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Akbiyikli, R and Eaton, D (2006) Operation and maintenance (O&M) management in PFI road projects in the UK. In: Boyd, D (Ed.), Proceedings 22nd Annual ARCOM Conference, 4-6 September 2006 Birmingham, UK. Association of Researchers in Construction Management, Vol. 1, 393–402.
- Type: Conference Proceedings
- Keywords: concession; payment mechanism; performance; availability; SPV
- ISBN/ISSN: 0 9552390 0 1
- URL: http://www.arcom.ac.uk/-docs/proceedings/ar2006-0393-0402_Akbiyikli_and_Eaton.pdf
Private Finance Initiative (PFI) projects are designed to fund long-term infrastructure and public services. A typical PFI road scheme involves the public sector client (Granting Authority), the private sector partner - Special Purpose Vehicle (SPV)-, the financial lenders, the road constructor and his supply chain, technical advisers (legal, financial, technical) and the Operation and Maintenance (facilities) Management Company.The main contracting party from the private sector side in a PFI road procurement mechanism is the SPV. The SPV must ensure that every design and construction of a road in respect of O & M shall be carried out in accordance with the requirement of Project Agreement (PA); in accordance with all statutory requirements and Environmental Statement; in accordance with the road project's Quality Plan; and in accordance with Good Industry Practice in order to satisfy the Granting Authorities Requirements.The Operation and Maintenance is the longest phase of PFI road project, the most important phase because the service and payment is created. The payment of the unitary fee is conditional on the SPV meeting certain "performance" and "availability" requirements set out in the PFI contract. The fee can be reduced if these standards are not met. This practice of "deductive payments" and "non-performance" is one of the main justifications for PFI, described by the UK government as transferring operational and maintenance risks to the private sector in a PFI road project. This paper will examine the current O&M management practice and will propose a conceptual framework for the O&M management practice in PFI road projects in the UK based upon two empirical case studies detailing physical and functional performance as the critical O&M criteria. The conceptual framework identifies that the functional and physical performance requirements need to be considered at the beginning of the life-cycle of the project and O&M has to be focused on delivery of the service by minimizing operation and maintenance expenses and maximizing the quality of services and satisfying the end-users' needs.