Privatisation: Build, Operate and Transfer &
Design, Build, Finance and Operate Partnering
BOT: private services provider finances the project,
Main Activities
designs it, undertakes the construction, owns and
operates it over the concession period and upon its
expiry transfer the beneficial ownership of the project
back to the government/public sector
2) Contractor under a DBFO contract is responsible to
the design, building, construction and operation aspects
of the project.
1) It involves large public sector projects involving
utilities, infrastructure (highways, water supply, and
When To Use
power supply).
2) It can generate a reliable revenue over a long period
of time.
3) There are availability of suitable financiers, competent
private companies conversant with and having the
resources to undertake the contract.
1) Realization of projects without increased
spending
2) More private sector initiative/involvement
3) More innovative and efficiently managed
projects
Strengths
4) Better value for money
5) Less risk burden on public sector
6) Single point responsibility for all aspects
of project
7) Maximum incentive on private sector
8) Ultimate beneficial ownership free of
debt
9) Less risk burden on public sector
1) More political gimmicks.
2) Do not lessen but merely transfer financial burden
3) Susceptible to abuse/favouritism
Weakness
4) Inefficient and far from being cost
effective
5) Users have no direct redress against
concessionaire
6) Higher incidence of poor planning, bad
design and unsatisfactory maintenance
Fast Tracking
1) Strategic alliance between two or more
organisations, the key objective is for mutual benefit. 1) A method of reducing the overall time
from inception until completion by
2) A contractual relationship between a contractor and overlapping certain activities while
an employer that is intended to maximise the benefit to maintaining an overall control over the
both in terms of reliability of outcome and efficiency in project.
the use of expertise and other resources, fostering
teamwork, trust and innovation
1) A project management approach geared
to very rapid project completion to reduce
the overall project life cycle time.
2) For instance the contract is awarded as
soon as sufficient works has been designed
and ready to commence on site.
1) Win-win solution for both parties 1) Shorter project life cycle and early
2) Greater certainty of the outcome in cost and time completion.
3) Product meeting requirements in cost effective 2) Earlier realization of the employers
manner and less wattage. return on investment and reduced finance
charges.
4) Continuity of work at satisfactory pricing level
5) Comfort of planning resources 3) Efficient use of resources.
6) Better quality finished product
7) Conducive working environment 4) Optimal and cost effective end product.
8) Disputes and claims minimised
9) Integrated core team sharing common objectives
and vision.
1) Communication problems due to
1) Lack of time tested model evidencing benefits overlapping of critical stages.
2) In practise, arms length dealing and being on par 2) Coordination problems within tight
difficult, tendency to be biased to one side. programme constraint.
3) Breakdown of relationships, harmonious and non-
3) Higher number of variations, disputes
adversarial working environment not realised.
and claims.
4) Commitment from parties may wane through time.
4) Cost overruns.