A Stochastic Concession Model for Infrastructure Projects Under Build-Operate-Transfer Schemes

doi:10.1007/s12204-016-1728-x

Abstract

Abstract: Concession period is a key factor in the arrangement of a build-operate-transfer (BOT) contract. This paper proposes a stochastic concession period model for infrastructure projects under a BOT scheme, which takes into account the impact of risks and the risk attitudes of the private investor and the government. A hypothetical case is simulated by using the Monte Carlo simulation method to illustrate the proposed model. The results indicate that even for a project with the same estimations, the concession interval can be different and depends a lot on the risk attitudes of the private investor and the government. The proposed model provides a more reasonable concession interval based on which a specific concession period can be obtained through negotiation between the two parties.

Key words: build-operate-transfer (BOT)| infrastructure projects| concession period| risk attitudes| Monte Carlo simulation

摘要： Concession period is a key factor in the arrangement of a build-operate-transfer (BOT) contract. This paper proposes a stochastic concession period model for infrastructure projects under a BOT scheme, which takes into account the impact of risks and the risk attitudes of the private investor and the government. A hypothetical case is simulated by using the Monte Carlo simulation method to illustrate the proposed model. The results indicate that even for a project with the same estimations, the concession interval can be different and depends a lot on the risk attitudes of the private investor and the government. The proposed model provides a more reasonable concession interval based on which a specific concession period can be obtained through negotiation between the two parties.

关键词: build-operate-transfer (BOT)| infrastructure projects| concession period| risk attitudes| Monte Carlo simulation

CLC Number:

F 224

ZHU Yinghua (朱莹华), XU Feng* (徐峰), HU Hao (胡昊). A Stochastic Concession Model for Infrastructure Projects Under Build-Operate-Transfer Schemes[J]. Journal of shanghai Jiaotong University (Science), 2016, 21(3): 320-327.

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