Safe roads, Reliable journeys, Informed travellers REGIONAL WORKSHOP ON PPP IN TRANSPORT RIGA,...

Safe roads, Reliable journeys, Informed travellers

REGIONAL WORKSHOP ON PPP IN TRANSPORTRIGA, LATVIA – 6 to 8 MARCH 2007

CONTRIBUTION OF PPP TO ENHANCE TRANSPORT INFRASTRUCTURE – THE UK EXPERIENCE

by

ALEC BRIGGS, SENIOR PROJECT LEADER, HIGHWAYS AGENCY

and

BARRY DREWETT, TECHNICAL DIRECTOR, PELL FRISCHMANN CONSULTANTS LIMITED


OUTLINE OF PRESENTATION

Part 1 - Alec Briggs

• The Role of the Highways Agency

• Funding of Motorway and Trunk Road Improvements

• Methods of Procurement

• Key Advantages of DBFO (PPP)

• DBFO Projects Awarded To Date

Part 2 - Barry Drewett

• Typical Contractual Arrangements

• Congestion Management Payment Mechanism

• Some Lessons Learnt

• Next Privately-Financed/DBFO Project (M25)


THE ROLE OF THE HIGHWAYS AGENCY

An Executive Agency of the Department for Transport

Responsible for operating, maintaining and improving the 8000 km strategic road network in England, valued at £72bn, carrying a third of all traffic and two-thirds of freight traffic(over 170 bn vehicle-kilometres per annum)

In conjunction with its ‘Customer First’ initiative, its primary aims are to provide: Safe RoadsReliable JourneysReal-Time Information for Travellers


FUNDING OF MOTORWAY AND TRUNK ROAD IMPROVEMENTS

Annual Highways Agency Budgets 05-06, 06-07 and 07-08 (£m)

ACTIVITY/YEAR 05-06 06-07 07-08

MAJOR IMPROVEMENTS (TPI) 589 1046 905

MANAGING TRAFFIC (incl. NTCC, RCCs, Traffic Officers)

109 103 98

TECHNOLOGY IMPROVEMENTS (motorway communications)

138 120 159

MAINTENANCE (incl. payments for completed DBFO schemes)

865 862 838

SMALL SCHEMES and R&D 191 167 170

TOTALS 1893 2298 2170


Total Value of Schemes: £11.9bn

Total Number of Schemes: 112(incl. completed schemes)

Comprised of:

Motorway Widenings 28

Trunk Road Widenings 30

Junction Improvements 22

Bypasses 32

Total Number of Schemes Completed: 30

Th

e T

arg

ete

d P

rog

ram

me

of

Imp

rov

em

en

ts (

TP

I) –

Feb

rua

ry 2

00

7


Main Types of Procurement Contracts

●D

esig

n,

Bu

ild

, F

inan

ce a

nd

Op

erat

e (D

BF

O)

(PP

P)

●E

arly

Co

ntr

acto

r In

volv

emen

t (E

CI)

●D

esig

n &

Bu

ild

(D

&B

)

Maj

or

Imp

rove

men

t P

roje

cts:

Mai

nte

nan

ce:

●A

s p

art

of

DB

FO

co

ntr

acts

(P

PP

)

●M

anag

ing

Ag

ent

Co

ntr

acto

r (M

AC

)

Sp

ecia

list

Ser

vice

s:

Fra

mew

ork

Ag

reem

ents

, e.

g.

des

ign

ser

vice

sP

RO

CU

RE

ME

NT

OF

IMP

RO

VE

ME

NT

S A

ND

MA

INT

EN

AN

CE


Categorisation of Major Road Projects (February 2007)

Typ

e MW

TR

W J B

To

tal

No. £

(bn)

No. £

(bn)

No. £

(bn)

No. £

(bn)

No. £

(bn)

EC

I

16 3.88 19 2.20 16 0.76 15 1.58 66 8.42

DB

FO

6

1.77 1

0.08 0 0 0 0 7

1.85

D&

B

6

0.63 10 0.26 6

0.13 17 0.59 39 1.61

Tot

al

28 6.28 30 2.54 22 0.89 32 2.17

112

11.8

8

Ke

y:

MW

= M

oto

rwa

y W

ide

nin

g

TR

W =

Tru

nk

Ro

ad

Wid

en

ing

J

= J

un

cti

on

Im

pro

ve

me

nts

B

= B

yp

as

se

s


Typical Procurement of a Major Highway Scheme (Private Funding)

Task Undertaken by Type of Contract Payment Method

Study work for Scheme Identification Consultants Project Support Framework(PSF)

Target Cost based on timecharges

Assessment ofAlternative Optionsand Public Consultation

Consultants Project Support Framework(PSF)


Development of Preferred Optioninc.

Surveys

Outline Design

EnvironmentalAssessment

Cost Estimates

Draft Order Publication



Public Inquiry and Secretary ofState’s Decision



Detailed Design and Construction,and Operation and Maintenance

Consultants and Contractors inDBFO Company

Design, Build, Finance andOperate (DBFO)

Negotiated Service Payment

Land

acq

uisi

tion


Tranche 1 Works Payment ContractCost Mechanism Award

●A69 Newcastle to Carlisle £9.4m Shadow tolls Jan 1996

●A1(M) Alconbury to Peterborough £128m Shadow tolls Feb 1996

●A417/A419 Swindon to Gloucester £49m Shadow tolls Feb 1996

●M1-A1 Motorway Link, Leeds £214m Shadow tolls Mar 1996

Tranche 1A

●A50/A564 Stoke to Derby Link £20.6m Shadow tolls May 1996

●A30/A35 Exeter to Bere Regis £75.7m Shadow tolls July 1996

●M40 junctions 1-15 £37.1m Shadow tolls Oct 1996

●A168/A19 Dishforth to Tyne Tunnel £29.4m Shadow tolls Oct 1996

Tranche 2●A13 Thames Gateway, London £146m Lane availability Apr

2000(Transferred to T f L in July 2000)

●A1 Darrington to Dishforth £245m Congestion Feb 2003

●A249 Stockbury to Sheerness £100m Congestion Feb 2004

DB

FO

PR

OJ

EC

TS

AW

AR

DE

D T

O D

AT

E


Ke

y B

ene

fits

of

DB

FO

Co

ntr

ac

ts

●F

ost

erin

g d

evel

op

men

t o

f a

pri

vate

sec

tor

road

op

erat

ing

in

du

stry

●B

ette

r o

utt

urn

co

st c

erta

inty

●M

ore

rel

iab

le a

nd

acc

ura

te e

xpen

dit

ure

fo

reca

sts

●T

ran

sfer

of

app

rop

riat

e le

vels

of

risk

to

pri

vate

sec

tor

●Im

pro

ved

par

tner

ship

s b

etw

een

pu

bli

c an

d p

riva

te s

ecto

rs

●P

rovi

de

sco

pe

for

inn

ova

tio

n i

n a

ll a

reas

in

clu

din

g f

inan

ce

●O

vera

ll,

pro

vid

es b

ette

r va

lue

for

mo

ney


Par

t 2

- B

arry

Dre

wet

t –

Pri

vate

ly-F

inan

ced

DB

FO

Pro

ject

s

•T

ypic

al C

on

trac

tual

Arr

ang

emen

ts

•C

on

ges

tio

n M

anag

emen

t P

aym

ent

Mec

han

ism

•S

om

e L

esso

ns

Lea

rnt

•N

ext

Fu

ture

Pri

vate

ly-F

inan

ced

/DB

FO

P

roje

ct (

M25

Lo

nd

on

Orb

ital

)


Typical Contract Structure(A1 Darrington to Dishforth)

Secretary of StateHighways Agency

Department's Agent(FM / PFC)

Department's Representative(Highways Agency)

DBFO Company(RMS)

Contractor (RMG)(AMEC, A. McAlpine, Dragados, KBR)

Designer(Mouchel-Parkman)

Design sub-consultants(KBR, Carl Bro)

Operation and Maintenance(A. McAlpine)

Funders(Shareholders)

(Bond Finance)(Bank Loans)

DBFO Agreement(inc. Direct Agreement)

Finance Company

ConstructionContract

O & M Contract

Design Contract

TY

PIC

AL

CO

NT

RA

CT

UA

L A

RR

AN

GE

ME

NT

S

To

tal N

o. o

f co

ntr

acts

: 16

0


Development of Payment Mechanisms in DBFO Projects

Tranches 1 & 1A

shadow tolls

safety payments

lane closurecharges

congestionpayments

safetyperformance

availability

safetyperformance

A13 D2D & A249

Fu

ture

M25

Lo

nd

on

Orb

ital

lik

ely

to

be

avai

lab

ilit

y-b

ased

mec

han

ismCO

NG

ES

TIO

N M

AN

AG

EM

EN

T P

AY

ME

NT

ME

CH

AN

ISM


Length: 53 km

New D4M motorway: 22 km

2 TPI Schemes

New

or

up

gra

ded

M

oto

rway

C

om

mu

nic

atio

ns

Fac

ilit

ies

thro

ug

ho

ut

Co

ng

esti

on

Man

agem

ent

Pay

men

t M

ech

anis

m

A1

Dar

rin

gto

n t

o D

ish

fort

h D

BF

O P

roje

ct

Wo

rks

cost

: £2

45m

Co

nce

ssio

n p

erio

d:

33 y

ears


Congestion Management Payment Mechanism – D2D Contract

Comprises 2 separate key elements based on:

(a) Active management of traffic congestion(i.e. minimising congestion)

(b) Active management of traffic safety(i.e. minimising Personal Injury Accidents (PIAs))


Allocation of payment amounts and measurement of traffic

● Whole Project Road divided into 50 NO 2 KM LONG CARRIAGEWAY SECTIONS (25 NB

and 25 SB)

● GROSS ANNUAL PAYMENT (as tendered) allocated to whole project road to give

amounts for EACH HOUR on EACH CARRIAGEWAY SECTION pro-rata previous hourly

traffic flows

● VEHICLE SPEEDS and VOLUMES measured AUTOMATICALLY using a MONITORING

SYSTEM based on inductive loop detectors (in carriageway surfacing)

(a) Active Congestion Management


Mo

nit

ori

ng

Sys

tem

Ou

t-s

tati

on

Eq

uip

men

t•

Ind

uct

ive

loo

ps

& G

R M

arks

man

660

co

un

ters

•C

CT

V c

amer

as f

or

veri

fica

tio

n

•D

edic

ated

fib

re o

pti

c ca

ble

s fo

r si

gn

al t

ran

smis

sio

n


Minimum Condition Criteria must be met before any payment made

Co

ng

esti

on

Man

ag

eme

nt

Pa

yme

nts


(b) Active Safety Adjustment

Criteria for Safety Payments or Deductions

Cap

Benchmark

+PIAs

£ Deduction

£ Bonus

C B A B C

-PIAs

Cap

Zo

ne

A –

no

ad

just

men

ts

Zo

ne

B –

en

han

ced

ad

just

men

ts

Zo

ne

C –

sta

nd

ard

en

han

cem

ents

-8 -2 2 8


SOME LESSONS LEARNT

Schemes with large new-build elements more viable (more risk)

Need to reduce tendering costs

Need to reduce tendering / negotiation period

Need for robust reality check, e.g. risk pricing

Need for well-resourced DBFO companies

Need to streamline contractual procedures

Need for appropriate monitoring

Safe roads, Reliable journeys, Informed travellersM

25

Lo

nd

on

O

rbit

al

New

-bu

ild

co

st:

£2b

n

O/A

co

st (

incl

. O

&M

): £

5bn

NE

XT

PR

IVA

TE

LY

-FIN

AN

CE

D /

DB

FO

PR

OJE

CT


ECI DBFO M1

M25 Indicative Programme

Legend:

J1b-3

J5 – 6/7

J16 - 19

J19 - 23

J23 - 27

J27 - 30

M1

Section 3

Section 2

Section 1a

Section 1b

Section 5

Section 4

J6a - 10

Junction 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

ECI DBFO Ongoing

Safe roads, Reliable journeys, Informed travellersSafe roads, Reliable journeys, Informed travellers

Thank You!Thank You!

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s@h

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4 36

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