How to Profit by Managing Environmental Risks from DBFO Schemes



How to Profit by Managing Environmental Risks from DBFO Schemes

Authors

FERRARY C, ENTEC UK Limited, UK

Description

The UK government's Private Finance Initiative (PFI) is a way of providing the financial backing for major infrastructure projects, the end results of which are likely to be with us for some time. "Design, Build, Finance, Operate" schemes (DBFO) are also

Abstract

The UK government's Private Finance Initiative (PFI) is a way of providing the financial backing for major infrastructure projects, the end results of which are likely to be with us for some time. "Design, Build, Finance, Operate" schemes (DBFO) are also common in many other countries although they may be called by different names. One of the main areas to which DBFO has been applied is projects involving transport.

However, in its application here in the UK, DBFO has not been without its critics. The novelty of the approach and, perhaps, the government's enthusiasm for it, have led to some unease about possible exposure of investors and environmental risk has been one of the main areas of concern.

In the current climate, no major investor can afford not to take environmental issues seriously. The political controversy surrounding the environmental effects of roads and traffic has led companies becoming involved in DBFO to - quite rightly - take great care in this respect. However, this presents problems from a commercial point of view. Executive time spent considering environmental issues and keeping abreast of EU and UK environmental legislation is expensive. Hiring consultants to predict, monitor and put right environmental problems can be even more so. But, in a new and fiercely competitive market, DBFO bidders must keep costs low. In the first round of DBFO contracts for both road and tram projects in the UK several consortia were asked to lower their bids after submission before the contracts were finally awarded.

There is another way to manage the risks faced by DBFO bidders. By taking an approach that looks at environmental risks across the whole DBFO process, not only can savings in both capital outlay and costs can be identified, but also other profitable spin-offs, such as better public relations.

This is achieved in five main ways by:

* Developing cost-effective environmental design features;

* reducing the time taken to obtain necessary consents;

* minimising resource input and waste;

* avoiding delays and penalties during construction; and

* cutting the costs of compliance with environmental legislation.

This approach of applying environmental management practice has been used with success on major transport projects in the UK and overseas. I should perhaps point out that whilst specific UK legislation and procedures are referred to here, the principles discussed are applicable worldwide.

Publisher

Association for European Transport