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A stochastic concession model for infrastructure projects under build-operate-transfer schemes

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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.

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Authors and Affiliations

  1. Stake Key Laboratory of Ocean Engineering; School of Naval Architecture, Ocean & Civil Engineering, Shanghai Jiaotong University, Shanghai, 200240, China

    Yinghua Zhu  (朱莹华), Feng Xu  (徐 峰) & Hao Hu  (胡 昊)

Authors
  1. Yinghua Zhu  (朱莹华)
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  2. Feng Xu  (徐 峰)
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  3. Hao Hu  (胡 昊)
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Corresponding author

Correspondence to Feng Xu  (徐 峰).

Additional information

Foundation item: the Research Project Ministry of Housing and Urban-Rural Development of PRC (No. 2011- 123-22), and Fund of China International Contractors Association

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Zhu, Y., Xu, F. & Hu, H. A stochastic concession model for infrastructure projects under build-operate-transfer schemes. J. Shanghai Jiaotong Univ. (Sci.) 21, 320–327 (2016). https://doi.org/10.1007/s12204-016-1728-x

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  • DOI: https://doi.org/10.1007/s12204-016-1728-x

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