Modeling government subsidies and project risk for financially non-viable build-operate-transfer (bot) projects

Fen May Liou, Ch-Hpin Huang*, Borliang Chen

*Corresponding author for this work

Research output: Contribution to journalArticle

14 Scopus citations

Abstract

Governments encourage private sector participation in building infrastructure through Build-Operate-Transfer (BOT) agreements. Large projects may be financially non-viable despite their net economic benefits for the host society. Host governments might subsidize initial private investments to create financial feasibility. Small-scale subsidies might not sufficiently reduce project risks to attract private investment; however, large percentage subsidies might result in loose profit structures, discouraging the pursuit of efficiency. This article applies Monte Carlo techniques to data from the Taiwanese West Corridor High-Speed Rail Project to assess the subsidy-risk trade-off relationship. The results provide guidance for public-private negotiations.

Original languageEnglish
Pages (from-to)58-64
Number of pages7
JournalEMJ - Engineering Management Journal
Volume24
Issue number1
DOIs
StatePublished - 1 Mar 2012

Keywords

  • Build-Operate-Transfer
  • Monte Carlo Simulation
  • Multiple Regression Model
  • Net Present Value
  • Project Management

Fingerprint Dive into the research topics of 'Modeling government subsidies and project risk for financially non-viable build-operate-transfer (bot) projects'. Together they form a unique fingerprint.

Cite this