The Europe Highway E18 Muurla - Lohja
Procurement process
The Ministry of Transport and Communications� administrative sector
aims to develop its investment procurement procedures and modes of operation,
assisting the utilisation of innovations and product development carried out by
designers and contractors, and thus increasing the productivity and
profitability of the administrative sector and the sector as a whole. The
investment procurement models aim to combine planning, construction and
maintenance into one whole. These projects are so-called comprehensive service
projects, whose procurement procedures are called the life cycle responsibility
model.
In the life cycle responsibility model, a state or other public authority is the
purchaser and takes competitive offers from service providers who will be
responsible for the planning, funding, construction and agreement-period
maintenance of the project. The agreement between the purchaser and service
provider is called a service agreement.
In order to realise the services, the service provider has right of use and
right of possession over the land used in the project for the duration of the
agreement period. After the agreement period has ended, these rights will be
transferred to the purchaser. The service provider has an obligation to carry
out all tasks, measures, and material and equipment acquisitions needed to
produce the agreed-upon services. The service provider�s obligation begins
when the service agreement comes into force. The service provider is responsible
for the investment being available for use from implementation on until the end
of the agreement period.
The
principle behind the life cycle responsibility model
(pdf)
Finnra�s
E18 Muurla-Lohjanharju project has started a procurement procedure for
converting the Muurla � Lohja portion of the Europe Highway E18 (highway 1)
into a motorway, and for its maintenance with one service agreement. The
procurement procedure follows the life-cycle model, which is a Finnish
application of the Public Private Partnership model (PPP) commonly used
internationally. The agreement
period is 25 years - that is, from 2005 to 2030.
In
the first supplementary budget of the State, the proposed order authorisation
for the project is EUR 700 million, of which the construction is estimated to
account for EUR 335 million. Payments to the contractor will begin at the time
the road or a part thereof is opened for traffic. The targeted times of opening
the motorway for traffic are as follows:
- Muurla
� Lahnaj�rvi portion: autumn 2008
- Lahnaj�rvi
� Lohja portion: autumn 2009
Procurement schedule (jpg)
Life-cycle model - a Finnish PPP application
The
Finnish Government�s Ministerial Committee for Economic Policy decided in
February 2004 that the procurement model used for the E18 Muurla - Lohja
motorway shall be the life-cycle model.
The
life-cycle model is a Finnish application of the PPP model (Public Private
Partnership), which is based on a partnership between the public and private
sectors, and used internationally. In this model the client orders an entity of
services from the service provider. The agreement signed between the client and
the service provider is called a service
agreement.
In
the life-cycle model the service
provider is responsible for the construction planning for the project, its
funding, building and service, and maintenance during the long-term period of
agreement. The client pays service fees. Road tolls will not be applied. The
agreement period is 25 years - that is, from 2005 to 2030 for the Muurla �
Lohja project.
During
the period of agreement the service provider holds the rights of use and
possession for the land prescribed in the project for the implementation of the
comprehensive service. After the period of agreement the investment as property
and possession will be assigned to the client. The client defines the project
primarily as the required service levels, and partly as technical and structural
requirements. The service provider agrees to perform all work, measures, and
material and equipment acquisitions necessary for the completion of the agreed
comprehensive service. The obligation to execute the work starts on the date the
service agreement takes effect. The service provider ensures that the investment
is available from the time of commissioning to the end of the period of
agreement.
The use of the life-cycle model enables
improved utilisation of the innovations and product development of consultants
and constructors, thus improving the productivity and viability of the sector.
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