Risks and Mitigation Measures in Build-Operate-Transfer Projects
Infrastructure investments are important in developing
countries, it will not only help to foster the economic growth of a
nation, but it will also act as a platform in which new forms of
partnership and collaboration can be developed mainly in East Asian
countries. Since the last two decades, many infrastructure projects
had been completed through build-operate-transfer (BOT) type of
procurement. The developments of BOT have attracted participation
of local and foreign private sector investor to secure funding and to
deliver projects on time, within the budget and to the required
specifications. Private sectors are preferred by the government in
East Asia to participate in BOT projects due to lack of public
funding. The finding has resulted that the private sector or promoter
of the BOT projects is exposed to multiple risks which have been
discussed in this paper. Effective risk management methods and
good managerial skills are required in ensuring the success of the
project. The review indicated that mitigation measures should be
employed by the promoter throughout the concession period and
support from the host government is also required in ensuring the
success of the BOT project.
[1] World Bank, (2008) PPI Database . Available from:
http://ppi.worldbank.org/explore/ppi_exploreRegion.aspx?regionID=2(
Accessed on 17 January 2010 )
[2] T. Merna and C. Njiru, Financing Infrastructure Projects. Thomas
Telford, London, 2002
[3] T. Merna and F. Al-Thani, Corporate risk management: An
organizational perspective. Wiley, London, 2005
[4] J. Raftery, Risk analysis in project management. E&FN Spon, London,
1994
[5] C.B. Chapmen, Risk in investment, procurement and performance in
construction. E&FN Spon, Chapman & Hall, London, 1991
[6] N.J. Smith, Appraisal, risk and uncertainty. Thomas Telford, London,
2003
[7] C. Walker and A.J. Smith, Privatized infrastructures: the BOT
approach. Thomas Telford, London, 1996
[8] J. Delmon, BOO/BOT projects: A commercial and contractual guide.
Sweet & Maxwell Limited, London, 2000
[9] T.M. Zayed, and L.M. Chang, "Prototype Model for build-operatetransfer
risk assessment." Journal of Management Engineering, 18 (1),
p. 7-16, 2002
[10] T. Merna, "Financial risk in the procurement of capital and infrastructure
projects." International Journal of Project and Business Risk
Management, 2(3), p. 256-270, 1998
[11] L. Bing, R.L.K. Tiong, W.W. Fan and D.A.S. Chew, "Risk management
in international construction joint ventures." Journal of Construction
Engineering and Management, 125(2), p. 277-284, 1999
[12] S.Q. Wang, R.L.K. Tiong, S.K. Ting and D. Ashley, (2000), "Foreign
exchange and revenue risk: analysis of key contract clauses in China-s
BOT project." Construction Management and Economics, 18(3), p. 311-
320, 2000
[13] S.Q. Wang, R.L.K. Tiong, S.K. Ting and D. Ashley, "Evaluation and
management of foreign exchange and revenue risks in China-s BOT
project." Construction Management and Economics, 18(2), p. 197-207,
2000
[14] A. Wibowo, A., "Valuing guarantees in a BOT project." Engineering,
Construction and Architectural Management, 11(6), p. 395-403, 2004
[15] S.M. Levy, Build operate transfer: paving the way for tomorrow-s
infrastructure, John Wiley & Sins Inc. Canada, 1996
[16] K.C. Lam, and W.S. Chow, "The significance of Financial risks in BOT
procurement Building." Building Research and Information, 27(2), p.
84-94, 1999
[17] Y.Y.L. Florence and H. Linda, "Risks faced by Singapore firms when
undertaking construction projects in India." International Journal of
Project Management, 24(3), p. 261-270, 2006
[18] J.E. Schaufelberger and I. Wipadapisut, "Alternate financing strategies
for build-operate-transfer projects." Journal of Construction
Engineering and Mangement, 129(2), p. 205-213, 2003
[19] S. Ye and R.L.K. Tiong, "Effects of concession period design on
completion risk management of BOT projects." Journal of Construction
Management and Economics, 21(5), p. 471-482, 2003
[20] K.T., Yeo and R.L.K Tiong, "Positive management of differences for
risk reduction in BOT projects-." International Journal of Project
Management, 18(4), p. 257-265, 2000
[21] R.L.K. Tiong, "BOT projects: risks and securities." Construction
Management and Economics, 8(3), p. 315-328, 1990
[22] M.F. Dallas, Value and risk management: A guide to best practice.
Blackwell Publishing, Singapore, 2006
[1] World Bank, (2008) PPI Database . Available from:
http://ppi.worldbank.org/explore/ppi_exploreRegion.aspx?regionID=2(
Accessed on 17 January 2010 )
[2] T. Merna and C. Njiru, Financing Infrastructure Projects. Thomas
Telford, London, 2002
[3] T. Merna and F. Al-Thani, Corporate risk management: An
organizational perspective. Wiley, London, 2005
[4] J. Raftery, Risk analysis in project management. E&FN Spon, London,
1994
[5] C.B. Chapmen, Risk in investment, procurement and performance in
construction. E&FN Spon, Chapman & Hall, London, 1991
[6] N.J. Smith, Appraisal, risk and uncertainty. Thomas Telford, London,
2003
[7] C. Walker and A.J. Smith, Privatized infrastructures: the BOT
approach. Thomas Telford, London, 1996
[8] J. Delmon, BOO/BOT projects: A commercial and contractual guide.
Sweet & Maxwell Limited, London, 2000
[9] T.M. Zayed, and L.M. Chang, "Prototype Model for build-operatetransfer
risk assessment." Journal of Management Engineering, 18 (1),
p. 7-16, 2002
[10] T. Merna, "Financial risk in the procurement of capital and infrastructure
projects." International Journal of Project and Business Risk
Management, 2(3), p. 256-270, 1998
[11] L. Bing, R.L.K. Tiong, W.W. Fan and D.A.S. Chew, "Risk management
in international construction joint ventures." Journal of Construction
Engineering and Management, 125(2), p. 277-284, 1999
[12] S.Q. Wang, R.L.K. Tiong, S.K. Ting and D. Ashley, (2000), "Foreign
exchange and revenue risk: analysis of key contract clauses in China-s
BOT project." Construction Management and Economics, 18(3), p. 311-
320, 2000
[13] S.Q. Wang, R.L.K. Tiong, S.K. Ting and D. Ashley, "Evaluation and
management of foreign exchange and revenue risks in China-s BOT
project." Construction Management and Economics, 18(2), p. 197-207,
2000
[14] A. Wibowo, A., "Valuing guarantees in a BOT project." Engineering,
Construction and Architectural Management, 11(6), p. 395-403, 2004
[15] S.M. Levy, Build operate transfer: paving the way for tomorrow-s
infrastructure, John Wiley & Sins Inc. Canada, 1996
[16] K.C. Lam, and W.S. Chow, "The significance of Financial risks in BOT
procurement Building." Building Research and Information, 27(2), p.
84-94, 1999
[17] Y.Y.L. Florence and H. Linda, "Risks faced by Singapore firms when
undertaking construction projects in India." International Journal of
Project Management, 24(3), p. 261-270, 2006
[18] J.E. Schaufelberger and I. Wipadapisut, "Alternate financing strategies
for build-operate-transfer projects." Journal of Construction
Engineering and Mangement, 129(2), p. 205-213, 2003
[19] S. Ye and R.L.K. Tiong, "Effects of concession period design on
completion risk management of BOT projects." Journal of Construction
Management and Economics, 21(5), p. 471-482, 2003
[20] K.T., Yeo and R.L.K Tiong, "Positive management of differences for
risk reduction in BOT projects-." International Journal of Project
Management, 18(4), p. 257-265, 2000
[21] R.L.K. Tiong, "BOT projects: risks and securities." Construction
Management and Economics, 8(3), p. 315-328, 1990
[22] M.F. Dallas, Value and risk management: A guide to best practice.
Blackwell Publishing, Singapore, 2006
@article{"International Journal of Architectural, Civil and Construction Sciences:54865", author = "Syed Kamarul Bakri Syed Ahmad Bokharey and Kalaikumar Vallyutham and Narayanan Sambu Potty and Nabilah Abu Bakar", title = "Risks and Mitigation Measures in Build-Operate-Transfer Projects", abstract = "Infrastructure investments are important in developing
countries, it will not only help to foster the economic growth of a
nation, but it will also act as a platform in which new forms of
partnership and collaboration can be developed mainly in East Asian
countries. Since the last two decades, many infrastructure projects
had been completed through build-operate-transfer (BOT) type of
procurement. The developments of BOT have attracted participation
of local and foreign private sector investor to secure funding and to
deliver projects on time, within the budget and to the required
specifications. Private sectors are preferred by the government in
East Asia to participate in BOT projects due to lack of public
funding. The finding has resulted that the private sector or promoter
of the BOT projects is exposed to multiple risks which have been
discussed in this paper. Effective risk management methods and
good managerial skills are required in ensuring the success of the
project. The review indicated that mitigation measures should be
employed by the promoter throughout the concession period and
support from the host government is also required in ensuring the
success of the BOT project.", keywords = "BOT project, risks management, concessionaire,consortium.", volume = "4", number = "3", pages = "69-7", }
