NEC4 Design Build and Operate Contract (DBO)

The NEC4 Design Build and Operate Contract (DBO, shown as DBOC on NEC's own product page) appoints one contractor to design and build an asset and then operate or maintain it for a defined Service Period. The client funds the asset. It is not the same as NEC4 design and build, which has no form of its own and is simply an ECC with the Contractor taking on design.

This page helps you decide which of those you need. All the forms are listed under NEC contract types.

Design and build, or design build operate?

Question	ECC with Contractor design	DBO
What ends the Contractor's main role?	Completion, then the defects period	The end of the Service Period, after an operating phase
Who administers it?	Project Manager and Supervisor	Service Manager
How is performance tested?	Against the Scope at Completion	Also through targets during operation, in a performance table
Payment	Main Options A to F	A Price List that can mix prices and Defined Cost
Who funds it?	Client	Client

If you only need the Contractor to design and build, use the ECC and set out the design responsibility in the Scope. The guide on the Contractor's design covers how that works, and X15 deals with limiting design liability.

What it covers

• Both phases in one contract. The Service Period runs through construction and operation, so one contract manages the whole span.
• Existing assets too. It can be used where the Contractor operates an existing asset during an upgrade or extension.
• Flexible payment. The core clauses allow a price-based, cost-based or mixed payment strategy, set up through a Price List. A Schedule of Cost Components is included.
• Performance incentives. A performance table rewards meeting or beating operational targets.
• Design acceptance. The Contractor sends its design to the Service Manager, and work relying on it follows acceptance.

Options available

NEC lists X3, X4, X8, X9, X10, X13, X14, X18 and X23, with W1 and W2, Y(UK)2, Y(UK)3 and Z clauses. Options you may expect from the ECC, such as X5, X6, X7, X15 and X16, aren't used. NEC describes payment through the Price List, so don't expect to pick from the ECC's Options A to F. Check your edition when you plan your procurement.

When it is appropriate

The DBO works when the client wants a single point of responsibility for both how an asset is built and how it performs. Common candidates are:

• Process assets such as water or waste treatment plants, where design choices drive running costs
• Equipment-heavy assets where the supplier's operating knowledge is valuable
• Assets the client doesn't want to run, or lacks the staff to run
• Projects where long-term outcomes matter more than a low construction price

It is less suitable when:

• You need private funding, which this contract does not provide
• The operator is already in place, or the asset is a simple building with routine upkeep. Separate contracts, such as an ECC followed by a TSC, may suit better
• The client can't define targets it can measure over the long term
• Few bidders can offer the combined capability, which limits competition

Things to think through early

1. Length of the Service Period. Long enough for the Contractor's design choices to show up in running costs, but realistic for pricing. X23 lets you extend it.
2. Performance table. Targets should be things the Contractor controls. If external demand changes the result, the incentive stops working.
3. Handback condition. Say in the Scope what state the asset should be in when the period ends.
4. Consortium structure. A builder and an operator will often team up. Check who signs and how the liability is shared between them.
5. Roles. The Service Manager needs to handle both construction and operating matters, which are different skills. NEC runs a specific accreditation for this role, and you may want a team, not just one person.

A fictional example

A local authority wants a new sludge treatment plant. Running costs matter over the plant's life, and it has no in-house operators. It appoints a single contractor for a design and construction phase followed by an illustrative ten years of operation. The Price List combines lump sums for the design and construction with cost-based payment for operating items, and the performance table sets targets for throughput and availability. The contractor's interest in low running costs is built in from the first design meeting, which is the main reason for using this form.

Related guides

• NEC Contract Types: Which Form Do You Need?
• NEC4 Alliance Contract (ALC)
• NEC4 Facilities Management Contract
• NEC4 Framework Contract (FC)
• NEC4 Supply Contract (SC)
• NEC4 Supply Short Contract (SSC)

This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.