Prototype Model for Build-Operate-Transfer Risk Assessment

Abstract

The build-operate-transfer ~BOT! approach for project delivery, where the private sector has to finance, design, build, operate, and maintain the facility and then transfer it to the government after a specified concession period, is now gaining widespread popularity in developing countries. Compared with conventional project delivery methods, BOT sponsors expose themselves to a high risk, so that special attention must be paid to analyzing and managing risks. The identification, analysis, and allocation of various types of risks are an important aspect for the validation of privately promoted infrastructure projects. The BOT risk model presented in this paper is a prototype evaluation model that provides a logical, reliable, and consistent procedure for assessing the BOT project risk. The proposed model introduced the BOT risk index ~F!, which relied on the actual performance of eight main BOT risk areas. Two different modeling approaches were used in constructing this index: a new developed and an adapted Dias and Ioannou model. Not only can this index be used for BOT projects' risk evaluation, but also for ranking them to select the lowest risk project as well.