contractors inDBFO Company
Design, Build, Finance andOperate (DBFO)
Negotiated Service Payment
Land
acq
uisi
tion
Safe roads, Reliable journeys, Informed travellers
Tranche 1 Works Payment ContractCost Mechanism Award
●A69 Newcastle to Carlisle £9.4m Shadow tolls Jan 1996
●A1(M) Alconbury to Peterborough £128m Shadow tolls Feb 1996
●A417/A419 Swindon to Gloucester £49m Shadow tolls Feb 1996
●M1-A1 Motorway Link, Leeds £214m Shadow tolls Mar 1996
Tranche 1A
●A50/A564 Stoke to Derby Link £20.6m Shadow tolls May 1996
●A30/A35 Exeter to Bere Regis £75.7m Shadow tolls July 1996
●M40 junctions 1-15 £37.1m Shadow tolls Oct 1996
●A168/A19 Dishforth to Tyne Tunnel £29.4m Shadow tolls Oct 1996
Tranche 2●A13 Thames Gateway, London £146m Lane availability Apr
2000(Transferred to T f L in July 2000)
●A1 Darrington to Dishforth £245m Congestion Feb 2003
●A249 Stockbury to Sheerness £100m Congestion Feb 2004
DB
FO
PR
OJ
EC
TS
AW
AR
DE
D T
O D
AT
E
Safe roads, Reliable journeys, Informed travellers
Ke
y B
ene
fits
of
DB
FO
Co
ntr
ac
ts
●F
ost
erin
g d
evel
op
men
t o
f a
pri
vate
sec
tor
road
op
erat
ing
in
du
stry
●B
ette
r o
utt
urn
co
st c
erta
inty
●M
ore
rel
iab
le a
nd
acc
ura
te e
xpen
dit
ure
fo
reca
sts
●T
ran
sfer
of
app
rop
riat
e le
vels
of
risk
to
pri
vate
sec
tor
●Im
pro
ved
par
tner
ship
s b
etw
een
pu
bli
c an
d p
riva
te s
ecto
rs
●P
rovi
de
sco
pe
for
inn
ova
tio
n i
n a
ll a
reas
in
clu
din
g f
inan
ce
●O
vera
ll,
pro
vid
es b
ette
r va
lue
for
mo
ney
Safe roads, Reliable journeys, Informed travellers
Par
t 2
- B
arry
Dre
wet
t –
Pri
vate
ly-F
inan
ced
DB
FO
Pro
ject
s
•T
ypic
al C
on
trac
tual
Arr
ang
emen
ts
•C
on
ges
tio
n M
anag
emen
t P
aym
ent
Mec
han
ism
•S
om
e L
esso
ns
Lea
rnt
•N
ext
Fu
ture
Pri
vate
ly-F
inan
ced
/DB
FO
P
roje
ct (
M25
Lo
nd
on
Orb
ital
)
Safe roads, Reliable journeys, Informed travellers
Typical Contract Structure(A1 Darrington to Dishforth)
Secretary of StateHighways Agency
Department's Agent(FM / PFC)
Department's Representative(Highways Agency)
DBFO Company(RMS)
Contractor (RMG)(AMEC, A. McAlpine, Dragados, KBR)
Designer(Mouchel-Parkman)
Design sub-consultants(KBR, Carl Bro)
Operation and Maintenance(A. McAlpine)
Funders(Shareholders)
(Bond Finance)(Bank Loans)
DBFO Agreement(inc. Direct Agreement)
Finance Company
ConstructionContract
O & M Contract
Design Contract
TY
PIC
AL
CO
NT
RA
CT
UA
L A
RR
AN
GE
ME
NT
S
To
tal N
o. o
f co
ntr
acts
: 16
0
Safe roads, Reliable journeys, Informed travellers
Development of Payment Mechanisms in DBFO Projects
Tranches 1 & 1A
shadow tolls
safety payments
lane closurecharges
congestionpayments
safetyperformance
availability
safetyperformance
A13 D2D & A249
Fu
ture
M25
Lo
nd
on
Orb
ital
lik
ely
to
be
avai
lab
ilit
y-b
ased
mec
han
ismCO
NG
ES
TIO
N M
AN
AG
EM
EN
T P
AY
ME
NT
ME
CH
AN
ISM
Safe roads, Reliable journeys, Informed travellers
Length: 53 km
New D4M motorway: 22 km
2 TPI Schemes
New
or
up
gra
ded
M
oto
rway
C
om
mu
nic
atio
ns
Fac
ilit
ies
thro
ug
ho
ut
Co
ng
esti
on
Man
agem
ent
Pay
men
t M
ech
anis
m
A1
Dar
rin
gto
n t
o D
ish
fort
h D
BF
O P
roje
ct
Wo
rks
cost
: £2
45m
Co
nce
ssio
n p
erio
d:
33 y
ears
Safe roads, Reliable journeys, Informed travellers
Congestion Management Payment Mechanism – D2D Contract
Comprises 2 separate key elements based on:
(a) Active management of traffic congestion(i.e. minimising congestion)
(b) Active management of traffic safety(i.e. minimising Personal Injury Accidents (PIAs))
Safe roads, Reliable journeys, Informed travellers
Allocation of payment amounts and measurement of traffic
● Whole Project Road divided into 50 NO 2 KM LONG CARRIAGEWAY SECTIONS (25 NB
and 25 SB)
● GROSS ANNUAL PAYMENT (as tendered) allocated to whole project road to give
amounts for EACH HOUR on EACH CARRIAGEWAY SECTION pro-rata previous hourly
traffic flows
● VEHICLE SPEEDS and VOLUMES measured AUTOMATICALLY using a MONITORING
SYSTEM based on inductive loop detectors (in carriageway surfacing)
(a) Active Congestion Management
Safe roads, Reliable journeys, Informed travellers
Mo
nit
ori
ng
Sys
tem
Ou
t-s
tati
on
Eq
uip
men
t•
Ind
uct
ive
loo
ps
& G
R M
arks
man
660
co
un
ters
•C
CT
V c
amer
as f
or
veri
fica
tio
n
•D
edic
ated
fib
re o
pti
c ca
ble
s fo
r si
gn
al t
ran
smis
sio
n
Safe roads, Reliable journeys, Informed travellers
Minimum Condition Criteria must be met before any payment made
Co
ng
esti
on
Man
ag
eme
nt
Pa
yme
nts
Safe roads, Reliable journeys, Informed travellers
(b) Active Safety Adjustment
Criteria for Safety Payments or Deductions
Cap
Benchmark
+PIAs
£ Deduction
£ Bonus
C B A B C
-PIAs
Cap
Zo
ne
A –
no
ad
just
men
ts
Zo
ne
B –
en
han
ced
ad
just
men
ts
Zo
ne
C –
sta
nd
ard
en
han
cem
ents
-8 -2 2 8
Safe roads, Reliable journeys, Informed travellers
SOME LESSONS LEARNT
Schemes with large new-build elements more viable (more risk)
Need to reduce tendering costs
Need to reduce tendering / negotiation period
Need for robust reality check, e.g. risk pricing
Need for well-resourced DBFO companies
Need to streamline contractual procedures
Need for appropriate monitoring
Safe roads, Reliable journeys, Informed travellersM
25
Lo
nd
on
O
rbit
al
New
-bu
ild
co
st:
£2b
n
O/A
co
st (
incl
. O
&M
): £
5bn
NE
XT
PR
IVA
TE
LY
-FIN
AN
CE
D /
DB
FO
PR
OJE
CT
Safe roads, Reliable journeys, Informed travellers
ECI DBFO M1
M25 Indicative Programme
Legend:
J1b-3
J5 – 6/7
J16 - 19
J19 - 23
J23 - 27
J27 - 30
M1
Section 3
Section 2
Section 1a
Section 1b
Section 5
Section 4
J6a - 10
Junction 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ECI DBFO Ongoing
Safe roads, Reliable journeys, Informed travellersSafe roads, Reliable journeys, Informed travellers
Thank You!Thank You!
alec
.bri
gg
s@h
igh
wa
ys.g
si.g
ov.
uk
+44
(0)1
13 2
83 6
303
bd
rew
ett@
pel
lfri
sch
man
n.c
om
+
44(0
)192
4 36
8 1
45