Development projects through build-operate schemes: Their role and place in developing countries

Abstract

Developing countries need to embark on extensive infrastructure provision in order to achieve and sustain economic growth and aspire towards the standards of the developed economies. In their quest to achieve this objective, developing countries face two major constraints: unavailable indigenous technological know-how and financial resources. Traditional methods of project development, funding, implementation, management and operation do not fully alleviate these constraints. The funding agencies and foreign donors have their limits which are often lower than development requirements. Methods used to procure projects and implement them often imply that consultants and contractors (sometimes financiers) are not always committed to the successful operation of projects and, furthermore, responsibilities are difficult to assign when things go wrong. In an attempt to address the foregoing, build-operate schemes are the latest method adopted in developing infrastructure projects. This paper focuses on developing countries; it explores and discusses the following: 1. • The importance of infrastructure project development in developing countries. 2. • The shortcomings of traditional project development methods. 3. • Restricting and constraining factors for developing countries in undertaking development projects. 4. • The various types of build-operate schemes that exist. 5. • The strengths, weaknesses, opportunities and threats of build-operate schemes. 6. • Problems experienced in implementing build-operate schemes in developing countries. 7. • A framework for selecting potential build-operate schemes. Not all projects can be undertaken successfully using a build-operate paradigm. The flow chart for build-operate project selection covers the issues of the political and economic risk, the issue of national security, the market pricing structure, anticipated project returns and finally, guarantees for facility or product usage. If these factors are taken into consideration then build-operate schemes can be successfully implemented in developing countries. Their potential role is too great to be empirically quantified and these countries will have the opportunity to achieve quantum leaps in development through such schemes.