Research On The Decision-making Model Of The Concession Period Of BOT Projects Under Uncertainties

Recently, BOT (built-operate-transfer) mode has gradually received the favor of public sector and private sector, because it could mitigate government financial stress, improve effective of management and operation and accelerate technological innovation especially in the field of traffic projects investment and financing. Therefore, the theory research and practice application about concession period is becoming the focus in fields of both academy and practice. In this context, it is necessary to discuss the problem of traffic BOT projects concession period decision-making from the uncertainty perspective.This dissertation speaks out around the core issue of concession period decision-making under uncertainty condition, including eight chapters. The first chapter described the background and significance of the topic, key issue to be solved, research contend and technology roadmap; the second chapter was the literature review related to the researches of BOT scheme and concession period; Chapter three deployed the uncertainty problem of traffic BOT projects decision-making; Chapter four investigated the effectiveness of BOT scheme under the endogenous uncertainty condition; Chapter five established the BOT project concession period decision-making model under exogenous uncertainty condition, aiming at fixed concession period "model I"; Chapter six built BOT project concession period decision-making adjustment model under exogenous uncertainty condition, aiming at fixed concession period "model I"; Chapter seven, on the premise of exogenous uncertainty, built BOT project concession period decision-making model under flexible demand, aiming at fixed concession period "model II"; Chapter eight consisted of the conclusions, limitations and future research prospects. The main achievements are as follows:I) This dissertation compared the definition and classification of "uncertainty" in the semantic classification, economics, organization theory comprehensively, combined with the specific context of traffic BOT projects, defined the uncertainty in the BOT projects decision-making as "the environmental background of project company during the concession period decision-making process, if the project company can not fully aware the consequences of its own actions, the decision-making process will be dominated by uncertainty". In accordance with the sources of uncertainty, the uncertain factors of traffic BOT project decision-making were divided into endogenous and exogenous uncertain factors. Endogenous uncertain factors include the exterior of interests, the possibility of the project company to breach the contract; Exogenous uncertain factors include the construction period, construction costs, charges prices, traffic volume, operation and maintenance costs.II) This dissertation constructed the contract model of BOT projects under endogenous uncertainty condition, calculated the equilibrium solution of the contract model and the tendering solution of perfect competition; Comparing with traditional contract model, analyzed the effects of exterior of interest and the possibility of the project company to breach the contract in the midway to the BOT model, and gave the prerequisite of the project company quit the contract. The study obtained four propositions:i) Because of the existence of exterior of interest, the moral hazard of construction company can not be deterred by the means of traditional perfect competition tender model. ii) On the premise of forbidding the project company quitting the contract, the moral hazard can be efficiently deterred by the perfect competition tendering BOT concession contract, thereby realize the social efficiency of contract. iii) If it is unable to prohibit the project company to quit the contract, it would germinate moral hazard. iv) While signing the concession agreement of BOT projects, it will deter the moral hazard validly by the means of imposing deposit meet certain condition.III) This dissertation established BOT project concession period decision-making model in the condition of exogenous uncertainty, proposed concession period adjustment method. According to practice, this research set two types of concession period decision-making model under the condition of fixed concession period. This research analyzed the foundational characters of exogenous uncertain factors during traffic BOT projects decision-making process, on the basis of that, with the object of maximizing the revenue of project company, built traffic BOT projects concession decision-making model under the condition of exogenous uncertainty, and designed the solving process. In the condition of net present value rate is given, this model could determine a reasonable concession period. And a BOT highway project case study is provided to demonstrate the validity of the proposed model. The research indicated that, on basis of considering various kinds of uncertain factors, the concession period not only incentive project company saving construction cost, shortening construction period and obtaining more operation revenue, but also take account of the interest of public and project company, thereby improve the rationality of concession decision-making.In the aspect of design concession period of adjustment methods, this dissertation proposed four kinds of criterions of concession period under the four conditions of shortening, extending, unchanged and invalid adjustment, considering various exogenous uncertain factors; If NPVR exceeds the upper limit, the decision model is built for shortening concession period with the target of social welfare maximum. If the NPVR is under the lower limit, the decision model is built for extending concession period with the target of corporate benefit maximum. Monte Carlo simulation is applied to the model for solution. And the feasibility of the model is proved by numerical example, at the same time, cumulative probability of realization of expected return is calculated and contrasted under different discount rate, so it proves the rationality of allocation of risk by the means of concession period adjustment when single price adjustment method is unsuitable.IV) On the premise of exogenous uncertainty, this dissertation establishes BOT project concession-making model in the condition of elasticity demand. On the basis of rationalizing the decision-making sequence of concession period and concession price, this dissertation advances fixed concession period "model II". Different from the model previous studied, regarding the concession period and the concession price as the decision variables of government and the project company in order to maximize total consumer surplus and net present value of revenue respectively, this research combines the two interacted factors to the game model of concession period decision-making under elastic demand. Though the analysis of the perfect Nash equilibrium solution, the research draws several properties as followed:i) If the traffic demand function is given, the optimal concession period and optimal concession price are exist when the absolute value of price elasticity of demand is greater than one. ii) If other parameters remained unchanged, the concession period extends with the construction cost increasing, concession price decreases with the construction cost increasing. iii) If the traffic volume and construction standards are given, there is a upper limit of construction cost of project company. Finally, from the perspective of price elasticity, this dissertation analyses the impact of traffic demand uncertainty on concession period decision-making, concludes that if the traffic demand changes, decision-maker should choose concession adjustment strategy correspondingly according to the price elasticity and traffic volume on the new demand curve.