Authority | Central or local government department,
agency or other public sector body paying a
private sector contractor to provide a
long-term public service asset. |
Availability | Contractually defined measure of the
proportion of time for which the public service
asset is available for use. |
Benchmarking | Process to compare both standard and price
of services with an equivalent market standard.
The process does not involve any formal
competitive tendering. |
Construction phase | Project phase when the asset being procured
is physically built. |
Contractor | Private sector company or consortium
receiving long-term payments from the public
sector to provide a public service asset. |
Design, Build, Finance and Operate
(
DBFO) | Contractual relationship between the public
and private sector parties for the design,
construction, operation and financing of a
public service asset. A form of
PPP. |
Design, Build and Operate (
DBO) | Contractual relationship between the public
and private sector parties for the design,
construction and operation of a public service
asset, financed by the public sector. |
Financial close | Stage of the procurement process when
negotiations with the preferred bidder and
financial modelling of the project are
completed. |
Hard facilities management (Hard
FM) | Services, other than Soft
FM services, required to
support the operation of the public service
asset. Hard
FM services include
maintenance of buildings, engineering,
landscaping etc. |
Key Performance Indicators (
KPIs) | Quantitative and qualitative measures of
service performance.
KPIs are specified in the
contract and are used to assess contractor
performance against output specifications. |
Life cycle costs | Costs associated with refurbishing the asset
throughout the contract period. |
Net present value (
NPV) | Present value of expected project cashflow
after applying a discount rate to reflect the
value of alternative use of funds. |
Operations phase | Project phase when the public service asset
is available for use by the public sector
authority and the intended beneficiaries. |
Payment mechanism
deductions | Form of financial penalty incurred by the
private sector contractor for not fulfilling
certain contractual requirements. |
Private Finance Initiative (
PFI) | Programme launched in 1992 by the
Conservative Government to encourage private
sector investment in the public sector. |
Public Private Partnership (
PPP) | Generic term for public sector projects
involving both the public and private sectors.
Involvement can be to varying degrees and the
partnership can take different forms. |
Preferred bidder | Single private sector bidder selected by the
procuring authority to go forward to the
detailed contractual and financial negotiation
stage prior to award of the
PPP contract. |
Pre-qualification | First stage of the process for procuring a
private sector entity to provide a public
sector asset. Any private sector entity can
submit a pre-qualification bid for
consideration. Successful pre-qualification
bidders are invited to submit a detailed
financial and technical proposal. |
Procurement phase | Project phase when the procuring authority
invites bids from private sector entities,
assesses bids received, selects a preferred
bidder, and negotiates the financial and
service specification elements of the
PPP contract with the
preferred bidder. |
Public Sector Comparator (
PSC) | Means of assessing the value for money of a
particular
PPP procured project in
comparison to a hypothetical traditionally
procured project. |
Risk transfer | Passing of risk from the public to the
private sector party. The specific transfer of
a variety of project risks can be specified in
the
PPP contract. |
Services specification | Contractually stated service outputs
required to be delivered by the private sector
service provider. |
Soft facilities management (Soft
FM) | Services, other than Hard
FM services, required to
support the operation of the public service
asset. Soft
FM typically includes
catering, cleaning, laundry etc. |
Special Purpose Vehicle (
SPV) | Private sector company specifically
established to carry out a particular
PPP contract. The
SPV is usually made up of
different shareholders including a construction
company and a facilities management
company. |
Traditional procurement | Method for procuring and operating a public
service asset, where the public sector
authority procures and finances and design
and/or construction of an asset and separately
procures its operation, or manages the
completed asset itself. |
Value for money | Requirement that a procurement option
represents the optimum combination of whole
life cost and quality (or fitness for purpose)
to meet the user's requirement, that is the
most economically advantageous option rather
than necessarily the lowest cost option. |