A Decision Support System for the determination of concession period length in transportation project under BOT contract

Abstract

The determination of the concession period length directly affects both the involved government and private investors' financial returns and risks in a Build–Operate–Transfer project. In existing methods, the concession period is usually determined by the concessionaire depending on their expected investment return, or predicted without comprehensive analysis of the influential factors. In view of this, a Decision Support System for concession period length determination (CPLD) was developed and, as demonstrated herein provides a possible way of solving the concession period problem, especially under the impact of influential factors. The influential factors were firstly investigated. Then the overall model was developed using the Monte Carlo method. A dataset of a simulated highway project was employed to verify the model. The results show that the developed model can generate a set of alternatives, among which a reasonable one could be selected after balancing the interests of both sides.