Glossary of Terms

Availability charge

The charge payable by the Department to Newcastle Estate Partnership for space provided. The space must pass certain objective tests to be deemed "available".

Change of law risk

The risk that future changes in legislation, for example, health and safety law, may lead to higher costs or loss of income for the owner of the building.

Condition payment

The charge payable by the Department to NEP for the condition of the space occupied. The condition payment covers building maintenance, mechanical and electrical and other types of maintenance, and insurance.

Crown Build

A building project where a government body commissions and finances construction. The public sector retains the risk that buildings will not be delivered on time or to cost.

Dilapidations

Disrepair on a leased property for which the outgoing tenant must reimburse the landlord.

Do Minimum Option

Option appraised by clients in comparison to Private Finance deals when insufficient capital funding is available for a redevelopment project. Assumes continued occupation of the existing premises with the only essential repairs or replacement.

Facilities management

Management of services relating to the operation of a building. Includes such activities as maintenance, security, catering and external and internal cleaning.

Force majeure

Events over which the parties to the contract have little control, but which could have serious impacts on performance of the contract. These may include war, rebellion, nuclear explosion, earthquakes and pressure waves from aircraft.

Full Repair and Insure Lease

Lease where the tenant agrees all internal and external repairs and all related insurance. It is the standard form of commercial lease in the United Kingdom.

Latent defect

A defect in retained buildings which had not been detected before contract signature; or a defect which emerges after construction in the new buildings.

Lease receivables funding

A method of funding a construction project whereby a bank pays a lump sum to the owner of the property for the right to receive future lease payments from tenants occupying the building. The owner uses the lump sum it receives to pay off debts incurred during construction of the building.

Newcastle Estate

Properties owned or leased by the Department of Social Security and its agencies in the Newcastle upon Tyne area. Before the signature of the Private Finance deal, the Newcastle Estate comprised 12 sites.

Opportunity Cost Rentals

Charges levied by the Treasury on departments occupying freehold land and buildings. A non-cash transfer between Treasury and Departments.

Public sector comparator

An estimate of what a project would cost if traditional public sector procurement methods were used.

Reserve bidder

The second place bidder retained by the client to replace the preferred bidder in the event of a breakdown in negotiations with the first place preferred bidder.

Risk transfer

The passing of risk under the contract between the public sector and the Private Finance service provider.