Operational or service contracts and ‘Facilities Management’

Contracts to operate and maintain works not only form part of BOT, BOOT
and PFI contracts mentioned in Sections 1.4 and 1.7 above, but are increasingly being adopted separately. Various terms apply having different shades of meaning. General terms are Operational Agreements and Facilities Management (FM). If only certain operations are undertaken by a contractor this is termed Contracting Out. Various forms of FM Contract can be let under which a management contractor is employed to run, or advise and direct existing staff how to operate, a facility at maximum efficiency, or how to undertake construction of a new facility, tutoring staff in new techniques.
Leasing Agreements are somewhat different in that they comprise a contractor taking over and running the operation of some works for a period for a fee, or for part of the income from sales of the works output. Such an agreement can also require the contractor to maintain or refurbish plant and equipment, and introduce new equipment, so that the contractor has a financial input which the terms of the agreement need to cover. In many French cities, leasing – termed Affermage – has been widely used for many years for the operation of waterworks, or wastewater systems. The contracts are for a term of years. The advantage is that a contractor who specializes in such work has a wider range of specialist staff to draw upon than a small local authority.
Concessionary Agreements are those used where PFI is undertaken, as described in Section 1.7 above.
Facilities Management Contracts can cover the running of practically anything; from providing personnel to maintain a prison, school or sewerage system, to providing janitors and window cleaners. Such contracts are increasingly being undertaken by civil engineering contractors and even some consulting engineering firms, because of their management skills.