With the Design-Build-Finance-Operate (DBFO) approach, the responsibilities for designing, building, financing and operating are bundled together and transferred to private sector partners. There is a great deal of variety in DBFO arrangements, and especially the degree to which financial responsibilities are actually transferred to the private sector.

One commonality that cuts across all DBFO projects is that they are either partly or wholly financed by debt leveraging revenue streams dedicated to the project. Direct user fees (tolls) are the most common revenue source. However, others ranging from lease payments to shadow tolls and vehicle registration fees. Future revenues are leveraged to issue bonds or other debt that provide funds for capital and project development costs. They are also often supplemented by public sector grants in the form of money or contributions in kind, such as right-of-way. In certain cases, private partners may be required to make equity investments as well.

A Range of Project Sponsors

Another point of departure among DBFO arrangements is the range of organizations that can function as the sponsor. Sponsoring agencies can include:

  • Departments of Transportation;
  • Toll Authorities; and
  • Public Benefit Corporations

In Europe, Latin America, and Asia, where the DBFO approach is commonly used to develop new toll road projects, the debt is usually raised by private concession companies who are fully responsible for designing, building, financing, and operating the projects. Given the ability of public sector agencies in the United States to issue low- interest tax-free debt, it is often more cost-effective for public project sponsors to issue debt than their private sector partners.

Because of this, public project sponsors using the DBFO approach in the United States often issue project debt themselves, but rely on their private partners to study the different options for doing so and to recommend a final financing package. In such cases, the revenue risk may be passed on to the private partner or retained by the public project sponsor.


DBFO procurements can be expected to shift a great deal of the responsibility for developing and operating surface transportation infrastructure to private sector partners. In nearly all cases, the public agency sponsoring a project would retain full ownership over the project. However, as with the BOT approach, the private partner would have design-build responsibilities and would then maintain and operate the infrastructure for a fixed fee. Depending on the revenue sources used and revenue risk allocation, private partners may or may not be exposed to revenue risks.