Risk exposure of the parties to build-operate-transfer (BOT)‎ methods of procurement

Abstract EN

-The Build-Operate-Transfer (BOT) array of methods are extremely complex arrangements.

They pose risks not experienced previously in the construction industry.

They unveil several new parallel approaches to public-private partnership.

The different faces of BOT (such as BOOT, BOO, ....

etc.) mainly differ in the precise mechanisms of ownership, usage rights, and obligations.

Each host country, each infrastructural sector, and indeed each specific project has its own risk profile.

Challenges arise from the markedly increased project variables, much longer time horizons, greater vulnerability to external risks, and multiple project participants (including specialist financiers and operators), with multi-attribute success criteria.

The private sector pursues the financial benefit generated from the project, while the government is concerned with the socio-economic benefit.

At the same time, all the project risks are allocated between them.

This paper found that political risks were the most difficult to handle in comparison with financial risks.

Promoters, lenders and government risk exposures are discussed.

This paper concludes that the most important barrier or limitation faced by central and local agencies is “lack of knowledge of and experience in the BOT concept”.

Expert knowledge is scattered in papers by researchers, it is useful to solicit this expert knowledge, consolidate it, and code it into a knowledge base within an appropriate framework to improve future BOT procurement process.

An important recommendation is to increase transparency in the selection process.