Contract, BOOM

A particular type of contract in which one party builds, owns, operates and maintains [BOOM] an asset on behalf of a customer. The benefits for the customer are that they can contract for and pay for, the output of the asset, rather than paying the construction cost upfront, as well as avoiding bearing the risk of poor construction control, poor capacity availability, and maintenance costs. As an example, the customer may award a contract for power generation to a contractor. The customer would pay only for the power supplied and the contractor would not only supply the asset, in this case design and build of a power station, but also assume responsibility for operating the asset. This changes the contract from supply of an asset to the provision of a service and the customer gains the benefit of the output of the power station, without the problems associated with operating and running the power station. See also Public Private Partnership.