Study On The Determination Period Of Highway BOT Project Based On Monte Carlo Method

The construction of Highway has some characteristics:large scale of investment, long recovery time, much funding and so on. It is the basis of economic development with public and service, but facing the demand of a lot of money, the government has limited financial capacity level. It is difficult for the government to provide funds for highway construction, so the BOT project financing system will be introduced to the highway projects, to meet the needs of the highway infrastructure by using market-based financing to make up for the lack of government financial resources. The core of BOT project negotiations is the concession period agreement, and the most important thing is to determine the concession period between the government and investors in the concession agreement, which determine the rights and obligation of the government and investors, also the interests. On the one hand, the project company will invest less for the recovery of investment early if the concession period is too short, so affecting the quality of the road, or charging high prices, increasing the burden on road users’; on the other hand, the concession period is too long, damaging the interests of government, corresponding to extend the control of the government, so a reasonable concession period is particularly important for both sides. However, the period of highway construction and operation has a lot of uncertainty, like the risk of completion, operational, financial and natural environmental, which are important factors in highway BOT project of the decision.Summary the risks of highway BOT project through qualitative methods, referring to the relevant literature, case materials. Based on qualitative, used analytic hierarchy process (AHP) to determine the matrix to determine the sort of major risks: traffic>operating and maintenance costs>Pay rates>investment>construction period. Determined key risk probability distribution through describing their factors. Using Monte Carlo method to simulate the net present value in the operation of the project period on the basis of consideration of risk-sharing. The concession period is calculated based on the net present value range. In this paper, validating the reliability of the method by use the case of Wu Kun Expressway. Monte Carlo method can simulate the various characteristics of risks, reflect the characteristics of risk fully, and the concession period is more persuasive, more reasonable and more comprehensive. It is a realistic and workable approach for the project company and the government after all.