Valuation of multi-stage BOT projects involving dedicated asset investments: A sequential compound option approach

Yu-Lin Huang*, Chai Chi Pi

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

The valuation of multi-stage build-operate-transfer projects is not a trivial task. It needs to deal with uncertain project values in future expansions and the possibility of expansions or abandonment in the presence of project risks. The valuation problem becomes more difficult when multi-stage projects require upfront and intermediate dedicated asset investments for future expansions. Dedicated asset investments may or may not create project values, depending on whether future expansions could be justified and realized. A sequential compound option model is proposed to tackle these important valuation issues.

Original languageEnglish
Pages (from-to)653-666
Number of pages14
JournalConstruction Management and Economics
Volume27
Issue number7
DOIs
StatePublished - 19 Nov 2009

Keywords

  • Build-operate-transfer
  • Valuation

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