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P3 Toolkit

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P3-VALUE: Shadow Bid Tool User Manual

December 31, 2013

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Appendix B: Glossary

This glossary contains useful terms and acronyms that are used within the Shadow Bid Tool.

Term Description
Base Date The Base Date is commonly referred to as the estimated date of financial/contract close for a project
Commissioning Phase The Commissioning phase, often referred to as the Start-Up phase, is where the asset is prepared for operations. This phase often involves the testing and integration of the projects systems and components to facilitate that all applicable design criteria are met.
Concession Period Concession Period (Total construction and operating periods).
Concessionaire Private entity that assumes ownership and/or operations of a given public asset (i.e., train station, bus operation) under the terms of a contract with the public sector
Construction Delay Day Cost Construction delay per day.
Construction End End date of construction period.
Construction Engineering Costs The allowable costs for environmental evaluation and documentation, permits, or approvals.
Construction Period Number of years in construction period.
Construction Phase The Construction phase involves the actual construction of the physical asset. This phase is often the most sensitive to risks which could result in change orders, schedule delays, and contract disputes. By identifying potential risks before the start of construction phase, it may be possible for the project team to better anticipate and manage construction risks before they occur.
Construction Start Start date of construction period.
Construction Year Index Count for construction periods
Contingency An allowance included in the estimated cost of a project to cover unforeseen circumstances.
Cost Impact Cost impact is defined as the additional cost of labor, equipment and materials that are incurred when the risk event occurs and whoever is responsible for that risk has to carry out additional works as a direct result of the event. Indirect costs, such as the cost of site offices, utilities and additional resources for engineers, inspectors, etc. are not included in the cost impact.
CPI Consumer Price Index
DB Design-Build: Under a DB, the private sector delivers the design and construction (build) of a project to the public sector. The public sector maintains ownership and operations and maintenance of the asset. Build refers to constructing the road, which includes reviewing conditions at the building site, providing construction staff and materials, selecting equipment, and, when necessary, amending the design to address problems discovered during the construction phase.
DBFO/M Design Build Finance Operate / Design Build Finance Operate Maintain: Under a DBFO or a DBFOM, the private sector delivers the design and construction (build) of a project to the public sector. It also obtains project financing and assumes operations and maintenance of an asset upon its completion.
Debt Tranche Base Rate Base rate of example project bond.
Debt Tranche DSCR Required DSCR for example project bond.
Debt Tranche Debt Type Debt facility type for example project bond.
Debt Tranche Dollar Maximum dollar value of example project bond.
Debt Tranche Fee Fees for example project bond.
Debt Financing Percent Active financing percentage.
Debt Tranche Grace Grace period for example project bond.
Debt Tranche Index Grace period flag for example project bond.
Debt Tranche Interest Only Period Interest only period for example project bond.
Debt Tranche Margin Margin for example project bond.
Debt Tranche Maturity Maturity date for example project bond.
Debt Tranche Name The name/type of debt.
Debt Tranche Percentage Percentage of project debt sourced from example project bond.
Debt Tranche Remaining Remaining payment years for example project bond.
Debt Tranche Period Interest only period for example project bond.
Design Phase The Design phase, often referred to as a Pre-Construction phase, involves completing plans for the project such as, the development of detailed construction documents and logistics plans, issuance of permits, selecting construction materials and the construction site, and development of detailed cost and schedule estimates. During this phase, the public sector can solicit proposal or bids from qualified contractors and vendors to execute the work based on the detailed design and or operations criteria. Depending on the delivery method, the bid solicitations may take place early or late in the design phase. For example, under P3 or Design-Build, solicitations can take place early or possibly even before the Design Phase while under traditional Design-Bid-Build bid solicitations are unlikely to be issued until a complete set of construction documents in finalized towards the end of the design phase.
Design Type Asset Type in reference to the Assumptions sheet of the Shadow Bid Tool.
Discount Rate The discount rate is a percentage by which a cash flow element in the future (i.e., project costs and revenues) is reduced for each year that cash flow is expected to occur.
Discount Rate Nominal Discount rate factoring in the inflation rate.
Discount Rate Real Discount rate that does not account for inflation.
DSCR Debt Service Cover Ratio
Finance Finance refers to the phase or delivery aspect of the project that includes providing capital for the project, which may include issuing debt or equity and verifying the feasibility of plans for repaying debt or providing returns on investment.
Inflation Consumer Price Index Inflation Consumer Price Index used as a base rate for inflation assumptions.
Leveraging Leveraging is the degree to which an investor or business is utilizing borrowed money.
Maintenance The maintenance phase includes keeping the project in a state of good repair, which includes filling potholes, repaving or rebuilding roadways, and ensuring the integrity of bridges and highways.
Non-Road Pricing Revenue Non-road pricing revenues cover a vast landscape of strategies to help pay for non-tolled improvements or facilities, such as transit.
Non-Agency Subsidy Percentage of construction costs provided by non-agency government subsidy.
Net Present Cost (NPC) Net Present Cost is the estimated cash flows associated with PSC analysis.
Net Present Value (NPV) Net Present Value is the present value of the expected future cash flows minus the cost.
NPC Base Net Present Cost of the base project (excluding risk).
NPC P10 NPC of the project at the 10th risk percentile.
NPC P70 NPC of the project at the 70th risk percentile.
NPC P90 NPC of the project at the 90th risk percentile.
Operations Phase During the Operations phase, the completed asset is operated and maintained to facilitate continuation of beneficial use and/or revenue generation over the life of the asset. Operations refer to the process of ensuring the continuing performance and availability of the highway, which includes removing debris and snow and collecting tolls and data on traffic.
Periodic Maintenance Repairing damage normally expected from seasonal and occasionally unusual natural conditions or occurrences.
Periodic Maintenance Cost Period The time period between periodic maintenance works.
Planning Phase Planning is the earliest phase of the project in which the project is purely conceptual with relatively low design definition, and very rough high level estimates of the cost and schedule. Tasks in this phase typically consists of financial and technical feasibility studies, development of rough budget and schedule estimates, public forums if applicable, and an assessment of existing assets for a replacement or renewal project.
Post Operating Costs Operating Costs post construction completion.
Pre Operating Costs Operating Costs before construction completion.
Primer Within the context of the Value for Money Tool User Manual, " Primer" refers to the FHWA's Primer on Value for Money Assessment for Public-Private Partnerships, which provides an overview of general/basic concepts of the VfM and PSC development processes. Also, FHWA's Primer on Financial Structuring and Assessment provides an overview of basic financing concepts.
Procurement Phase Stage at which a pool of bidders is down-selected based on specific criteria.
Project Financing The percentage of total construction cost and project cost that are not funded by subsidy that will be funded by debt financing.
Public Sector Comparator (PSC) The Public Sector Comparator (PSC) represents the most efficient public procurement cost (including all capital and operating costs and share of overheads) after adjustments for Competitive Neutrality, Retained Risk and Transferrable Risk to achieve the required service delivery outcomes. This benchmark is used as the baseline for assessing the potential value for money of private party bids in projects.
Retained Risk The value of those risks or parts of a risk that government proposes to bear itself under a partnership arrangement.
Revenue Leakage Assumed annual revenue losses for a tolling facility.
RFP Request for Proposal
ROW Right of Way (in reference to a type of Project Cost in the Assumptions sheet of the Shadow Bid Tool).
Risk Allocation The process of assigning operational and financial responsibility for specific risks to parties involved in the provision of services under P3. Also see risk transfer.
Risk Transfer The process of moving the responsibility for the financial consequences of a risk from the public to the private sector.
Routine Maintenance Routine Maintenance is defined as work that is planned and performed on a routine basis to maintain and preserve the condition of the highway system or to respond to specific conditions and events that restore the highway system to an adequate level of service.
Schedule Impact Schedule impact is defined as the delay that the event may cause to the project schedule.
P3 Estimate P3 Estimate refers to a financial model created based on P3 procurement. It is called a P3 Estimate because it is an estimate based on an expected bid.
T&R Traffic and revenue.
Transferrable Risk The value of any risk that is transferrable to the bidder.
Value for Money (VfM) The procurement of a P3 project represents VfM when - relative to a public sector procurement option - it delivers the optimum combination of net life cycle costs and quality that will meet the objectives of the project.

 

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