E18 main page

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.