The VFM Evaluation Analysis Of BOT Wastewater Treatment Project Based On Risk Allocation

With the Sustainable development of China’s economy, the size of the urbanization is increasing, sewage emissions discharged by enterprises and residents are increasing year by year. On the contrary of the increasing demand for infrastructure, the government’s fiscal budget couldn’t keep up with the pace of economic development. Therefore, BOT mode has been widely used in sewage treatment projects. Although the first BOT project began as early as in1984, there is almost no single standard for performance evaluation of BOT project. Some of the existing evaluation methods focus from the external evaluation, on the one hand, these methods does not consider the importance of risk allocation, on the other hand, the concept that evaluating BOT mode from the point of view of the value for money (VFM) hasn’t taken shape. From the existing wastewater treatment project and other BOT project, some failures have emerged, hence, it become an urgent problem to evaluate on the performance of BOT mode.The main purpose of this study is to have a detailed analysis of the risk management process of the BOT wastewater treatment project, then to build the VFM evaluation model for BOT sewage treatment project in China by learning from foreign VFM evaluation model based on the results of risk allocation.Firstly, after organizing the related theory of Risk management of BOT wastewater treatment project and summarizing the existing methods of the performance evaluation of BOT, it suggests that risks have a significant impact on project costs, benefits, and all, hence, reasonable risk allocation plays an important role in the performance evaluation of BOT wastewater treatment project. In addition, the performance evaluation of china’s BOT project is scattered and unsystematic.Therefore, in the following content, the risk factors are identified through the literature research and case studies in the light of the characteristics of BOT project and the sewage treatment project; the risk quantification results are calculated using triangular fuzzy number and set-valued statistics method; the proportion of risk allocation is determined through expert survey.Furthermore, other indicators of the value for money evaluation model are distinguished, which take into account of China’s laws and regulations and the specific situation of the sewage treatment project. For example, the costs of raw PSC and competitive neutrality. Now, the value for money evaluation model of BOT wastewater treatment project has been completed.Finally, for applying the value for money evaluation model, some basic data is got from two wastewater treatment projects in Dalian. The results show that, based on the risk allocation results analyzed by this paper, government departments can transfer most of the risk to the private sector in BOT mode, the overall social benefits are improved, and BOT mode also has a comparative advantage compared to the traditional way in terms of the project cost.