International Construction Law Review
DBOM CONTRACTS IN AUSTRALIA
ANDREW CHEW AND GEOFF WOOD
Partners, Baker & McKenzie, Sydney
1. GENERAL
1.1 Introduction
Over the last 15 years, there has been a marked increased in co-operation between governments and the private sector for the development, financing and operation of an array of infrastructure ranging from tollroads, water and sewerage treatment plants, desalination plants, sewerage outfall tunnels, power stations, hospitals, schools and prisons to defence related facilities and equipment. This form of co-operation is commonly known as public-private partnerships or PPPs.
In Australia, many PPP projects to date have been largely based on the DBFO (design-build-finance-operate) model and project financed by the private sector.
However, with the changing financial climate following the Global Financial Crisis, there has been a shift towards an operational model that utilises public sector financing rather than a PFI PPP approach, such as the DBOM or DCOM (design-build/construct-operate-maintain) model.1
DBOM contracts, while transferring responsibility for the construction, operation and maintenance of the infrastructure to the private sector, allow governments to maintain both legal and economic ownership of that infrastructure. The DBOM model (or variants of it) has been used for various types of projects in Australia over the last 10–15 years. In the late 1980s, it was used by the Roads and Traffic Authority in the Silverwater Road Extension Project to counter design-life problems encountered on earlier design-and-construct-only road projects.
Internationally, the DBOM model (or its variants) has been used for various types of projects. In the United States, that procurement method has been used for rail transit projects, automated airport movers, water treatment plants and highway projects.2 In Europe, the model has been used in various privatised rail networks and highways. A recent DBOM
1 For the purposes of this paper, we have used the DBOM acronym.
2 US Dept of Transportation, Federal Highway Administration, Case Studies of Transportation Public-Private Partnerships around the World (July 2007). DBOM/DBFO projects include: Hudson-Bergen Light Rail Transit Line in New Jersey; Las Vegas Monorail and Seattle monorail project; various automated airport people movers (AMPs); the Tolt and Cedar River water treatment plants in Seattle; Route 3 North in Boston; Massachusetts Capital Belt HOT Lanes, South Bay Expressway (SR125); Research and Technology Building, University of Washington Campus.
The International Construction Law Review [2011
276