Glossary of Terms

Availability payment

The portion of the unitary payment which is related to availability of the Embassy.

Conventional/traditional procurement

A contract in which the Department, using Government finance, pay the supplier for construction of an asset. Such projects are paid for in full by completion of construction. The provision of services is dealt with separately.

Cover ratios

Cover ratios are standard tools used in the financial appraisal of projects. The ratios measure the extent to which current and future liabilities to lenders are covered by available cash flows.

Facilities management services

Provision of a full range of building-related services.

Liquidated damages

Financial compensation payable by a supplier in the event of delays during a construction project.

Net Present Cost

The net present cost of the contract price represents the amount that would have to be invested at the start of the contract to fund the expected future cash payments which the FCO will be required to make.

Novation agreement

The agreement covering the transfer of the Department's existing contracts with the architect and consulting engineers to the supplier.

Output specification

The specification of the Department's requirements in terms of the desired outputs rather than inputs.

Private Finance Initiative

A policy introduced by the Government in 1992 to harness private sector management and expertise in the delivery of services.

Preferred bidder

A bidder selected from the shortlist to carry out exclusive negotiations with the Department.

Public Sector Comparator

An estimate of what the project would cost if conventional procurement methods were used as an alternative to a private finance contract. This helps in assessing whether the private finance contract offers better value for money.

Risk transfer

The passing of risk normally borne by the Department to the supplier.

Unitary payment

A single payment for the provision of accommodation and associated services.