Highways Agency

DBFO Briefing Pack

March 2005

General briefing notes

Background

Design, build, finance and operate (DBFO) started life as a precursor and transition to motorway tolling, designed to create an operating industry which took a long-term commercial view and which might manage tolled motorways in the future. With this in mind, the Conservative Government announced in November 1992 that private-sector companies might be invited to bid for DBFO projects, with remuneration from the government according to usage.

The DBFO concept was included for consultation in 'Paying for Better Motorways: Issues for Discussion' (May 1993). A preliminary note on the principles applying to DBFO was published in April 1994. Welcomed by the City and industry, financial advisers Hambros/Pricewaterhouse then carried out a more intensive consultation on risks.

As a result of this consultation exercise, the DBFO form of contract was developed. In summary, the private sector, over the 30-year life of the contract, assumes responsibility for the operation and maintenance of a length of existing road (where appropriate) and the detailed design and construction of specified improvement schemes and their subsequent operation and maintenance. These responsibilities lead the private sector to focus on delivering whole-life cost efficiencies. DBFO has developed into a method of procurement worth pursuing in its own right as an alternative to other forms of procurement using conventional funding arrangements.

The first eight DBFO projects - Tranches 1 & 1A

Tranche 1

A1(M) Alconbury to Peterborough
M1-A1 Lofthouse to Bramham Link Road
A417/A419 Swindon to Gloucester
A69 Carlisle to Newcastle

Tranche 1A

A19/A168 Dishforth to Tyne Tunnel
A30/A35 Exeter to Bere Regis
A50/A564 Stoke to Derby Link
M40 Denham to Warwick

Contracts for the first eight DBFO projects were all awarded in 1996 (sometimes referred to as tranches 1 and 1A). These involve the private sector in managing about 600km or 5 per cent of the existing Highways Agency network and delivering 11 road improvement schemes with an estimated capital value in excess of £550m. Ten of the 11 schemes were completed and opened to traffic by Spring 1999, with the remaining scheme, the A30 Honiton to Exeter Improvement, opened in the Spring of 2000.

Reimbursement on these contracts is primarily by means of shadow tolls paid according to usage of the project road, plus bonus elements for safety enhancements and charges for lane closures and penalty points for not achieving set operating standards.

A1 Darrington to Dishforth DBFO Project

The A1 Darrington to Dishforth DBFO project contains two upgrading and widening schemes, with a capital value of about £245 million. Construction has been completed on this project.

A249 Stockbury (M2) to Sheerness DBFO Project

The A249 DBFO project contains three improvement schemes with a capital value of about £100 million. The contract was signed in February 2004.

M25 DBFO Project

The M25 DBFO project comprises the existing Area 5 network and Dartford Crossings - which together form the Project Road. Once let, a DBFO Company will assume responsibility for the operation and maintenance of the Project Road and a programme of capital works including the widening of up to approximately 102km of the existing M25, generally to dual 4 lane standard. The project is currently at the preferred bidder stage.

Current DBFO projects

List of current DBFO projects

A1 Darrington to Dishforth (North EastA1(M))
Alconbury to Peterborough (East, Midlands)
A19 Dishforth to Tyne Tunnel (North East)
A249 Stockbury (M2) to Sheerness DBFO- incorporating A249 Iwade Bypass to Queenborough Improvement (London & South East)
A30 Exeter to Bere Regis (London & South East, South West)
A419 Swindon to Gloucester (London & South East, Midlands, South West)
A50 Stoke to Derby link (Midlands)
A69 Carlisle to Newcastle (North East, North West)
M1 Lofthouse to Bramham link road (North East)
M40 Denham to Warwick (East, London & South East, Midlands)

DBFO projects - key dates and durations

Project	Tender Issue Date	Tender Return Date	Invitation of BAFO Date	Return of BAFO Date	Preferred Bidder Date	Award Date
Tranche 1
M1-A1 Lofthouse - Bramham (Kvaerner)	09/01/95	12/06/95	29/09/95	06/10/95	15/10/95	26/03/96
A419/A417 Swindon - Gloucester (RMG)	09/01/95	30/05/95	29/09/95	06/10/95	16/10/95	08/02/96
A1(M) Alconbury - Peterborough (RMG)	09/01/95	22/05/95	29/09/95	06/10/95	16/10/95	08/02/96
A69 Newcastle - Carlisle (Road Link)	09/01/95	05/06/95	29/09/95	10/10/95	17/10/95	12/01/96
Tranche 1A
M40 Denham - Warwick (UK Highways)	14/06/95	30/10/95	26/03/96	03/04/96	24/04/96	08/10/96
A168/A19 Dishford - Tyne Tunnel (Auto Link)	14/06/95	06/11/95	12/04/96	29/04/96	16/05/96	14/10/96
A30/A35 Exeter - Bere Regis (Connect)	14/06/95	13/11/95	19/03/96	03/04/96	23/04/96	24/07/96
A50 Stoke - Derby (Connect)	14/06/95	23/10/95	23/01/96	12/02/96	27/02/96	20/05/96
Post Tranche 2
A1 Darrington to Dishforth	27/03/01	27/09/01	02/05/02	29/05/02	23/09/02	13/02/03
A249 Stockbury (M2) to Sheerness	24/07/02	06/12/02	26/03/03	07/04/03	28/04/03	19/02/04

DBFO PROJECTS - KEY DATES & DURATION

View DBFO Projects - key dates & duration table (will open in new window).

Net present value ranges

Project	NPV Range
Tranche 1 Projects
A1(M)	£138m to £165m
M1/A1	£186m to £281m
A419/A417	£106m to £124m
A69	£58m to £66m
Tranche 1A Projects
A19	£125m to £149m
A30/A35	£129m to £158m
A50	£58m to £72m
M40	£155m to £210m
Post Tranche 2 Projects
A1DD	£200m to £295m
A249	£100.5m

DBFOs per cent of the core and existing HA networks

Project	Length km	Length miles	% of existing network (4,642 miles) See Note 1	% of agreed core network (4,167 miles) See Note 1
Awarded Projects
A1M	21	13	0.28 %	0.31 %
M1-A1	30	18	0.39 %	0.43 %
A419/A417	52	32	0.69 %	0.77 %
A69	84	52	1.12 %	1.25 %
A19	118	73	1.57 %	1.75 %
A30/A35	102	63	1.36 %	1.51 %
A50	57	35	0.75 %	0.84 %
M40	122	76	1.64 %	1.82 %
SubTotal	586	362	7.79 %	8.68 %
A1 DD	53	33	0.71 %	0.79 %
A249	17	11	0.23 %	0.26 %
SubTotal	70	44	0.94 %	1.05 %
Total	656	406	8.74 %	9.74 %

Note 1: The figures for the existing network and the agreed core network have been extracted from Highways Agency Pavement Management System (HAPMS) on the 14/10/04.

Parliamentary questions and answers

Introduction

The following is a selection of DBFO-related parliamentary questions dealt with since the inception of DBFO contracts:

Useful documents and how to obtain them

General website addresses

Government Office set up to modernise and improve Government procurement:
Office of Government Commerce

Auditors appointed by Parliament to audit Government:
National Audit Office (NAO)

Specific DBFO Documents

Audit Report on the first four DBFO projects (A1(M), M1-A1, A417/A419 and A69):
NAO Report (The Private Finance Initiative: The First Four Design, Build, Finance and Operate Roads Contracts)

The first of the three linked consultations in respect of developing new and/or improving the existing, procurement and contracting policies:
Improving DBFOs, a Consultation Document, December 2002

A case study on the first eight DBFO road contracts and their development:
DBFO - Value in Roads

Public Accounts Committee scrutinises all Government expenditure and the Public Accounts - Forty- Seventh Report published on 10th of June 1998 is linked below:
Public Accounts Office (PAC) Reports

Prequalification Document for the A249 Stockbury (M2) to Sheerness DBFO Project:
A249 Stockbury (M2) to Sheerness

Prequalification Document for the A1 Darrington to Dishforth DBFO Project:
A1 Darrington to Dishforth DBFO

Prequalification Document for the M25 DBFO Project: M25 DBFO

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