Because of current tax laws, if public tax-free financing is involved, the contract period for operation has usually been limited to five years with provisions for renewal. Contract Operation the operation of an existing publicly owned and operated facility is transferred to a private party. There is increasing interest in and use of these approaches for several reasons. There are increasing pressures to reduce costs and shorten construction schedules. These methods offer increased flexibility for concurrent design and construction, and they expedite the preparation of bid packages, bid solicitation, and contract negotiation.
Public agencies experience less administrative costs by working with only one contractor.
Many public agencies view their risks as reduced because contractors are willing to assume price and performance risks. Multiple layers of profit and overhead are reduced. The responsibilities for delays, nonconformance, and warranty work are more clearly identified. It is both. However, all of these approaches have created new opportunities for design professionals that traditionally have provided conventional design and construction-related services.