Design, build, finance, maintain (DBFM) is a project delivery method that allows private sector consortium design, construction, financing, regular maintenance, and rehabilitation of the infrastructure asset over the term of the contract to meet predefined performance specifications. The typical contract term for the maintenance work is 20 to 30 years. The public sector retains ownership of the assets.
There is a great deal of variety in DBFM arrangements in the United States, and especially the degree to which financial responsibilities are actually transferred to the private sector. One commonality that cuts across all DBFM projects is that they are either partly or wholly financed by debt leveraging revenue streams dedicated to the project. Direct user fees (tolls) are the most common revenue source. Future revenues are leveraged to issue bonds or other debt that provide funds for capital and project development costs. Often, they are also supplemented by public sector grants in the form of money or contributions in kind, such as right-of-way. Private partners are usually required to make equity investments as well.
Availability payments have also been used in this capacity. The private sector would not be fully paid for construction work following substantial completion but would be paid in installments over the length of the maintenance term. Because the private sector is responsible for the maintenance and performance of the facility for 20 to 30 years, there is additional incentive to use high-quality and durable materials that will ultimately benefit the public sector and travel public.
DBFM can be attractive to some public sectors, as it creates a single point of responsibility for delivering the project, reduces long-term risk, and incentivizes the contractor to adopt low-maintenance solutions. It may also be an attractive option for the contractor who is providing maintenance services since it results in regular payments from the public sector over a long period.
Design Build Finance Maintain (DBFM) Availability Payment:
