Performance Based Contracting in UK. Paresh Tailor Highways Agency, UK
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1 Performance Based Contracting in UK Paresh Tailor Highways Agency, UK
2 DBFO History Early PFI projects Queen Elizabeth II bridge, Second Severn, Birmingham North Relief Road DBFO part of the Government s Public Private Partnership (PPP) Initiative where the private sector take over traditionally public sector roles to give better value for money. DBFO concept published in green paper Paying for Better Motorways 1993.
3 Objectives to ensure that the project road is designed, maintained and operated safely to transfer the appropriate level of risk to the public sector to promote innovation (technical / financial) to foster the development of a private sector road-operating industry in the UK to minimise financial contributions from the public sector
4 DBFO Projects Awarded Tranche 1 & 1a Works Payment Contract Cost Mechanism Award A69 Newcastle to Carlisle $18.8m Shadow tolls Jan 1996 A1(M) Alconbury to Peterborough $256m Shadow tolls Feb 1996 A417/A419 Swindon to Gloucester $98m Shadow tolls Feb 1996 M1-A1 Motorway Link, Leeds $428m Shadow tolls Mar 1996 A50/A564 Stoke to Derby Link $41.2m Shadow tolls May 1996 A30/A35 Exeter to Bere Regis $151.4m Shadow tolls July 1996 M40 junctions 1-15 $74.2m Shadow tolls Oct 1996 A168/A19 Dishforth to Tyne Tunnel $58.8m Shadow tolls Oct 1996
5 Roads Programme Total Number of Schemes (incl. completed schemes) 113 Comprised of: Motorway Widenings 31 Trunk Road Widenings 28 Junction Improvements 22 Bypasses 32 Schemes Completed 47 Total value of schemes remaining $24bn
6 DBFO Projects Awarded Tranche 2 Works Payment Contract Cost Mechanism Award A13 Thames Gateway, London $292m Lane Apr 2000 (Transferred to TfL in July 2000) availability A1 Darrington to Dishforth $490m Congestion Feb 2003 A249 Stockbury to Sheerness $200m Congestion Feb 2004
7 M40 A30 A50 M6 Toll NTCC A249 A1DtoD NRTS M25 M1/A1 A19 A69 A1M A417/ Highways Agency PFI Portfolio Contract Scheme Cumulative Capital value Billions
8 Typical DBFO Structure Secretary of State Highways Agency Department's Agent (FM / PFC) Department s Representative (Highways Agency) DBFO Agreement (inc. Direct Agreement) Funders (Stakeholders) (Bank Loans) (Bond Finance) DBFO Company Finance Company Construction Contracts O & M Contract Contractor Operation and Maintenance Design Contract Designer Design sub-consultants Total No. of contracts: 150+
9 Core Service Delivery Requirements DBFO companies must comply to: Provide a safe highway reducing casualty and maintaining safe & serviceable network Minimise disruption (reliability) minimise delays from incidents and maintenance Keep travellers informed keeping technology working
10 Key Benefits of DBFO Contracts Fostering development of a private sector road operating industry Better outturn cost certainty More reliable and accurate expenditure forecasts Transfer of appropriate levels of risk to private sector Improved partnerships between public and private sectors Provide scope for innovation in all areas including finance Overall, provides better value for money
11 DBFO has delivered.. Public sector Private sector Customer Value for money Security, revenue stream Safer, more reliable service
12 NEXT DBFO PROJECT M25 London Orbital New-build cost: $3 $4bn O/A cost (incl. O&M): $10bn
13 Performance Criteria Areas Lane Availability Route Performance Condition Criteria Safety Performance Proactive Management
14 Where next with performance based contracting Recently developed a Toolkit for Performance Measurement for all contracts in response to the Highways Agency s key organisational drivers and commissioning objectives Continued performance improvement Long-term relationship with Suppliers Benchmarking Performance Identification of Best Practice Learning Lessons
15 Toolkit for Performance Measurement Product Service Right First Time Cost Time Safety Client Perf Team Culture
16 Performance measured Radar diagrams can be used to present all Areas of Measure scores for a given measurement period. Areas of poor and excellent service can readily be identified Communicatio n Product Q Q Q Q Q Q Q Responsive ness Service 0506Q2 0506Q3 0405Q4 0506Q1 0506Q4 0607Q1 0607Q2 Product 8.0 Health & Safety Safety 8.0 Teamwork Right First Time Safety Service Q4 0506Q Q Q Q Q Q Q4 0506Q1 0506Q2 0506Q3 0506Q4 0607Q1 0607Q2 8.0 Risk Mmt Safety Time 8.0 ECC Use Right Cost First Time Cost Time Q Q Q Q Q Q Q Q4 0506Q1 0506Q2 0506Q3 0506Q4 0607Q1 0607Q2 Right First Time Line graphs or histograms can be used to identify trends in performance for Area of Measure or Performance Indicator level.
17 Thank You
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